COMMISSIONER OF WEALTH TAX Vs. B ABDULLA KUNHI

JUDGEMENT

(1.) THE respondent-assessee is a partner of a partnership firm, Rehaman Saw Mills, having 1/3 share in the partnership. THE partnership was dissolved by an agreement dated September 30, 1976. Total assets of the firm were valued at Rs. 40,00,000. THE respondent-assessee, for the assessment year 1977-78, declared only one-third of the value of the estate of the extent of his share in the partnership firm. THE appellate authority exercising the powers under Section 35 of the Wealth-tax Act, 1957, revised the assessment orders and assessed the net value of the estate of the firm to an extent of Rs. 40,00,000 as liable for assessment.

(2.) IT was a disputed contention whether the assessee had become a full owner of the assets of the firm when dissolution took place on the last date of the valuation date, i.e., September 30, 1976. IT was the contention of the assessee that he has become the full owner of the assets of the partnership firm only after the expiry of the valuation date, i.e., September 30, 1976. The appellate authority in appeal held that by the deed the dissolution was effective from September 30, 1976, and the assessee had not become the full owner of the estate throughout the valuation date. Hence found that it was a debatable point and as such exercise of powers under Section 35 is not proper.

(3.) THE decision of the Allahabad High Court in Banarsi Dass v. CWT [1970] 76 ITR 104, is cited at the Bar which has a direct bearing on the question involved in this case. It is held thus (page 106):