COMMISSIONER OF WEALTH TAX Vs. PURUSHOTHAM PAI

JUDGEMENT

(1.) THE following question has been referred to this court by the Income-tax Appellate Tribunal, Bangalore Bench, under the provisions of the Wealth-tax Act :

(2.) THE assessee, P. Purushotham Pai, is the owner of one-third share in a coffee estate. THE remaining two-thirds share in that coffee estate is held by other tenants-in-common. THE appellant the value of the one-third share of the coffee estate in his return for the year 1970-71, under the Wealth-tax Act, 1957 (hereinafter referred to as "the Act"), and claimed allowance to the extent of Rs. 1,50,000 under the proviso to section 5(1)(iv-a) of the Act. THE Wealth-tax Officer did not allow the exemption as claimed by the assessee. What he did was that he first valued the entire coffee estate including the shares of the other tenants-in-common at Rs. 2,50,178 and deducted Rs. 1,50,000 which was the exemption allowable under the proviso to section 5(1)(iv-a) of the Act, from that total value and arrived at the net value of the estate including the shares of the other tenants-in-common at Rs. 75,178. One-third thereof was treated as the value of the interest of the assessee in agricultural land and, on that basis, proceeded to complete the order of assessment. Aggrieved by the order of the Wealth-tax Officer, the assessee file an appeal before the Appellate Assistant Commissioner of Income-tax who dismissed it. On appeal to the Income-tax Appellate Tribunal, Bangalore Bench, it was held that the method adopted by the Wealth-tax Officer in calculating the taxable wealth was not in accordance with law. THE Tribunal was of the opinion that the exemption allowable under the proviso to section 5(1)(iv-a) of the Act should have been allowed in favour of the asssessee after determining the value of his one-third share in the coffee estate. In other words, the Tribunal directed the Wealth-tax Officer first to arrive at the value of the one-third share of the assessee and then to allow the exemption allowable under section 5(1)(iv-a) of the Act, in the hands of the assessee. At the instance of the department, the above reference has been made by the Tribunal.