COMMISSIONER OF WEALTH TAX Vs. MELA RAM

JUDGEMENT

(1.) This case and the connected case viz. I.T.R. No. 35 of 1966 arise out of an assessment to wealth tax of two brothers, namely, Shri Mela Ram and Shri Ralya Ram. They are both partners in the firm Messrs. Ralya Ram Mela Ram of Delhi and each partner has an equal share. The reference relates to the assessment year 1961-62 and the date of valuation is 31-3-1961. The question referred to this Court relates to the construction of Section 7(2) (a) of the Wealth Tax Act, 1957 which will hereafter be referred to as the Act. It reads :-

(2.) The facts in the case of assessment of Shri Mela Ram in I.T.R. No. 34 of 1966 are the same as in the case of his partner Ralya Ram in I.T.R. No. 35 of 1966, and are as follows:-

(3.) The assessee pleaded before the Wealth Tax Officer that his onehalf share in the firm should be adopted as given: in the balance-sheet.. The Wealth Tax Officer accepted the plea subject to one modification. He accepted that the value of the assessee's one-half share in the firm as per the firm's balance sheet was Rs. l,04,980.00. This amount however included the assessee's interest in No. 2 Keeling Road, New Delhi, which as said before, was valued in the balance-sheet at Rs. l,26,996.00. According to the Wealth Tax Officer, there was a great discrepancy in the market value of the property and the balance sheet value thereof. He therefore valued the property separately at the current market rate and excluded Rs. 63,498.00 (being one-half of Rs. l,26,996.00) from Rs. l,04,980.00 and valued the assessee's one-half share in the firm, excluding his share in this property at Rs. 41,482.00. He separately valued the whole property at Rs. 5,00,000/ and held that the assessee's one-half share therein was Rs. 2,50,000.00. . In short, the Wealth Tax Officer valued all the assets of the firm, except No. 2 Keeling Road property, as per the balance sheet under Section 7 (2) (a) of the Act while he valued No. 2 Keeling Road at its market value under Section 7(1) of the Act.