COMMISSIONER OF WEALTH TAX Vs. TANDON A K

JUDGEMENT

(1.) THIS judgment will dispose of a bunch of references under S. 27 of the WT Act, 1957, pending in this Court.

(2.) THE assessees are partners in a firm known as M/s Wengers and Co., which owns A -15 and A -16, Connaught Place, New Delhi, known as Wengers Building. The WTO, while making the assessment, accepted the assessees' claim that, in respect of the assessees' share in the said immovable property owned by the firm, they were entitled to exemption under S. 5(1)(iv) of the WT Act, 1957 (hereinafter referred to as "the Act"). However, the CWT was of the opinion that the order of the WTO allowing the exemption under S. 5(1)(iv) to the extent of rupees one lakh was erroneous and, therefore, he served a notice on the assessees to show cause why the same should not be cancelled and the assessment be not made afresh by withdrawing the benefit of the exemption under section 5(1)(iv) of the Act. The CWT, relying on the judgment of the Madras High Court reported in Purushothamdas Gocooldas vs. CWT (1976) CTR (Mad) 361 : (1976) 104 ITR 608 (Mad), held that deduction under S. 5(1)(iv) was not allowable to a partner in a firm regarding property owned by the firm. The assessees who are partners in the said firm, M/s Wengers and Co., filed appeals before the Tribunal. The Tribunal, relying on the judgments of the Karnataka High Court reported in CWT vs. Mrs. Christine Cardoza (1978) 114 ITR 532 (Kar), of the Orissa High Court reported in CWT vs. Butchi Krishna (1977) CTR (Ori) 299 : (1979) 119 ITR 8 and of the Madhya Pradesh High Court reported in Narsibhai Patel vs. CWT (1981) 2 - CTR (MP) 43 : (1981) 127 ITR 633 (MP), held that the order of the WTO was correct inasmuch as it allowed the benefit of exemption under S. 5(1)(iv) of the Act to the partners of the firm. Thus, the order of the CWT was set aside by the Tribunal. With this background, the Revenue has sought the opinion of this Court on the following questions:

(3.) IN order to appreciate the controversy involved, it may be appropriate to reproduce certain provisions of the WT Act as were in force at the relevant time :