COMMISSIONER OF WEALTH TAX Vs. MAHESHKUMAR R PATEL

JUDGEMENT

(1.) The Income-tax Appellate Tribunal, Ahmedabad Bench "A", has, at the instance of the Commissioner of Wealth-tax made a statement of the case and has referred the following question of law arising out of its order dated May 20, 1980 :

(2.) The brief facts, in which the aforesaid question has arisen as found by the Tribunal, are that the assessee is a partner in the firm of H. C. Patel and Co. Two specific assets owned by the firm are deposits in banks and house properties. For the years 1973-74 to 1976-77, the assessee claimed exemption from payment of wealth-tax under sec. 5(1) in respect of his share of the bank deposits held by the firm and in respect of the house property owned by the firm. The Wealth-tax Officer held that the above two assets did not belong to the assessee but belonged to the firm. Even though the assessee was a partner in that firm, what was includible in his net wealth was his share of the "net assets" of the firm and not the individual asset, and not his share in each asset separately. On this ground, the claim of the assessee was rejected by the Wealth-tax Officer. On appeal, though the assessee gave up the claim to separate exemption in respect of the two assets, he claimed that while determining the value of his interest in the firm, the value of exempted assets under section 5(1) of the Wealth-tax Act, 1957, ought to be excluded.

(3.) The Appellate Assistant Commissioner accepted this claim of the assessee. The Revenue appealed. The Tribunal upheld the order of the Appellate Assistant Commissioner. At the instance of the Commissioner of Wealth-tax, the aforesaid question of law arising out of its order dated May 20, 1980, has been referred to this court for its opinion by the Tribunal.