PURUSHOTHAMDAS GOCOOLDAS Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) IN this consolidated reference in respect of six assessments under the Wealth-tax Act, a common question of law has been referred under Section 27(1) of the Wealth-tax Act. The question that is referred is :

(2.) THE assessees in the six cases along with one Aminchand Dwarkadas were partners in a firm of partnership by name Messrs. Gocooldas Jamnadas and Company, Madras. In respect of the assessment year 1964-65, they submitted their individual returns of wealth, the relevant valuation date being October 17, 1963. THE assessees wealth included properties, shares in companies and interest in the firm of partnership, Messrs. Gocooldas Jamnadas and Company, Madras. One of the assets of the partnership was a house bearing No. 8, Nowroji Road, Madras, in which the partners were residing. In their return under the Wealth-tax Act, each of these assessees valued their share in this house separately and claimed deduction under Section 5(1)(iv) of the Wealth-tax Act. THE Wealth-tax Officer valued the properties owned by the partnership firm at Rs. 14,68,800. In arriving at the above value, he fixed the value of the house No. 8, Nowroji Road, at Rs. 5,45,600. With reference to the shares held by each of these assessees, the Wealth-tax Officer included the value of their share in the firm in each of the individual assessments under Section 4(1)(b) of the Wealth-tax Act. THE assessees claimed that wealth-tax was not payable by the respective assessees in respect of the value of the assessees' share in the residential house No. 8, Nowroji Road, to the extent of a sum of Rs. 1,00,000 under Section 5(l)(iv) of the Act. THE Wealth-tax Officer rejected this claim on the ground that the property was not owned by the individual assessees, but it was an asset of the partnership firm and that the assessees individually were not also using the property exclusively for residential purpose. On an appeal, on an erroneous view that the house No. 8, Nowroji Road, belonged to the Hindu undivided family and not the partnership, the Appellate Assistant Commissioner held that the respective assessees were entitled to have a deduction of their share in the value of the house up to a maximum of Rs. 1,00,000 as provided under Section 5(1)(iv), Aggrieved by this order, the department preferred six appeals to the Tribunal. By a common order, the Tribunal held that no partner could be said to have an exclusive ownership in any particular property or asset of a partnership firm and that, therefore, Section 5(1)(iv) was not applicable. It may be mentioned that before the Tribunal, it was admitted on behalf of the assessees that the house No. 8, Nowroji Road, belonged to the partnership firm at the relevant period and formed part of the assets of that firm. THE Tribunal accordingly set aside the order of the Appellate Assistant Commissioner and restored the order of the Wealth-tax Officer. At the instance of the assessees, the above question has been referred,