G N KHANNA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THESE three references arise out of the same set of facts and are inter-related. Hence, all of them are being disposed of by this common judgment.

(2.) THE assessee, Sarvasri G. N. Khanna, N. K. Khanna, M. N. Khanna, S. K. Khanna, K. N. Khanna, are partners in Annapurna Biscuit Manufacturing Company, Kanpur. The assessment year involved in the cases of G. N. Khanna and M. N. Khanna are 1971-72 and 1972-73, while in the cases of others the year involved is 1972-73. The dispute in the assessments to wealth-tax for these assessees related to the addition of their respective shares in the development rebate reserve as appearing in the books of the firm. In the balance sheets of the firm relevant for the years under consideration under the head "development rebate reserve account" on the liabilities side the following figures were shown: The WTO in the case of each of these assessees made an addition of the amount corresdponding to their shares respectively by relying on S. 7(2)(a) of the WT Act (hereinafter referred to as "the Act") r/w r. 2F of the WT Rules, 1957 (hereinafter referred to as "the Rules").

(3.) IN Wealth-tax Reference No. 320 of 1977, in which the assessee is M. N. Khanna and which relates to the asst. yr. 1971-72, after the word "includible", the words "in entirety" do not find a place. However, there was no controversy before us that the assessee's share in the development rebate reserve is liable to be included while computing the value of his interest in the firm. The controversy is confined only to the question as to whether the entire development rebate reserve is to be included or the tax which the firm might be called upon to pay under S. 155(5)(ii)(c) of the IT Act should be deducted therefrom.