VENKA REDDY S Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THIS reference arises under section 27(1) of the Wealth-tax Act, 1957 ("the Act" for short). The assessment years involved are 1976-77 and 1977-78. The assessee is a Hindu undivided family. The Wealth-tax Officer found that the wife of the karta has wealth in her individual capacity in excess of Rs. 1,00,000. Consequently he taxed the net wealth in the case of the assessee-joint family at the higher rates specified in sub-para (2) of Part I of Schedule I to the Wealth-tax Act. It may be pointed out that for the purpose of wealth-tax in the case of every Hindu undivided family which has at least one member, whose net wealth assessable for the assessment year exceeds Rs. 1,00,000 wealth-tax is payable by the joint family on its net wealth at the higher rates specified therein. The assessee's contention is that the expression "member" occurring in sub-para (2) of Part I of Schedule I refers to a male member who is a coparcener and not a female member. According to the assessee, as the family did not consist of more than one coparcener and only a female member of the family has wealth exceeding Rs. 1,00,000, the higher rates of wealth-tax specified above cannot be applied. The Revenue rejected the above contention and it was affirmed by the Income-tax Appellate Tribunal.

(2.) THE assessee-family holds interest in a partnership through its karta. THE Income-tax Officer included the value of the partnership interest acting under section 4(1)(b) of the Wealth-tax Act, 1957. THE assessee contended that section 4 comes into operation for purposes of computation of net wealth in the case of "individuals" and it can have no application for computation of net wealth in the case of a Hindu undivided family. In that view, it was claimed that the provisions of section 4(1)(b) cannot be pressed into service for purposes of inclusion of the value of partnership interest held by the assessee-family in the partnership firm through its karta. THE Revenue rejected the above contention also and it was affirmed by the Income-tax Appellate Tribunal.

(3.) THE second question relating to the assessment of the partnership interest held by the assessee-family under section 4(1)(b) is not free from difficulty. Section 4 refers to the computation of the net wealth of an "individual". THE provisions contained in clauses (a) and (b) undoubtedly come into operation only in the case of computation of net wealth of an individual as distinguished from a Hindu undivided family. THE contention of the learned counsel for the assessee that section 4 goes out of application altogether in a case where the computation of wealth is other than that of an "individual" is not without force. It is not possible to read clause (b) of sub-section (I) of section 4 independently because it does not by itself convey any sense. Clause (b) has to be necessarily read with the opening part of section 4(1) in order to make the sense complete. We may, for purpose of convenience, quote below the provision.