S GOPALREDDI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) This reference arises under s. 27(1) of the WT Act, 1957 ("the Act" for short). The assessment years involved are 1975-76 and 1977-78. The assessee is an HUF. The WTO 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 para (2) of Part I of Sch. I to the WT Act. It may be pointed out that for the purpose of wealth tax in the case of every HUF 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 assessees contention is that the expression member occurring in para (2) of Part 1 of Sch. 1 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 ITAT.

(2.) The assessee-family holds interest in a partnership through its Karta. The ITO included the value of the partnership interest acting under s. 4(1)(b) of the WT Act, 1957. The assessee contended that s. 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 new wealth in the case of an HUF. In that view, it was claimed that the provisions of s. 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 IT Appellate Tribunal.

(3.) Aggrieved by the decision of the Tribunal, the assessee sought a reference of the following two questions of law for the opinion of this court under s. 27(1) of the Act.