COMMISSIONER OF WEALTH TAX Vs. N BALAKRISHNA

JUDGEMENT

(1.) At the instance of the Revenue, the following two questions have been referred under s. 27(1) of the WT Act :

(2.) The undisputed facts are that the assessee was a minor admitted to the benefits of a partnership and that partnership had a residential property. For the valuation dates being 31/12/1975 and 31/12/1976 respectively corresponding to the asst. yrs. 1976-77 and 1977-78, the 1/8th share of the assessee in the net wealth of the firm was added in determining the net wealth of the assessee. But the exemption under s. 5(1)(iv) in respect of the residential property owned by the firm was not allowed. On appeal, the CIT(A) noted that on a revaluation, the property was valued at Rs. 5,76,000 and the share of the assessee-partner came to Rs. 72,000. This amount being less than Rs. 1 lakh, which is the maximum amount exempted under s. 5(1)(iv) of the Act, he held that this amount is not includible in the wealth-tax assessments of the assessee. The Revenue appealed and contended that the deduction under s. 5(1) should be made in computing the net wealth of the firm before apportionment of the share of the partners and consequently no such deduction should be given in the assessment of the assessee as a partner and relied upon the decision of this Court in CWT vs. Nagendra Ranjalker (supra). However, the Tribunal noted that the assessee being a minor admitted to the benefits of the partnership, he could not be regarded as a partner and, therefore, his share was not assessable to wealth-tax. The Tribunal, therefore, followed its own decision in the case of B. Sadasiva Rao vs. WTO (1982) 30 CTR (Trib) (Hyd) 10 and confirmed the exclusion of the share of the value of the residential property from the net wealth of the assessee. The learned counsel for the Revenue pointed out that the decision of the Tribunal in Sadasiva Rao vs. WTO (supra) has been reversed by this Court in CWT vs. B. Chandrasekhara Rao (1989) 175 ITR 66 (AP), and therefore, the decision of the Tribunal was not correct and the questions raised must be answered in favour of the Revenue. On the other hand, the learned counsel for the assessee submitted that, on the question whether the deduction under s. 5 should be taken into account in computing the net wealth of the firm before ascertaining the share of the partner or whether it should be taken into account after ascertaining the share of the partner and allowed as a deduction only in the hands of the partner, who alone is the assessee, there were several decisions, the most recent being that of the Delhi High Court in CWT vs. A. K. Tandon (1992) 103 CTR (Del) 42 : (1992) 198 ITR 26 (Del) in favour of the assessee and, therefore, the judgment of this Court in CWT vs. B. Chandrasekhara Rao (supra) requires reconsideration.

(3.) Even though we find that the question raised does admit of further consideration as suggested by the learned counsel for the assessee, we are of the opinion that on the facts of this case, the question is academic. It is not in dispute that the assessee was a minor on the relevant valuation dates and he was only admitted to the benefits of the partnership. Therefore, the assessee did not have any share in the assets of the firm. That was the reason why the Tribunal upheld the order of the Appellate Commissioner excluding the value of the building from the net wealth of the assessee. Though the Appellate Commissioner excluded it on the ground that it was exempt under s. 5(1)(iv), the value itself was not includible as the assessee had no share in the assets of the firm. That being the accepted position, the question whether he is entitled to deduction under s. 5(1)(iv) in respect of an asset not includible in the net wealth is clearly academic.