KANAMARLAPUDI SUBBA RAO Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) The question referred to us under section 27(1) of the Wealth-tax Act, is :

(2.) The assessee admitted a sum of Rs. 2,52,725 in Part IV of his wealth-tax return for the assessment year 1978-79 and claimed before the Wealth-tax Officer that the said sum represents his partnership interest in the firm, M/s. K. Narayana Setty & Son, Nellore. His contention was that the said partnership interest cannot be included in the hands of the assessee. The assessee is a Hindu undivided family of which the karta is K. Subba Rao. His contention was that since he was a partner of the said partnership firm in his individual capacity, the value of his share in the partnership firm cannot be treated as the wealth of the Hindu undivided family. This argument was rejected by all the three authorities and we agree with them. K. Subba Rao was a partner in the said partnership firm representing the Hindu undivided family. Therefore, the share held by him in the said partnership is the property and share of the Hindu undivided family. Accordingly, it is liable to be taxed in the hands of the Hindu undivided family, according to the definition of "net wealth" contained in clause (m) of section 2, read with section 3 of the Act. For this purpose, it may not really be necessary to go to section 4(1) (b).

(3.) For the above reasons, we answer the question referred to us in the affirmative, i.e., in favour of the Revenue and against the assessee. No costs.