COMMISSIONER OF WEALTH TAX Vs. B CHANDRASEKHARA RAO

JUDGEMENT

(1.) DOUBTING the correctness of the view expressed in Commissioner of wealth Tax v. Chandrasekhar Rao, 175 1tr 66, a Division Bench of this Court has referred this RC for consideration of the Full Bench. The rc arises out of the reference application filed by the Commissioner of wealth Tax under Section 256 (1) of the Income Tax Act. The questions of law referred are these:

(2.) BEFORE we proceed to state the facts, we would like to extract the relevant provisions including those adverted to in the questions framed.

(3.) THE assessee who was a minor during the relevant assessment year, was admitted to the benefits of partnership in the firm known as taj Maha1 Hotel, Secunderabad. Me was having l/8th share in the profits of the firm. In the Wealth Tax assessment, the assessee returned as net wealth of Rs. 68, 897/ -. The Wealth Tax Officer added to that amount a sum of Rs. 1,06,656/-and arrived at the net wealth of Rs. 1,75,553/ -. The amount of Rs. 1,06,656/-that was added represents, to put it in the language of WTO "the difference in 1/sth share of interest in Taj Mahal Hotel, as determined in other co-owners' cases". The WTO quantified the interest of the assessee in the firm apparently under Section 4 (1) (b), though the details of such quantification are not available from record. Whether such interest can be included in the net wealth of the assessee at all, is not put in issue anywhere and the only issue that seems to have loomed large before the appellate Commissioner and the appellate Tribunal was whether the assessee can claim exemption under Section 5 (1) (iv) subject to the ceiling of Rs. 1,00,000/-to the extent of his share in the value of the house property of the firm. That is the indication we get from the statement of the case and the Appellate Assistant Commissioner's order. It is also seen from the order of the first appellate authority that the claim ofthe appellant was that he should be given the benefit of exemption under Section 5 (1) (iv) in respect of the house property of the firm after computing his share of interest in the firm. For putting forward such claim, the decision in CWT v. Narendra Ranjalkar, 129 itr 203, came in his way. It was held in that case as follows: