L N BIRLA Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) L. N. Birla, the assessee, was assessed to wealth-tax in the assessment years 1972-73, 1973-74 and 1974-75, the valuation dates being 31st of March of the calendar years 1972, 1973 and 1974. The assessee was a partner of a firm named M/s. Kumaon Orchards. The assessee had l/5th share in the said firm. The firm owned agricultural lands. In his return of net wealth, the assessee claimed exemption under Section 5(1)(iva) of the Wealth-tax Act, 1957, in respect of his share of the agricultural land of the firm. The Wealth-tax Officer disallowed the claim of the assessee on the ground that the asset to be included in the assessee's net wealth was 1/5th share of the interest of the assessee in the said firm and not the land as such.

(2.) Being aggrieved, the assessee preferred an appeal against the assessments before the Appellate Assistant Commissioner of Wealth-tax. The Appellate Assistant Commissioner held that in determining the net wealth of the firm, exemption under Section 5(1)(iva) of the Wealth-tax Act should be allowed up to the admissible limit. But the benefit of the said section could not be given to each of the partners separately. He directed the Wealth-tax Officer to revise the assessments accordingly.

(3.) Both the assessee and the Revenue preferred appeals to the Income-tax Appellate Tribunal against the order of the Appellate Assistant Commissioner. Before the Tribunal, the assessee relied upon an order of the Special Bench of the Madras Income-tax Appellate Tribunal as also the orders of the Calcutta Tribunal in the case of the assessee in earlier years where the assessee was allowed exemption under Section 5(1)(iva) in respect of his l/5th share of the agricultural land of the firm. The Revenue, on the other hand, relied upon another order of the Tribunal where a different view had been taken in favour of the Revenue. The Revenue also relied upon a decision of this court in Sarvamangala Properties Ltd. v. CWT [1973] 90 ITR 267 and a decision of the Supreme Court in CWT v. Bishwanath Chatterjee [1976] 103 ITR 536, and contended that in view of the principles laid down in the said decisions, the firm was the owner of the property and as such the assessee was not entitled to exemption under the Wealth-tax Act in respect of his share in the property of the firm.