COMMISSIONER OF WEALTH TAX Vs. SURRYA KUMAR SHARMA

JUDGEMENT

(1.) THIS is a reference under S. 27(1) of the WT Act, 1957 (for short, "the Act"), by the Tribunal, Gauhati Bench, Guwahati, to this Court. After receiving the statement of the case from the Tribunal, on 16th Dec., 1992, notices were issued to the parties for hearing of the case. Pursuant to the said notices, Mr. D.K. Talukdar, learned standing counsel of the IT Department, appeared on behalf of the applicant, but none appeared on behalf of the respondent.

(2.) THE brief facts of the case as stated in the statement of the case drawn up by the Tribunal are that for the asst. year 1979 -80, the WTO included in the net wealth of the respondent -assessee his interest as partner in the firm, Kaliapani T.E., after computing the same under r. 2 of the WT Rules, 1957. The respondent -assessee challenged the order of assessment before the AAC contending that the exemption under S. 5 of the Act had not been allowed in respect of his share in the properties in the firm. The AAC found that the computation of the interest of the assessee in the firm by the WTO was not in accordance with the WT Rules, 1957, and directed that the exemption under S. 5(1)(iv) of the Act should be allowed to the firm at the stage of determination of net wealth before the balance was distributed amongst the partners. The AAC directed the WTO to redetermine the market value of the interest of the assessee in the firm. The said order of the AAC was challenged by the respondent -assessee before the Tribunal and the assessee contended that the AAC erred in directing that the assessee's interest in the firm should be computed after allowing the exemption under S. 5(1)(iv) of the Act at the stage of determination of the net wealth of the firm before allocation to the partners. The Tribunal, inter alia, observed that there was a decision of the Tribunal (Special Bench) in the case of L. Gulabchand Jabak vs. WTO (1982) 14 TTJ (Mad) 465 : 1 SOT 613, in which a similar claim of the assessee was allowed and set aside the orders of the authorities below to enable the WTO to bring the basic facts and materials on record in the light of the directions given in the said case and to dispose of the matter afresh after giving the assessee an opportunity of being heard. Thereafter, at the instance of the Revenue, the Tribunal referred to this Court for its opinion, the following question of law which is said to have arisen out of the aforesaid order :

(3.) IN the case of CWT vs. Tarachand Agarwalla : (1990) 81 CTR (Gau) 79 : (1989) 180 ITR 234 (Gau), this Court held that the deduction under S. 5(1)(iv) of the Act should be allowed in the hands of the assessee -partner and not in the hands of the firm. Following the aforesaid decision in the case of Tarachand Agarwalla (supra), this Court held in the judgment dt. 6th Nov., 1992, in WT Ref. No. 4 of 1988 that the deduction under S. 5(1)(iva) of the Act in the case of agricultural land standing in the name of the firm is also to be allowed in the hands of the assessee -partner in respect of his share in the said land. We have also delivered judgment on 31st March, 1994, in WT Ref. No. 19 of 1989 -CWT vs. Parsuram Chouthmal (HUF) (1995) 124 CTR (Gau) 327 : (1995) 211 ITR 57 (Gau) holding that a firm has no legal personality of its own and that the properties owned by the firm actually belong to the partners constituting the firm to the extent of their respective shares therein and the deduction under S. 5(1)(iv) of the Act is to be allowed to each of the partners of the firm to the extent admissible under the proviso to S. 5(1)(iv) of the Act in respect of their shares in the house properties standing in the name of the firm. Though a copy of the order of the Tribunal (Special Bench) in the case of L. Gulabchand Jabak (supra) has not been annexed to the statement of the case, it appears that in the said case the Tribunal has allowed the claim of the assessee under S. 5(1) of the Act in respect of the assessee's share in the immovable properties standing in the name of the firm consistent with the law as stated by this Court in the aforesaid three decisions. Since the orders of the WTO and the AAC in the present case were not in accordance with the law as stated above and since the basic facts and materials relating to the claim for exemption under S. 5(1)(iv) of the Act had not been brought on record, we are of the opinion that the Tribunal was justified on the facts and in the circumstances of the case to restore the matter to the WTO with the direction to decide the matter afresh keeping in view the decision of the Special bench in the case of L. Gulbachand Jabak (supra) in the which the claim of the assessee was allowed.