COMMISSIONER OF WEALTH-TAX Vs. VIPIN KUMAR

JUDGEMENT

(1.) THESE are five wealth-tax references made to this court under Section 27 of the Wealth-tax Act, 1957 (hereinafter called "the Act" ). Three of these relate to Shri Vipin Kumar, the assesses for the consecutive assessment years 1974-75 to 1976-77, whereas the other two pertain to Shri Satish Kumar, Hindu undivided family, Batala, in regard to the assessment years 1974-75 and 1975-76.

(2.) SHRI Vipin Kumar, in his individual capacity, was a partner in a firm which was working under the name and style of Gurdaspur Roller Flour Mills, Gurdaspur, during the assessment years in question and he had an 11 per cent. share in it. He claimed for all these three years exemption under Section 5 (1) (iv) of the Act in respect of an amount of Rs. 74,140 being the value of his share in the immovable property belonging to the firm, namely, the factory land and building. Similarly, Shri Satish Kumar, Hindu undivided family, was also a partner in the same firm during the relevant assessment years. The Hindu undivided family which is the assessee claimed exemption under Section 5 (1) (iv) of the Act in respect of an amount of Rs. 80,880 which represented its share in the factory land and building belonging to the firm. The Wealth-tax Officer, while finalising the assessment, negatived the claim of both the assessees in this regard, being of the view that, since the assessees did not own the house property, the deduction claimed was not admissible. In the appeal filed by the assessees, the appellate authority, while relying on the decision of the Madras High Court in the case of Purushothamdas Gocooldas v. CUT [1976] 104 ITR 608, also did not agree with the assessees and dismissed the appeals. In second appeals filed by the assessees, the Tribunal noticed a conflict of opinion between the Karnataka High Court and the Madras High Court and, relying on the observations of the apex court in the case of Naga Hills Tea Co. Ltd. [1973] 89 ITR 236, and on the reasoning of the Karnataka High Court in CWT v. Mrs. Christine Cardoza [1978] 114 ITR 532, upheld the claim of the assessees herein and granted them the exemption as claimed under Section 5 (1) (iv) of the Act. Thereafter, at the instance of the Commissioner of Wealth-tax, the Tribunal referred under Section 27 of the Act, the following two similar questions of law in the case of both the assessees for the opinion of this court :

(3.) SECTION 5 (1) (iv) of the Act, as it stood during the relevant assessment years, reads as under :