COMMISSIONER OF WEALTH TAX Vs. SUNDER DEVI

JUDGEMENT

(1.) These two references involve a common question of law based on identical facts and such are being disposed of by a common judgment. The references have been made by the Tribunal under s. 27(1) of the Wealth Tax Act, 1957 (hereinafter in short the Act) seeking opinion of this Court on the following questions :

(2.) In both the cases the assessees are the partners of a registered partnership firm M/s. Narbheram Vishram Gua. The assessment year involved is 1978-79. The firm owned two buildings, one of which was used for running a Petrol Pump and the other was used solely for the purpose of residence of the persons employed in the undertaking belonging to the firm. The firm also owned loan bonds. In the wealth-tax returns filed by the assessees, they claimed deduction to the extent of their share in the said three assets held by the firm under the provisions of ss. 5(i)(iv), 5(i)(xxxa) and 5(i)(xxii). The claim was rejected by the WTO on the ground that the said assets were owned by the firm and assessees cannot be deemed to be the owner thereof only because they are the partners of the firm thereby entitling them to the deduction claimed. The appeal to the AAC having failed, the assessees went to the Tribunal in second appeal. The Tribunal held that the claim was sustainable and according the additions made in respect of the said three assets by the CWT was deleted.

(3.) Mr. Vidyarthi learned counsel appearing for the Revenue, has submitted that the sine quo non for claiming deduction under three clauses of s. 5(1) of the Act referred to above, is that the assets should be owned by the assessee and according to him, since in the present case the assets admittedly belong to the firm which has a separate and distinct legal entity, the assessees only by virtue of their status as partners in the said firm cannot claim to be the owners of the said assets and as such they cannot derive any benefit of deduction under the provisions in question. In support of his submission he placed reliance on the cases of Purushottam Dass Gocooldas (Deceased) vs. CWT reported in (1976) 104 ITR 608 (Mad) and Adanki Narayanappa vs. Bhaskara Krishnappa, reported in AIR 1966 SC 1300.