TMI Blog1995 (4) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of business of the firm in which appellant is a partner." 3. The assessee is a private limited closely-held company. The assessee is a partner in the firm of M/s. Rajathadri Hotel, Satara, holding 2506 share in the said firm. In the balance sheet of the company, the investment in the said firm as capital has been reflected in the assets side. The partnership firm runs a hotel. It has also got investments in land, building and motor cars. The Assessing Officer levied wealth-tax on the assessee company's share in the value of such land, building and motor cars, as appearing in the balance sheet of the firm, under section 40(3) of the Finance Act, 1983. According to the Assessing Officer, the words 'wherever located' as appearing in sub-section (2) of section 40(3) of the Finance Act, 1983 clearly brought in its ambit the location of an asset in the balance sheet of a firm. For this reason, the Assessing Officer included the various such assets in the net wealth of the assessee company. 4. On the matter being taken in appeal, it was urged before the learned CWT(A) that an investment in a partnership firm was not a subject-matter of tax under section 40 of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (3) thereof and belonging to the company are liable to be included in the net wealth of a company. Since in the present case the assets of the firm which are sought to be included in the company's net wealth did not 'belong' to the company and belonged only to the firm, their value was not liable to be included in the net wealth of the company under sub-section (2) of section 40 of the Finance Act, 1983. Reliance was placed on the decision of the Supreme Court in Addanki Narayanappa's case. (2) The premises hired out to (a) Karnataka Bank, (b) Pathak Co., (c) Shalimar Drycleaners, and (a) Rajathadri Restaurant and Wine shop were being used as 'hotel' by the partnership firm and, therefore, under the terms of clause (vi) of sub-section (3) of section 40 of the Finance Act, 1983, they were not liable to be included in the net wealth of the company (3) The revenue authorities have made a mistake in adopting 102924 sq. ft. as the total land belonging to the firm for the purposes of hotel and rented areas. In fact such land measures only 48069 sq. ft. as per the particulars given in the statement at pages 63 and 65 of the assessee's paper book. (4) Since the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned departmental representative that all the three-assets, viz., rented portions of the building, land and jeeps would fall within the tax net under section 40 of the Finance Act, 1983. We agree with the learned counsel for the assessee that during the subsistence of a partnership, no partner can deal with any portion of the property as his own, nor can he assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time and upon dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities. Such is the view taken by the Supreme Court in its decision in Addanki Narayanappa case. The department is neither quarreling, nor can it quarrel with this principle enunciated by the highest Court of the land. But then, it should be noted that this judgment of the Supreme Court was rendered in the context of the relevant sections of the Partnership Act, 1932. What is under consideration before us is, as to whether these assets could be held to be belonging to the assessee company for the purposes and in the context of section 40 of the Finance Act, 1983 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set contained in clause (e) of section 2 of that Act is only inclusive and not exhaustive. The definition of asset under the Wealth-tax Act was necessary mainly for the purpose of determination of net wealth under that Act. Such determination is done by aggregating the value of all the assets which is in excess of the aggregate value of an the liabilities of an assessee. As against this, sub-section (3) of section 40 of the Finance Act, 1983 exhaustively enumerates the various items of property, in other words 'assets', the aggregate value of which shall be the amount of net wealth for the purpose of sub-section (1) of section 40. Such is the provision contained in sub-section (2) of that section. Thus the scheme of the Finance Act, 1983 which is a near complete code in itself is almost selfcontained and, therefore, does not require any definition of the term 'asset' or 'net wealth'. This is so far as the argument of the learned departmental representative is concerned. 9. The next question which requires consideration is as to whether the assets held by the revenue authorities to be taxable under section 40 of the Finance Act, 1983, belong to the assessee company and are taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it as belonging to him. The Court has also dealt with the provision contained in section 4(1)(b) of the Wealth-tax Act and has observed that that deeming provision is referable only to the quantification of a partner's interest in a firm. In this connection, it will be useful to reproduce the relevant part of the judgment of the Supreme Court which reads as under : " It is true that section 4(1) deals with the computation of the net wealth of an individual and it is also true that the same enacts a deeming provision in a sense that certain assets which do not in fact or in reality belong to that individual (the assessee) but to some one else are to be treated as belonging to that individual and are to be included in his net wealth. But, in our view, a careful reading and analysis of clauses (a) and (b) thereof will make it clear that there is a great difference between the cases covered by sub-clauses (i) to (v) of clause (a) and the case covered by clause (b). Clause (a) refers to five situations in all of which the asset is held by some one other than the individual concerned (the assessee) (eg., held by the spouse or minor child of such individual to whom such asset has been t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to the partners and not to the firm. in view of these decisions of the courts and the discussion made by us as above, we hold that the value of the three assets to the extent of the assessee-company's share in the partnership firm is liable to be included in the net wealth of the assessee-company for the purposes of taxation under section 40 of the Finance Act, 1983. 12. The next issue raised by the learned counsel was that the rented premises were being used as part and parcel of the hotel business and since the hotel is not an asset includible in the net wealth of the assessee company, the rented premises should also not be so included. We have given careful thought to this aspect of the matter, but do not find persuaded to accept the same. For the purpose of the discussion on this point, it would be useful to reproduce clause (vi) of sub-section (3) of section 40 : " (vi) building or land appurtenant thereto, other than building or part thereof used by the assessee as factory, godown, warehouse, cinema house, hotel or office for the purposes of its business or as a hospital, creche, school, canteen, library, recreational centre, shelter, rest-room or lunch room ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal representative did not dispute this legal position and we also, from a study of that decision of the Calcutta High Court, find that where property has been valued on yield method, reversionary value of the land is not liable to be included again in determining the value of that property. We, therefore, direct that valuation shall be finalised subject to this direction. 15. The last point raised by the learned counsel was to the effect that jeeps do not fall within the definition of 'motor cars' within the meaning of clause (vii) of sub-section (3) of section 40 of the Finance Act and, therefore, their value is not liable to be included in the net wealth. Here again, we do not find ourselves in agreement with the learned counsel. In this connection, the learned departmental representative has placed reliance upon the decision of the Pune Bench of the Tribunal in the case of Dempo Mining Corpn. Ltd 's case. In that case under section 40 of the Finance Act, we have taken a view that jeeps are motor cars within the meaning of this clause and, therefore, their value is liable to be included in the net wealth of the assessee company. We see no reason to depart from our earlier view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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