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TMI Blog1972 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... terest in the wealth of the firm styled as M/s. J. K. Bankers for the assessment years 1957-58 to 1963-64 ?" The assessee is a Hindu undivided family. It holds through its karta 1/3rd share in a partnership firm of the name and style of Juggilal Kamlapat Bankers (hereinafter referred to as " the firm "). While computing the net wealth of the assessee for each of the seven years, the Wealth-tax Officer had to take into consideration the assessee's share in the wealth of the firm. While computing that share the Wealth-tax Officer took the net wealth of the firm as per its books of accounts ignoring the liability of the firm on account of the outstanding income-tax. The assessee appealed and contended, inter alia, that in order to determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdrew its appeals and the department granted instalments for the payment of the outstanding income-tax liability. Where the assessee is an individual, his net wealth is to be computed in accordance with section 4(1)(b) of the Wealth-tax Act, which reads : " 4. Net wealth to include certain assets.-(1) In computing the net wealth of an individual, there shall be included, as belonging to that individual- ....... (b) where the assessee is a partner in a firm or a member of an association of persons, the value of his interest in the firm or association determined in the prescribed manner." The manner for the determination of the value of the interest of an individual in a firm is contained in rule 2 of the Wealth-tax Rules. Paragraph 1 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are not concerned in this case with the manner in which the net wealth of the firm is to be allocated between the partners. All we are concerned with is to find out as to how the net wealth of the firm should have been determined. The term " net wealth " according to ordinary commercial principles means the real wealth of a man. His real wealth would be his total assets minus the debts owed by him. This is in essence the definition of " net wealth " as given in section 2(m), which defines " net wealth " to mean " the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee. In the instant case the firm is not the assessee so that the net wealth of the firm is not to be assessed. The assessee is the karta of a Hindu undivided family. In computing his net wealth any income-tax liability outstanding against him may not be deducted under this provision but the income-tax liability of a firm, of which he is a partner, cannot be left out of consideration by virtue of this provision. While determining the net wealth of the firm not for the purpose of assessment but for the purpose of finding out an assessee's share in it, sub-clauses (a) and (b) of clause (iii) of section 2(m) would not be applicable. The net wealth under rule 2 is to be determined in accordance with the commercial principles and when ..... X X X X Extracts X X X X X X X X Extracts X X X X
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