TMI Blog1989 (7) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... in the firm was taken into account as required by section 4(1)(b) of the Wealth-tax Act. The assessee's claim for exemption under section 5(1)(iva) of the Act in respect of the value of her share in the agricultural assets of the firm was not accepted by the Wealth-tax Officer. In appeal, the Appellate Assistant Commissioner allowed exemption under section 5(1)(iva) in computing the net wealth of the firm and directed a fresh assessment allocating the net wealth of the firm amongst the partners in accordance with the Wealth-tax Rules, 1957. In further appeal, at the instance of the assessee, the Tribunal has allowed exemption under section 5(1)(iva) in computing the net wealth of the assessee. The above question of law referred to this court under section 27(1) of the Act arises from the common order of the Tribunal passed in respect of the assessment years 1970-71 to 1973-74. As per the charging provisions under section 3 of the Act, wealth-tax is to be charged for every assessment year in respect of the net wealth of every individual, Hindu undivided family and company at the rates specified in the Schedule. As per section 4(1)(b), the net wealth of an individual includes, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights, 'there is no such thing as a firm known to the law' as was said by James L. J., in Ex parte Corbett: In re, Shand [1880] LR 14 Ch 122, 126 (CA). In these circumstances, to import the definition of the word 'person' occurring in section 3(42) of the General Clauses Act, 1897, into section 4 of the Indian Partnership Act will, according to lawyers, English or Indian, be totally repugnant to the subject of partnership law as they know and understand it to be. It is in this view of the matter that it has been consistently held in this country that a firm as such is not entitled to enter into partnership with another firm or individuals. It is not necessary to refer in detail to those decisions many of which will be found cited in Jabalpur Ice Manufacturing Association v. CIT [1955] 27 ITR 88 (Nagpur), to which a reference has already been made. We need only refer to the case of Bhagwanji Morarji Goculdas v. Alembic Chemical Works Co. Ltd., AIR 1948 PC 100, where it has been laid down by the Privy Council that Indian law has not given legal personality to a firm apart from the partners. This view finds support from and is implicit in the observations made by this court in CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of his interest in the firm determined in the prescribed manner that is made includible in his net wealth." In Sunil Siddharthbhai v. CIT [1985] 156 ITR 509, the question for decision before the Supreme Court was whether the capital contributed by a partner to a firm at an appreciated value will result in capital gains and whether the same is assessable as income in his hands. In that case, it was held that where the partner transfers certain shares held by him in limited companies as his contribution to the assets of the firm of which he is partner, there was a transfer of a capital asset within the meaning of section 45 of the Income-tax Act; but since, however, the consideration received by the assessee on such transfer does not fall within the contemplation of section 48 of the Act, no profit or gain could be said to arise and there was no capital gain exigible to tax under the Income-tax Act. In that care, the Supreme Court observed at page 516 : "In support of the submission that there is no 'transfer' in the general sense of that term when a partner brings his personal assets into the firm as his contribution towards its capital, learned counsel points out that a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land, exemption under section 5(1)(iva) of the Wealth-tax Act had to be allowed to the extent permitted in the computation of the net wealth of the assessee. The Karnataka High Court considered and applied the principle laid down by the Supreme Court in Dulichand Laxminarayan's case [1956] 29 ITR 535. The same view is expressed in a later decision of the Calcutta High Court in L. N. Birla v. CWT [1987] 168 ITR 86. Learned counsel for the Revenue relies on the decision of the Supreme Court in Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300, wherein it is observed at page 1304 : "The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done, whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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