9911796707
TMI Blog1983 (12) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... of face value of the assessee's loan advanced to Panipat Woollen Mills Ltd., Kharar, which against the value of nil shown by the assessee was taken by the WTO at Rs. 34,370 and the same was taken at one-third of the same, i.e., Rs. 11,457, by the AAC when the controversy came before him. The assessee in her cross-objections for both the assessment years under consideration has contended that even one-third of the face value of the loan should not have been ordered to be included by the AAC. The facts pertaining to the issue with submissions of the assessee are well detailed in the order of the AAC but the same may be briefly described as under. The assessee had advanced a sum of Rs. 34,370 to Panipat Woollen Mills Ltd. on 1-10-1967 against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned departmental representative, Mr. M. P. Singh, on the other hand, submitted that said mill was declared as sick mill as late as in June 1977 and, therefore, in 1974-75 assessment year saying that the value of the loan was nil is against facts. 4. After taking into consideration the rival submissions and looking to the facts in detail, we find that there is no dispute about the fact that the loan had become 'time barred' as early as in 1970 and any effort made by the assessee thereafter for recovery of the same was futile. Simply because subsequently in 1977 an effort was made by the assessee would not make the value of the said loan one-third of the face value because under the Act what we are concerned with is the market value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was Rs. 19,760. When it came before the AAC, he observed that the partner's interest in a firm is always a movable asset. So long as the firm subsists he cannot claim any specific interest or right in a particular asset owned by the firm. It was in these circumstances that the action of the WTO rejecting the assessee's claim came to be confirmed by the AAC. 6. While disputing this action of the AAC, the learned counsel for the assessee relied on sections 7(1) and 4(1)(b) of the Act, rule 2 of the Wealth-tax Rules, 1957 ('the rules') and on the cases of Narsibhai Patel v. CWT [1981] 127 ITR 633 (MP), CWT v. Narendra Ranjalker [1981] 129 ITR 203 (AP) and CWT v. Nand Lal Jalan [1980] 122 ITR 781 (Pat.) against which the learned departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property was an asset of the firm, the assessees in the instant case could not claim to be entitled to any portion of the house property as exclusively belonging to them and hence were not entitled to claim exemption under section 5(1)(iv) of the Act. " The above came to be considered by the Madhya Pradesh High Court in the case of Narsibhai Patel and their Lordships distinguished the same as per headnote of the said case in the following words : " Though a partnership or firm is not a legal person and so cannot hold property, yet the property bought in by the partners for the partnership business cannot be without any owner. Such a property really vests in the partners collectively in proportion to their shares in the firm although t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Purushothamdas Gocooldas and the headnote of the case of Nand Lal Jalan read as under : " The assessee, an individual, was one of the two partners of a firm. The value of his interest in the firm had to be included in his net wealth. Besides other assets, the firm owned a house, which was used by both the partners for the purpose of their residence. The value of the interest of the assessee in the firm had to be determined under rule 2 of the Wealth-tax Rules, 1957. That rule required the net wealth of the firm to be determined and allocated to the partners, according to their shares in the capital. The assessee claimed that in computing the net wealth of the firm under rule 2, the sum of Rs. 1 lakh had to be deducted from the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression 'net wealth' in rule 2 as per its headnote held as under : " The expression 'net wealth' in rule 2 of the Wealth-tax Rules, 1957, which prescribes the manner of computation of the value of the interest of a partner in the firm, as understood in the light of the definition in section 2(m) of the Wealth-tax Act, 1957, means the total amount of net wealth of the firm arrived at in accordance with the provisions of the Wealth-tax Act, as if the firm were an assessee. Therefore, while computing the interest of a partner in the firm in terms of section 4(1)(b) of the Wealth-tax Act, only the interest of the firm arrived at in accordance with the provisions of the Act, as if the firm were an assessee, shall be taken into considera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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