Wealth-tax exemption for one house property applies where firm-owned property is treated as belonging to partners in substance.

A house property described as belonging to a firm was treated, in substance, as belonging to its partners for wealth-tax purposes, because a firm is not a distinct legal entity under the Wealth-tax Act. Section 5(1)(iv) exempted one house or part of a house belonging to the assessee from inclusion in net wealth, and the assessee's share in the property could not be denied that deduction merely by treating it as a firm asset. The value of the assessee's share in the house property was therefore deductible from net wealth.

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Issues: Whether deduction under section 5(1)(iv) of the Wealth-tax Act, 1957 was available in respect of a house property owned by a firm, where the assessee was a partner and co-owner in substance.

Analysis: Section 5(1)(iv) exempted one house or part of a house belonging to the assessee from inclusion in net wealth. A firm is not a distinct legal entity under the Wealth-tax Act, and property described as belonging to the firm belongs to its partners. Since wealth-tax under section 3 of the Wealth-tax Act, 1957 is leviable on individuals, Hindu undivided families and companies, the assessee's share in the house property could not be treated as a firm asset for denying the exemption.

Conclusion: The assessee was entitled to deduction under section 5(1)(iv), and the value of his share in the house property was deductible from net wealth.

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