HUF partnership interest held by karta in representative capacity is includible in net wealth under wealth tax law.

Where a karta is a partner in a firm in a representative capacity for a Hindu undivided family, the partnership interest is treated as the family's property and is includible in its net wealth under the Wealth-tax Act, 1957. The High Court applied section 2(m) read with section 3 to hold that the value of that share formed part of the HUF's taxable net wealth, and section 4(1)(b) was not necessary for the determination. The reference was answered in favour of the Revenue.

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Issues: Whether the value of a partnership share held by the karta in a representative capacity could be included in the net wealth of the Hindu undivided family under the Wealth-tax Act, 1957.

Analysis: The karta was found to have been a partner in the firm not in his individual capacity but as representing the Hindu undivided family. On that basis, the partnership interest was treated as the property of the Hindu undivided family and therefore formed part of its net wealth within the meaning of section 2(m) read with section 3 of the Wealth-tax Act, 1957. Section 4(1)(b) was not regarded as necessary for the determination.

Conclusion: The partnership share value was rightly included in the net wealth of the Hindu undivided family. The reference was answered in favour of the Revenue and against the assessee.

Ratio Decidendi: Where a partner holds a partnership interest on behalf of a Hindu undivided family, the value of that interest is assessable as the family's property and is includible in its net wealth.

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