Partner's share in a disallowed bad debt forms part of net wealth and can be rectified as a patent mistake.

A partner's interest in a firm is includible in net wealth under section 4(1)(b) of the Wealth-tax Act, and its valuation is governed by Rule 2(1) read with Rules 2A and 2C of the Wealth-tax Rules. Where a bad debt claimed in the firm's assessment is not allowed as a deduction, the firm retains a subsisting right of recovery, so the partner's proportionate share of that amount must be reflected in the wealth assessment. Omission of that share from net wealth was treated as a patent mistake, and section 35 could be invoked to rectify it; the reference was answered in the affirmative.

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Issues: Whether the Wealth-tax Officer was justified in invoking section 35 of the Wealth-tax Act, 1957 to rectify the omission of the assessee's proportionate share in a bad debt while computing net wealth.

Analysis: The value of a partner's interest in a firm must be included in his net wealth under section 4(1)(b) of the Wealth-tax Act, 1957, and the valuation is governed by Rule 2(1) of the Wealth-tax Rules, 1957, read with Rules 2A and 2C. Where a bad debt claimed in the firm's assessment is not allowed as a deduction, the firm retains a subsisting right to recover the amount, and the corresponding proportionate value must be reflected in the partner's wealth assessment. Omission of that share from the assessee's net wealth was therefore a patent mistake capable of correction under section 35 of the Wealth-tax Act, 1957.

Conclusion: The reference was answered in the affirmative. The Wealth-tax Officer had jurisdiction to invoke section 35, and the decision was against the assessee.

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