Partnership property and wealth-tax exemption: partners cannot claim a specific firm-owned house as their individual exempt asset.

A partner cannot claim wealth-tax exemption for a specific residential house held as partnership property where the exemption is confined to property belonging to the assessee. During the subsistence of the firm, a partner has no exclusive right in any particular item of partnership assets; his interest is only in the partnership as a whole and, on dissolution, in the surplus after liabilities. Because the house was owned by the firm and not by the partners in their individual capacity, the assessees were not entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957.

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Issues: Whether the assessees were entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957, in respect of their share in a residential house which was an asset of a partnership firm.

Analysis: The house in question was admittedly a partnership asset. A partner has no exclusive right in any specific item of partnership property during the subsistence of the firm; his interest is confined to a share in the profits and, on dissolution, to a share in the surplus assets after liabilities are met. Since the property was owned by the partnership and not by the assessees in their individual right, they could not claim that any portion of the house belonged to them for purposes of the exemption.

Conclusion: The assessees were not entitled to exemption under section 5(1)(iv) of the Wealth-tax Act, 1957, in respect of the house property.

Ratio Decidendi: A partner cannot claim exemption in respect of a specific partnership asset under a provision limited to property belonging to the assessee, because during the continuance of the partnership the asset belongs to the firm and the partner has only an undivided interest in the partnership as a whole.

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