Partner's share in firm-owned house can qualify for wealth-tax exemption under the house-property relief rule.

Rule 2 of the Wealth-tax Rules requires a partner's interest in a firm to be valued by computing the firm's net wealth and then allocating the relevant share to the partner. Read with section 5(1)(iv) of the Wealth-tax Act, the house-property exemption applies to a house or part of a house belonging to the assessee, subject to the statutory monetary cap where the value exceeds the prescribed limit. On the stated facts, the assessee-partner's share in one of the houses owned by the firm qualified for the exemption, and the relief was available only to the extent permitted by the provision.

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Issues: Whether, while computing the assessee-partner's net wealth under Rule 2 of the Wealth-tax Rules, exemption under section 5(1)(iv) of the Wealth-tax Act, 1957 could be allowed in respect of his share in one of the houses owned by the firm.

Analysis: Rule 2 governs the determination of the value of a partner's interest in a firm by first computing the firm's net wealth and then allocating the relevant portions among the partners. Section 5(1)(iv) grants exemption in respect of a house or part of a house belonging to the assessee, and where the value exceeds the prescribed limit, the exempt amount is restricted to that limit. On the facts, the firm owned immovable properties, the assessee had a one-fifth share, and one house had a value exceeding the threshold. Reading Rule 2 with section 5(1)(iv), the assessee's share in that house was entitled to the statutory exemption.

Conclusion: The exemption under section 5(1)(iv) was available to the assessee to the extent of Rs. 20,000.

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