AI Drafter 
TaxTMI 
TaxTMI 
1985 (3) TMI 50
X X X X Extracts X X X X
X X X X Extracts X X X X
....ging to the firm ? " The facts in brief are stated hereunder : The assessee is a partner in a partnership firm. The partners originally were the members of the same family. The house property in which the partners were residing was owned by the partners. It was treated as the property of the firm which is carrying on business. In the wealth-tax assessment of the assessee, exemption was claimed in respect of the said house property on the ground that the assessee had been residing there even though the property formed a part of the assets of the partnership firm. The justification for making such a claim is that the property continued to belong to the assessee inasmuch as the partnership is nothing but a compendious name for a group of pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... status of an HUF, was a partner in a firm as representing his HUF. The contention was that the building did not belong to the assessee but belonged to the firm. Dealing with the said contention, the Supreme Court referred to the view taken by the High Court that (p. 488): " Though it was true that a partner of a firm could not claim ownership in specific properties belonging to the partnership firm either during the continuance of the partnership or even on its dissolution but was entitled to get a share in the profits during its continuance and was further entitled, upon its dissolution or his retirement therefrom, to the value of his share in the surplus of the partnership assets left after a deduction of liabilities and prior charges....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sense of creating a legal fiction, while under cl. (b) it is provided that where the individual assessee is a partner in a firm, it is the value of his interest in the firm determined in the prescribed manner that is to be treated as belonging to him and is includible in his net wealth. In other words, cl. (b) is not a deeming provision in the sense in which deeming provision is made in cl. (a). It cannot be said that the interest of a partner in a firm does not belong to him; it, in fact, belongs to him and no legal fiction is required for treating it as belonging to him; and the proper way to interpret cl. (b) would be that the deeming part of it relates to the quantum of his interest in the firm determined in the prescribed manner which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ines 'net wealth' thus: ` net wealth ' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than . ..... (Here follow three types of debts, which are not to be reckoned, with which we are not concerned). Section 2(e) defines " assets " thus: " `assets' includes property of every description, movable or immovable, but does not include . ..... (Here follow certain specified properties with which we are not concer....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... within the meaning of s. 5(1)(iv). The Supreme Court in Juggilal Kamlapat Bankers v. WTO [1984] 145 ITR 485 held that the interest of partner in a partnership firm belongs to him and would be includible in the expression " asset " and will have to be taken into account while computing the net wealth of the individual. If that be the position, then the value of the interest represented by the house owned by the firm included in the net wealth of the partner, being the interest of the partner of the firm, shall be entitled to exemption to the extent allowed by s. 5(1) of the Act. In that view of the matter, in our opinion, when the interest in the assets of the firm belongs to the individual partner and is chargeable to wealth-tax, the partn....