1985 (6) TMI 42

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....ed by the Department that the assessee were not the owners of the factory building and as such the building appeared in the balance-sheet of M/s New Light Tannery and standing in the name of Tannery in municipal records, as such the partners were not entitled for the claim under s. 5(1)(iv) of the WT Act. The assessee claimed exemption under s. 5(1)(iv) in respect of the tannery building. The ITO observed that the immovable property is the asset of the firm and is not owned by the assessee. As such he negatived the claim of the assessee under s. 5(1)(iv) of the WT Act and computed the wealth as under: Asst. yr.: 1977-78, Shri Suheb Ahsan Capital in M/s New Light Tannery . Rs. 60,174 Accretion in Factory building . Rs....

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....y building is owned by the firm the exemption under s. 5(1)(iv) should be allowed to the partners in view of the authority reported in CIT vs. Brij Mohan Das (1979) 9 CTR (All) 50 : (1979) 118 ITR 397 (All) and CWT vs. Nandlal Jalan (1980) 14 CTR (Pat) 181 : (1980) 122 ITR 781 (Pat). The building also includes residential portion of five partners and provisions are directly applicable. The AAC on consideration of facts observed as under: "I have considered the facts and I agree with the appellant that in view of the judgment mentioned above he is entitled for deduction under s. 5(1)(iv) on the property held by the firm for Tannery and residential purposes. The WTO is directed to allow the relief as per law and the appeal is allowed." ....

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....f the firm is the property of the partners and what are called debts and liabilities of the firm are their debts and liabilities. It was also contended that during the subsistence of the partnership, assets thrown into the partnership by the partners get merged together and lose their identity. All the same, the assets as a whole belong to the partners. In computing the net wealth of the firm by reference to r. 2, of WT Rules if a partner qualifies for any exemption provided under the Act, such exemption must be taken into consideration in determining the net wealth of the firm. It was further contended that what a firm owns a house and a partner resides in a portion of the house, the exemption provided by s. 5(1)(iv) should be taken into c....