High Court Of Punjab & Haryana
Commissioner Of Wealth Tax vs. Mangat Rai Dhanda
Section WT 27(3)
Asst. Year 1978-79
Adarsh Kumar Goel & Rajesh Bindal, JJ.
WT Case No. 1 of 1991
24th April, 2006
Counsel Appeared :
D.S. Patwalia, for the Revenue
JUDGMENT
By the court :
This is a petition filed under s. 27(3) of the WT Act, 1957, seeking a direction to the Tribunal, Chandigarh Bench, Chandigarh to draw statement of case and refer the following questions of law, arising out of the order dt. 18th Sept., 1989 passed in WTA No. 471 of 1987, for the asst. yr. 1978-79, to this Court for its opinion :
“(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing deduction under s. 5(1)(iv) of WT Act, 1957 in respect of assessee’s share in the land and building of the firm in which he is a partner ?”
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that following deductions should be allowed in computing commercial profits for the purpose of capitalisation : 50 per cent of salary paid to managing/partner. Depreciation. Income-tax payable by firm. Bad debts.
(iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that multiple of 8.33 should be applied for determining the value of the property ?”
2. We have heard Sh. D.S. Patwalia, advocate, counsel for the Revenue. He could not dispute that this Court in CWT vs. Mrs. Anju Munjal (1998) 149 CTR (P&H) 229 : (1999) 240 ITR 918 (P&H) has already decided the issue sought to be raised in the present case in favour of the assessee, by following its earlier judgment in the case of CWT vs. Vipin Kumar (Individual) (1993) 111 CTR (P&H) 52 : (1993) 203 ITR 941 (P&H) which has attained finality. The relevant para of the judgment in Vipin Kumar’s case (supra) is extracted below :
“According to the principles of English jurisprudence which we have adopted in India for the purpose of determining legal rights, there is no such thing as a firm known to the law. In Addanki Narayanappa vs. Bhaskara Krishnappa AIR 1966 SC 1300, it was clearly held by their Lordships of the Supreme Court that, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense, every partner has an interest in the property of the partnership. In Juggilal Kamlapat Bankers vs. WTO (1984) 39 CTR (SC) 47 : (1984) 145 ITR 485 (SC), the apex Court held that the interest of a partner in a partnership firm belonged to him and would be includible in his ‘assets’ and will have to be taken into account while computing his net wealth. In this view of the matter, the assessees in the present case could be said to be having specific interest in the factory land and the building belonging to the firm and, as such, were entitled to the exemption granted to them by the Tribunal. Moreover, r. 2 of the WT Rules, providing for the detailed method of determining the value of the interest of a person in a firm of which he is a partner is a pointer to the fact that in the context of wealth-tax a partner can claim to have a specific interest in its assets exclusively apart from his interest as a partner in the firm. We have already observed that the property of the firm is, in fact, the property of its partners and, consequently, we cannot accept the contention of the Revenue that since the factory land and the building in the present case belong to the firm, the two assessees who were partners therein were not entitled to claim any deduction under s. 5(1)(iv) of the Act. The view that we have taken finds support from CWT vs. Vasantha (1973) 87 ITR 17 (Mad), CWT vs. Mrs. Christine Cordoza (1978) 114 ITR 532 (Kar), CWT vs. Mira Mehta (1986) 52 CTR (Cal) 408 : (1985) 155 ITR 765 (Cal) and CWT vs. Tarachand Agarwalla (1990) 81 CTR (Gau) 79 : (1989) 180 ITR 234 (Gau).”
The same view has been expressed by Madras High Court in CWT vs. M. Appuswami (1998) 233 ITR 460 (Mad) and CWT vs. R. Ariff & Ors. (2000) 246 ITR 797 (Mad). Counsel has also referred to two judgments in the cases of Purushothamdas Gocooldas & Ors. vs. CWT 1976 CTR (Mad) 361 : (1976) 104 ITR 608 (Mad) and Prakash Chand Modi vs. CWT (1997) 225 ITR 541 (Raj) to support his arguments that the question of law raised by the Revenue in the petition should be directed to be referred to this Court for its opinion, since the similar question raised in the above judgments has already been answered against the assessee and in favour of the Revenue though by other Courts. Since the issue sought to be raised by the Revenue is already covered by the judgment of jurisdictional High Court, we do not deem it appropriate to refer the question of law to this Court again merely because other Court has taken a view different to this Court. Once this Court has already expressed its opinion on the question of law sought to be raised, there is no valid reason to direct the Tribunal to refer the same question of law to this Court. Arguments on other issues were not addressed. Hence, the present petition is dismissed.
[Citation : 284 ITR 371]
