The interest of a partner in a partnership firm belongs to him and is includible in the expression "asset" for the purpose of computing the net wealth of the individual under the Wealth-tax Act, 1957.

AJIT K. SENGUPTA, J.

( 1 ) AT the instance of the Commissioner of Wealth-tax, the Tribunal has referred the following question of law to this court, for the assessment years 1976-77 and 1977-78, under Section 27 (1) of the W. T. Act, 1957:"whether, on the facts and in the circumstances of the case, the assessee is entitled to deduction under Section 5 (1) (iv) of the Wealth-tax Act, 1957, in respect of property belonging to the firm ?"

( 2 ) 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 persons joining together for carrying on business and the property continued to belong to the partners.

( 3 ) THE WTO denied the exemption on the ground that the property did not belong to the assessee any longer but in fact belonged to the partnership firm.

( 4 ) THE AAC took a different view. This view of the AAC is assailed by the Revenue in both the appeals. It was contended on behalf of the Revenue before the Tribunal that the property vested in the partnership and it ceased to belong to any of the partners and that the partners could not be said to own the property any longer. The Tribunal held that though the property became one of the assets of the firm, the partners were residing in the house and they continued to use the house for their residential purposes. In such circumstances, it was held that the house belonged to the partners.

( 5 ) SECTION 4 of the W. T. Act, 1957, provides that in computing the net wealth of an individual, there shall be included, as belonging to the individual certain assets. Under Section 4 (1) (b), in computing the net wealth of an individual who is a partner in a firm, the value of his interest in the firm, determined in the prescribed manner, shall be included as belonging to that individual. In a recent decision of the Supreme Court in the case of Juggilal Kamlapat Bankers v. WTO [1984] 145 ITR 485, the Supreme Court considered the scope of Section 4 (1) (b) read with Section 7 (2) (a) of the W. T. Act. There, the assessee, the karta of an HUF, who was assessed in the 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 on the date of dissolution or retirement, it was clear that, having regard to Section 29 of the Partnership Act (which enables a partner to transfer his interest in the partnership firm) and Section 2 (e) and Section 4 (1) (b) of the Act, the interest of a partner in the partnership firm will have to be regarded as a part of his net wealth under the Act. "

( 6 ) THE said view was approved by the Supreme Court. The Supreme Court observed as follows (p. 491) :"it is true that Section 4 (1) deals with the computation of the net wealth of an in

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