1. The short point, in these appeals preferred by the revenue is whether the assessee is entitled to exemption under Section 5(1)(xxxii) of the Wealth-tax Act, 1957 ('the Act'), in respect of the land/building owned by the firm in which she is a partner.
2. The assessee is a partner in the firm, Asia Tannery, Jajmau, Kanpur.
The assessment years are 1973-74 to 1975-76 and the relevant valuation dates are 31st of March, 1973, 1974 and 1975 respectively.
3. In her wealth-tax return, the assessee claimed exemption of Rs. 1,50,000 each under Section 5(1)(xxxii), in respect of the value of her interest in the aforesaid firm. In the wealth-tax assessment for the assessment years, 1973-74 and 1974-75, the WTO gave exemption of Rs. 94,721 and Rs. 1,09,514 respectively, while in the assessment year 1975-76, he rejected such claim with the following remarks : The assessee has claimed exemption of Rs. 1,50,000 under Section 5(1)(xxxii) in respect of her interest in M/s. Asia Tennery vide this office order-sheet entry dated 17-3-1980 the assessee was required to furnish by 25-3-1980 a copy of balance sheet along with computation of working under Section 5(1)(xxxii) so that her claim may be examined. Till to-day the required particulars have not been furnished. Limitation in this case expires after this month and as such the assessment cannot be pending. The claim of the assessee under Section 5(1)(xxxii) is, therefore, disallowed.
4. In appeals, the assessee once again urged that she was entitled for exemption of Rs. 1,50,000 in each of the years under consideration, under Section 5(1)(xxxii) in respect of the value of her interest in the firm-Asia Tannery. In his appellate order of the assessment year 1975-76, the AAC accepted the assessee's claim in the following manner: Shri J.P. Gupta, CA, contended before me that the appellant's capital employed in the said firm amounted to Rs. 2,69,774 and the appellant was entitled to exemption under Section 5(1)(xxxii) to the extent of Rs. 1.5 lakhs and the WTO was not correct in rejecting the claim without giving any reasonable explanation, It was contended by Shri Gupta, CA, that the full claim amounting to Rs. 1.5 lakhs was admissible as per rules but the same has been denied by the WTO while calculating the capital employed in the industrial undertaking the WTO has excluded the value of land and building which is contrary to the provisions of the Wealth-tax Act. The assets including land and building which are otherwise exempt under Section 5 of the Wealth-tax Act are to be included. The factory land and building is not exempt under any other clause of Section 5, hence it should not have been excluded for the purpose of giving exemption for capital employed, while calculating the exemption under Section 5(1)(xxxii) of the Wealth-tax Act. Details of total assets including exempted assets have been filed as per chart filed by the counsel for the appellant. The appellant is entitled to exemption amounting to Rs. 1.5 lakhs. The WTO is directed to allow the claim under Section 5(1)(xxxii) of the Wealth-tax Act.
Following his aforesaid order, the AAC directed the WTO to allow exemption of Rs. 1,50,000 in each of the assessment years 1973-74 and 1974-75 vide his consolidated order dated 21-9-1981.
5. The revenue is now in appeal before the Tribunal. The learned representative for the department invited our attention to Section 5(1)(xxxii) which reads as under : the value, as determined in the prescribed manner of the interest of the assessee in the assets (not being any land or building or any rights, in any land or building or any asset referred to in any other clause, of this Sectionsection) forming part of an industrial undertaking belonging to a firm or an association of persons of which the assessee is a partner or, as the case may be, a member ; and submitted that in: view of the words appearing in parenthesis, the asses-see:was not entitled to any exemption in respect of the land/building owned by Asia. Tannery of which she was a partner.
According to the learned representative for the department, the words 'referred to in any other clause of this Sectionsection' in the said parenthesis are applicable to 'any asset' and not to 'not being any land or building or any right in any land or building'. Thereafter, he invited our attention to the order of the WTO in respect of the assessment year 1975-76 and highlighted the fact that the assessee had not furnished the particulars to the WTO, as was required of her. He, therefore, urged that the orders of the AAC on this point should be reversed. The learned counsel for the assesses, on the other hand, relied on the orders of the AAC and supported his action. Referring to Section 5(1)(xxxii) the learned counsel for the assessee submitted that the words appearing in the parenthesis only indicate that an assessee should not be given double exemption in respect of the same asset once in the hands of the firm in which he is a partner and again in his individual assessment. at this stage, the learned counsel stated that while working out the value of the assessee's interest in Asia Tannery, no exemption in respect of the land/building owned by the firm, was allowed or considered. In support of this, he invited our attention to the balance sheets of the firm in respect of the years under consideration and explained how the value of the assessee's interest in the firm was arrived at.
6. We have carefully considered the rival submissions of the parties and we find force in the submissions made on behalf of the assessee. At the outset, we are constrained to observe that perhaps the controversy could have been avoided if the assessee had furnished the necessary particulars before the WTO, as was required of her. It may be that since the assessee had filed the balance sheets along with the returns, she may have thought that nothing further was required to be done.
However, this approach of the assessee was not at all commendable, more so when she was asked to furnish the 'computation of working under Section 5(1)(xxxii)'. It appears from the order of the AAC in respect of the assessment year 1975-76 that details of total assets including exempted assets' was filed before him by way of a chart. However, as it would appear from the order of the AAC (reproduced above), he did not think it fit to reproduce the chart, while giving his decision in favour of the assessee. Again, at the time of hearing before us, neither of the parties could give us a copy of the chart filed before the AAC. Under these circumstances, we are not in a position to give the actual working of the exemption claimed by the assessee. Even in his assessment orders for the assessment years 1973-74 and 1974-75, the WTO has not given computation of allowing exemption of Rs. 94,721 and Rs. 1,09,514 respectively under Section 5(1)(xxxii). Since the appeals can be decided on the legal issue we are proceeding to give our decision, but at the same time, we cannot restrain to observe that both the wealth-tax authorities as well as the assessee could have made the appeals more meaningful if all the relevant figures had been brought on record.
7. On the plain reading of the provisions of Section 5(1)(xxxii), we are clearly of the view that the assessee would be entitled to claim exemption in respect of the land/building owned by the firm, in computing her value of the interest in the said firm. In our view, the words appearing in parenthesis have to be read as a whole and in that view of the matter since while computing the value of the interest of the assessee in the assets of the firm, no deduction/exemption was considered in respect of the lam building owned by the firm, the assessee would be entitled to claim exemtion as contemplated under Section 5(1)(xxxii). In this view of the matte we are not prepared to accede to the submissions made on behalf of the revenue that the concluding words in the parenthesis are applicable 1 'any asset' mentioned therein and not applicable to the other portion the words used in the parenthesis. In any event, since two views in possible in interpreting the words mentioned in the parenthesis, the vie in favour of the assessee has to be preferred. For all these reasons, we cannot find any infirmity in the orders of the AAC under appeal. Howeve in order to protect the interest of the revenue we direct the assessee 1 furnish the necessary particulars before the WTO who will then have a opportunity to examine and verify the correct amount of exemptic allowable under Section 5(1)(xxxii). The WTO is, therefore, directed 1 modify the assessments accordingly.