1. OM PRAKASH, C. J.---Heard senior standing counsel for the Revenue. This is an application made by the Revenue under section 27(3) of the Wealth Tax Act,1957, requiring us to direct the Income- tax Appellate Tribunal to refer the following question for the opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that assessee, is entitled to exemption under section 5(1)(xxxii) of the Wealth Tax Act?"
2. We have carefully gone through the order of the Appellate Tribunal, which has found that the assessee was a partner in two firms dealing in jewellery; that these firms used to purchase old gold ornaments and hand them over to goldsmith to manufacture new gold ornaments: that the assessee had produced the goldsmith vouchers showing the ornaments making charges paid; weight of old gold and its purity, wastage, etc.; that from the vouchers produced by the assessee, it is clear that the firms in which the assessee was a partner were engaged in the business of manufacture of new gold jewellery from, old gold ornaments purchased from various people and that the goldsmiths worked under the firms' premises.
3. The submission of learned senior standing counsel before us is that the firms in which the assessee was a partner, were engaged only in polishing old gold ornaments and no new gold ornaments were being manufactured by the firms. No basis for this argument is shown to us. On the contrary, the finding of the Appellate Tribunal is that the firms in which the assessee was a partner were engaging goldsmiths at their own premises and they made new jewellery from old gold comments.
4. The finding recorded by the Appellate Tribunal being a finding of fact, no question of law arises.
5. The application, therefore, fails and is rejected.
6. 2000 PTD 237 [238 I T R 689] [Gujarat High Court (India)] Before R. K. Abichandani and A. R. Dave, JJ COMMISSIONER OF WEALTH TAX versus RAJIV I. MODI (MINOR)
7. Wealth Tax Reference No. II of 1982, decided on 21st August, 1998.
8. Wealth tax--- ----Assets---Firm---Partner bequeathing his right, title and interest in firm and amounts outstanding to his credit to a. Minor---Death of partner----Subsequent agreement between guardian of minor and firm---Firm agreeing to pay- monthly sum to minor---Minor acquired assets consisting of right, title and interest and share of partner in firm on his death---Subsequent agreement between guardian of minor and firm was not relevant---Indian Wealth Tax Act, 1957.
9. The assessee was the legal heir under the will of one G, who was one of the partners in a firm and who passed away on October 10,1967, bequeathing the right, title and interest that he had in the said firm and the amount outstanding to his credit with the said firm, as also his share in the property of the firm to the assessee, who was the son of his niece and who was a minor. After the death of G, a fresh lease deed was executed on January 1,1968, in which it was recited that the father of the assessee, who was his natural guardian, had agreed that the minor assessee would not exercise his rights and instead would allow the goodwill and other assets representing the share of 15 percent. Of G to remain in the firm, on the firm agreeing to paying certain periodical sum to the minor. In his return of wealth for the assessment year 1969-70, the assessee valued the goodwill at Rs.36,000 and Rs.1,884, contending that the amount should not be added in the not wealth of the assessee. The Wealth Tax Officer did not accept this contention on the ground that the assessee had inherited the value of goodwill as on October 10,1967, when G passed away. In the returns filed by the assessee for the years 1970-71 to 1973-74 also the assessee contended that the value of Rs.37,884 which was shown, should not be included in his wealth, but the same was not accepted. The Tribunal held that the assessee had no interest in the partnership firm except to receive Rs.2,500 per month under the agreement, dated January 1,1968. On a reference: Held, that the assessee acquired the asset consisting of the right, title and interest and the share of the deceased G when it devolved on him on October 10,1967 which he was entitled to recover from the firm and the amount of Rs.2,500 per month referred to in the agreement, dated January 1,1968 which was executed after the asset had devolved on the assessee, could not be taken to be the value of that asset, as erroneously decided by the Tribunal. The assessee, who was a minor, could not have become a partner in the firm. He was never admitted to the benefits of the partnership firm. He, therefore, did not have any interest in the firm in the capacity of a partner or a minor admitted to the benefits of a partnership. He was only entitled to the share of G in the firm, which had devolved on him under the will and had become his property when the bequest opened on October 10, 967, which alone he was entitled to recover from the firm. Since the position of his rights already crystallised on October 10,1967, it was immaterial whether the partnership was at will. Since the assessee was not a partner in the firm nor was he admitted to the benefits of the partnership, the question of his interest in the firm being precarious did not arise. The Tribunal erred in law in directing the Wealth Tax Officer not to include in the wealth of the assessee any amount towards the share of the assessee in the partnership firm on account of the will of the deceased partner.
10. Mihir Joshi instructed by Manish R. Bhatt for the Commissioner.
11. J. P Shah for the Assessee.