2001 PLP 906 (PTD)

C.V. Rajan for the Commissioner V.S. Iayakumar for the Assessee. R. JAYASIMHA BABU, J.‑‑‑For the assessment years 1966‑67 to 1970‑71, the Assessing Officer sought to include in the net wealth of the assessee, the amount he regarded as the assessee's share in the profit of the firm of which the assessee was a partner, that profit having arisen by reason of the exploitation of the customs clearance certificate. The assessee contended that the assessee had not received any such benefit from the firm and‑that the firm itself had taken the stand that it had not derived any benefit from the customs clearance certificates and that the firm never claimed such benefits. The Appellate Assistant Commissioner (Appeals) rejected the assessee's appeal against the order of the Income‑tax Officer. The Tribunal, however, allowed the assessee's appeal therefrom and while doing so, it also held that there is no presumption that the whole of the income or part of the income of the firm had become the assets of the assessee and that there was no material to indicate that there was any asset other than those disclosed in existence on the valuation dates. It must be noticed here that the additions made to the firm's income were in respect of the assessment years for which the wealth of the assessee was assessed. In other words, the assessment years for the purposes of Income Tax Act, 1961, for the firm and the Wealth Tax Act for the assessee were the same. The additions made to the income of the firm in respect of the assessment years 1966‑67 and 1967‑68 was questioned by the firm and the questions referred at the instance of the firm were considered by a Division Bench of this Court in T.C. Nos.292 and 293 of 1983 (Traders and Traders v. CIT (1999) 236 ITR 269), wherein this Court on March 25, 1998, held that the materials on record showed that the assessee was a beneficiary and it posed a further question as to how much of the benefits could be attributable to the assessee. It agreed with the view expressed by the Tribunal that fifty per cent. of the total receipts by the firm on the customs clearance certificate was attributable to the assessee. In view of the findings of this Court, it is clear that the assessee's net wealth should be held to include the benefit derived by the assessee from the firm. The Tribunal had relied upon the decision of the Kerala High Court in Annamma Paul Perincherry v. CWT (1973) 88 ITR

204. That case was explained by the Kerala High Court in the subsequent decision in CWT v. K.G. Xavier (1991) 191 ITR

169. The Kerala High Court in the latter decision has taken the view that if the addition made was in the same assessment year under the Income‑tax Act, it could be taken into account for the assessment of the partner under the Wealth Tax Act. Learned counsel for the assessee contended that the market value of the assets had to be determined as required under section 7 of the Wealth Tax Act and, therefore, the amount determined by this Court needs to be further reduced in so far as the assessment years 1966‑67 and 1967‑68 are concerned and the amounts are to be determined for those assessment years with due regard to section 7 of the Act. We see no reason to direct any further reduction from the amount determined by this Court in T.C. Nos. 292 and 293 of 1983 (Traders and Traders v. CIT (1999) 236 ITR 269), as the extent of the benefit derived by the assessee from the income of the firm on account of the transfer of the customs clearance certificate and the market value of the assets for the purpose of section 7 of the Act can be no different. As the extent of the benefit derived by the assessee for the assessment years 1968‑69 to 1973‑74 has not been determined, we remit the matter to the Tribunal to determine the extent of the assessee's share in the income derived by the firm and from the customs clearance certificate and the amount so determined by the Tribunal shall be added to the wealth of the assessee for those assessment years. The additions to be made in so far as the assessment years 1966‑67 and 1967‑68 are concerned shall be the amount computed in accordance with the decision of this Court in T. C. Nos. 292 and 293 of 1983 (Traders and Traders v. CIT (1999) 236 ITR 269). While answering the question referred to us in. favour of the Revenue and against the assessee, we direct the Tribunal to determine the extent of the additions to be made to the assessable wealth of the assessee for the relevant assessment years in accordance with what has been stated in this judgment. No costs. M. B. A./411/FC???????????????????????????????????????????????????????????????????????????????? Reference answered.