JUDGMENT
Mishra J.
1. These cases have two questions common to all of them, namely :
“(1) Whether, on the facts and circumstances of the case, the word ‘house’ mentioned in section 5(1)(iv) of the Wealth-tax Act includes ‘cinema theatre’ ? and
(2) Whether the basic exemption is available to the petitioner or not ?”
2. It is, however, conceded at the Bar that the answer to the first question will decide whether the basic exemption is available to the assessee or not. The assessee is a Hindu undivided family. At the material point, however, the karta of the family was a partner in a firm called Raman Theatre and was having 5/12ths share. He filed a wealth-tax return accordingly for the year 1974-75, admitting a taxable wealth of Rs. 1,73,770 and claimed a deduction of Rs. 82,810 under section 5(1)(iv), the sum representing his share of the cost of the cinema building; he claimed that cinema house is also a house, which is qualified for exemption under section 5(1)(iv) of the Wealth-tax Act. The Wealth-tax Officer, however, in his order has recorded as follows :
“I have carefully considered the claim. I am unable to concede the request. Exemption under section 5(1)(iv) is available for one house or part of a house belonging to the assessee. The cinema building cannot be said to be a house to be classified as a house entitled to exemption under section 5(1)(iv). This is only a building as different from a house which is used for residential purposes.”
3. The officer assessed the tax accordingly for the subsequent years as well as disallowed the exemption claim of the assessee. The Appellate Assistant Commissioner has, however, found one more disqualification that the cinema house or house in question was property belonging to a partnership firm and no partner would claim to have any specific interest in its assets exclusively, apart from his interest as a partner in the firm as such. The Tribunal, however, has found that the case is directly covered by the decision of the Madras High Court in the case of Purushothamdas Gocooldas v. CWT [1976] 104 ITR 608, on the question that no partner can claim independent deduction or exemption in respect of a partnership property and closed the proceedings. The assessee, it appears, moved this court in T.C. Nos. 152 to 154 of 1980 under section 27 of the Wealth-tax Act. This court gave a direction to the Tribunal, however, to draw up an agreed statement of the case and refer the question for this court’s opinion. The Tribunal has framed the aforementioned two questions and agreed reference for the opinion of this court.
4. To consider first the question whether the basic exemption is available to the assessee, we may refer to some of the provisions of the Act, which lay down, on the one hand, that there shall be a charge for every assessment year commencing on and from the first day of April, 1984, in respect of the net wealth on the corresponding valuation date of every Hindu undivided family and company at the rate or rates specified in the Schedule and what is understood as net wealth and on the other hand for exemptions in respect of certain assets. There is no dispute before us that the assessee has represented in the instant proceedings a Hindu undivided family and that he possessed such assets on which he is required to pay wealth-tax. He has claimed exemption in respect of a property, which admittedly has been in the hands of a partnership firm, and the assessee has a share therein to the extent of 5/12ths. He has sought exemption on the ground that the property is a house and qualifies for exemption under section 5(1)(iv).
5. Section 5(1)(iv) provides as follows :
“Subject to the provisions of sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets and such assets shall not be included in the net wealth of the assessee –
(iv) one house or part of a house belonging to the assessee.”
6. It was indeed unnecessary to call for a reference when the Appellate Assistant Commissioner and the Tribunal had followed a decision of this court, that is, in the case of Purushothamdas Gocooldas v. CWT [1976] 104 ITR 608. The court, however, has done no wrong by calling for a reference on account, in particular, of the fact that a neighbouring High Court has delivered a judgment in the case of CWT v. Mrs. Christine Cardoza [1978] 114 ITR 532 (Kar), and there is some difference of opinion on the subject whether a property belonging to a firm can be said to belong to the partners to the extent of their respective shares and on such assets thus worked out as exclusively belonging to the partners concerned, he may be found eligible for such exemption. The courts who fall in line with the view of this court in the case of Purushothamdas Gocooldas v. CWT [1976] 104 ITR 608, have, however, placed strong reliance upon the judgment of the Supreme Court in the case of Addanki Narayanappa v. Bhaskara Krishnappa, , a judgment which has been also taken as an authority by the dissenting courts. The courts which are in agreement or in line with the judgment of this court in the case of Purushothamdas Gocooldas v. CWT [1976] 104 ITR 608 are the High Court of Andhra Pradesh in the ease of CWT v. Narendra Ranjalker [1981] 129 ITR 203 and CWT v. B. Chandrasekhara Rao [1989] 175 ITR 66 and the Patna High Court in the case of CWT v. Nand Lal Jalan [1980] 122 ITR 781 and CWT v. Radha Krishna Jalan [1984] 145 ITR 217. The courts which have dissented from the Madras view in Purushothamdas Gocooldas’ case [1976] 104 ITR 608 are the High Court of Karnataka in CWT v. Mrs. Christine Cardoza [1978] 114 ITR 532, the High Court of Orissa in the case of CWT v. I. Butchi Krishna [1979) 119 ITR 8, the High Court of Madhya Pradesh in the case of Narsibhai Patel v. CWT [1981] 127 ITR 633, Jagdish Chandra Grover v. CWT [1985] 156 ITR 560 and Ravi Mohan v. CWT [1989] 180 ITR 667 and the High Court of Calcutta in the case of CWT v. Sri Naurangrai Agarwalla [1985] 155 ITR 752, Birla (L. N.) v. CWT [1987] 168 ITR 86 and CWT v. Mira Mehta [1985] 155 ITR 765 and the Full Bench of the High Court of Kerala in the case of CWT v. Smt. Kaethikamal Kumari Varma [1989] 179 ITR 543.
7. There are some judgments of this court, however, which contain observations which appear to conflict with the view expressed in the case of Purushothamdas Gocooldas . We shall deal with such judgments at the appropriate place in this judgment.
8. Speaking for the Bench, V. Ramaswami J., as he then was, in Purushothamdas , has found that the assessee was not entitled to any portion of the house property as exclusively belonging to him as it was not in dispute that the property was an asset of the partnership firm and was not owned by a group of individuals in their own right. The partnership firm, Gocooldas Jamnadas and Company, possessed assets, including a house and the partners were residing in that house. In their return under the Wealth-tax Act, each of them valued their share in that house separately and claimed deduction under section 5(1)(iv) of the Wealth-tax Act. The Wealth-tax Officer valued the properties owned by the partnership firm, and fixed their liability accordingly, but rejected their claim on the ground that the property was not owned by the individual assessees, but it was an asset of the partnership firm and that the assessees individually were not also using the property exclusively for residential purposes. The Appellate Assistant Commissioner, however, took the view that the house belonged to Hindu undivided family and not the partnership and thus held that the respective assessees were entitled to have a deduction of their share in the value of the house, as provided under section 5(1)(iv) of the Act. In appeals by the Department (Revenue), the Tribunal held that no partner could be said to have an exclusive ownership is any particular property or asset of a partnership firm and that, therefore, section 5(1)(iv) was not applicable. The Supreme Court in the case of Addanki Narayanappa v. Bhaskara Krishnappa, , has considered the relative rights of the partners with reference to the partnership assets and had said (at page 611 of 104 ITR) :
“‘The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done, whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated, his right during the subsistence of the partnership is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution or retirement after deduction of liabilities and prior charges.’
9. Earlier in the same judgment, it is further observed thus :
‘From a perusal of these provisions it would be abundantly clear that whatever may be the character of the property which is brought in by the partners when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realisation of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, 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. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in clause (a) and sub-clauses (i), (ii) and (iii) of clause (b) of section 48’.”
10. In Purushothamdas Gocooldas v. CIT [1976] 104 ITR 608, this court has said (at page 612) :
“Therefore, the assessees in this case cannot claim to be entitled to any portion of this house property as exclusively belonging to them.”
11. In CWT v. Mrs. Christine Cardoza [1978] 114 ITR 532, the High Court of Karnataka dealt with a case of a partnership firm, which held agricultural land. The questions raised in the said case were (1) Whether the exemption under section 5(1)(iv) claimed is available to a firm, or (2) whether it is available to a partner of the firm at the time of his individual assessment ? The court held that in computing the net wealth of the partner, the method of deducting the sum of Rs. 1,50,000 in computing the net wealth of the firm under rule 2 of the Wealth-tax Rules is not warranted by the terms of section 5(1)(iv)(a) of the Wealth-tax Act. The deduction contemplated by that provision according to the Karnataka High Court is in the computation of the net wealth of the assessee-partner and not of the firm, which is not an assessee. The court hence held that in computing the net wealth of an assessee, who was a partner in a firm, which owned agricultural lands, the value of the share of the assessee in agricultural lands will have to be included in his net wealth and the full deduction under section 5(1)(iv)(a) has to be given to him.
12. How the judgment in Addanki Narayanappa’s case, , of the Supreme Court has been read by the Karnataka High Court is found in the following observations in its judgment in Christine Cardoza’s case [1978] 114 ITR 532, observations which have been extracted in a later judgment of the Delhi High Court in the case of CWT v. A. K. Tandon [1992] 198 ITR 26 (at page 39) :
“Considerable emphasis has been laid by the learned counsel for the assessee on this sentence and it is contended that in the light of the clear enunciation by the Supreme Court in this case explaining the scope and effect of the decision in Addanki Narayanappa’s case, , the assessee owned, and had interest in, the agricultural land and was entitled to the deduction under section 5(1)(iva) of the Act. This submission for the assessee has considerable force. In the light of this pronouncement of the Supreme Court in regard to the concept of a firm and the interests that the partners have in what is called property of the firm, on the facts and in the circumstances of the case, it is difficult to hold that the assessee was not the owner of agricultural lands so as to deny the deduction under section 5(1)(iva). Accordingly, the view taken by the Tribunal must be upheld.”
13. The court further observed :
“But it seems to us that the method of deducting a sum of Rs. 1,50,000 in the computation of the net wealth of the firm under rule 2 is not warranted by the terms of section 5(1)(iva). The deduction contemplated is in the computation of the net wealth of an assessee and not of a firm which is not the assessee. On the principle enunciated by the Supreme Court, the assessee is a person who owns the agricultural land and, therefore, deduction has to be given in his/her hands. This is what has been directed by the Tribunal.”
14. In CWT v. I. Butchi Krishna [1979] 119 ITR 8, the Orissa High Court has taken the view that the exemption should be available in respect of the value of the assets of the exempted variety in the hands of the assessee, irrespective of whether the assessee held certain deposits in his own name or as his share in a firm and further that the limit prescribed under section 5(1A) of the Act was to be applied at that stage and not at the stage of computing the value of the assets in the hands of the firm.
15. The Madhya Pradesh High Court in the case of Narsibhai Patel v. CWT [1981] 127 ITR 633 has also said that a partnership or a firm is not a legal person and cannot hold property, yet the property brought in by the partners for the partnership business cannot be without any owner. Such a property really vests in the partners collectively in proportion to their shares in the firm although the right of ownership of each partner in respect of that property is restricted by the contract of partnership and the very nature and character of the collective business called the partnership business for which the property is to be utilised. The view that the Karnataka, Orissa and Patna High Courts have taken in the aforementioned cases is followed and it seems that at one stage the judgment of this court in the case of Purushothamdas Gocooldas [1976] 104 ITR 608 was almost isolated. So much so that the courts which appeared to have taken a common stand with the Madras view in the case of Purushothamdas Gocooldas [1976] 104 ITR 608, have also not been happy with the view in the said judgment.
16. In CWT v. Narendra Ranjalker [1981] 129 ITR 203, the High Court of Andhra Pradesh held that the net wealth of the firm ought to be arrived at in accordance with the provisions of the Wealth-tax Act, as if the firm were an assessee and that while computing the interest of a partner in the firm in terms of section 4(1)(b) of the Act, only the interest of the firm arrived at in accordance with the provisions of the Act, as if the firm were an assessee, should be taken into consideration. According to this judgment, thus it is the firm which is entitled to deduction on account of the exemptions granted under section 5(1A) of the Act. The firm in that case was held entitled to deduction on account of the deposits and it was held that the partner would not be entitled to exemption in regard to his share of the bank deposits held by the firm. In this judgment, it is also noted, a firm is not an assessee under the Act, but while computing the net wealth, the firm should be deemed to be an assessee and the provisions of the Act dealing with the computation of the net assets of the assessee should be applied to the firm as if it were an assessee, though in fact, it is not an assessee under the Act. The view expressed in Narendra Ranjalker’s case , is reiterated in the case of B. Chandrasekhara Rao [1989] 175 ITR 66, by the High Court of Andhra Pradesh. The two Patna cases in CWT v. Nand Lal Jalan [1980] 122 ITR 781 and CWT v. Radha Krishna Jalan [1984] 145 ITR 217, have proceeded on the same lines as the Andhra Pradesh High Court, but deviated in so far as the question of a firm being treated as an assessee is concerned. The latter contains a significant mention of the judgment of this court in Purushothamdas Gocooldas’ case [1976] 104 ITR 608 and counters the reasoning in Purushothamdas Gocooldas’ case in these words (headnote of 122 ITR) :
“A firm is not a legal entity even though it has some attributes of personality. ‘Firm’ is a compendious expression to designate an entity, not a person. What is called property of the firm is the property of the partners and what are called debts and liabilities of the firm are their debts and liabilities. During the subsistence of the partnership, assets thrown into the partnership by the partners get merged together and lose their identity. All the same, the assets as a whole belong to the partners.” The Patna High Court also distinguished the Supreme Court judgment in Addanki Narayanappa’s case , yet proceeded to hold that in computing the net wealth of the firm by reference to rule 2 of the Wealth-tax Rules, 1957, if an asset qualifies for exemption provided under the Act, such exemption must be taken into consideration in determining the net wealth of the firm. It (the High Court of Patna) has accepted that the firm is not an assessee under the Act and, therefore, it need not be treated as such and that the property of the firm is really the property of the partners. Yet, it seems it has proceeded to hold that the exemption should be taken for consideration in determining the net wealth of the firm, but not in the case of the partners as individuals.
17. There is, however, one significant aspect of the Wealth-tax Act, that it is an independent Act and contains its own scheme for assessment. The status of the partnership under the Income-tax Act is different from that under the Wealth-tax Act. The Income-tax Act contains special provisions under which a partnership is an assessable entity. There are provisions for assessment of a partnership firm to income-tax. So far as the Wealth-tax Act is concerned, a partnership is not an assessable entity. The concept of a partnership in the Income-tax Act cannot be imported into the Wealth-tax Act. A partnership having been excluded from assessment under the Wealth-tax Act and provision having been made for assessment of the properties standing in the name of the firm and in the hands of the nature of a partnership has to be taken into account. This aspect has been highlighted by the Calcutta High Court in its judgment in the case of Birla (L. N.) v. CWT [1982] 168 ITR 86. Under the general principles of law, the name of the firm is a compendious name for all the partners and it is not an entity in law. It is on that basis that the shares of the partners in the assets of the firm have to be considered as assets or wealth in the hands of the partners liable to be assessed to wealth-tax. This view, which to an extent, is contrary to the view taken by a Bench of this court in the case of Purushothamdas Gocooldas [1976] 104 ITR 608, is substantially accepted in a judgment of this court in the case of CIT v. K. Saraswathi Ammal [1981] 127 ITR 404, a case of an industrial undertaking, falling under section 84 of the Income-tax Act, 1961, which had declared dividends and a firm which held certain shares therein, had received dividends. The partners of the firm claimed exemption under section 85 of the Income-tax Act. When the matter came on reference to this court, it has said at page 407) :
“‘The property of the firm’ is statutorily defined in section 14 of the Partnership Act, the property that has been brought in by the partners and the property that is acquired by a firm will be the property of the firm. According to section 14 of the Partnership Act, when one talks of the property of the firm, it has to be remembered that a firm as such is not a legal entity; nor can a firm as such, according to the English concept, hold property. This is the reason why the Supreme Court in two decisions held that when the firm is dissolved and the partnership assets are distributed among the partners, there will be no transfer of the property of the firm in favour of the partners so as to attract the provisions of the Income-tax Act for capital gains. The decisions are CIT v. Bankey Lal Vaidya and CIT v. Dewas Cine Corporation . These two decisions clearly show that in general law the firm cannot be treated as the owner of the shares in Kalinga Tubes Ltd., but, for the purpose of the Income-tax Act, the firm has been made a legal entity just as a person, as a firm is included in the definition of the term ‘person’ under the Income-tax Act. The firm is a separate entity for the purpose of assessment and, therefore a firm will be entitled to the exemption under section 85. Whatever that be we are not concerned with that now, and we do not wish to express any opinion on that matter. As far as the individuals who make up the partners of the firm are concerned, we have no doubt that the properties, which are called the assets of the firm, really vest in the partners of the firm. This has also been said by the Supreme Court in the decision, Addanki Narayanappa v. Bhaskara Krishnappa, . Each of the partners may not hold any specific shares; nor can it be said that each partner holds all the shares in Kalinga Tubes Limited. But, this does not matter. The partners are the owners of the shares and the general principle of law cannot be abrogated and we cannot conceive of a hypothetical ownership of these shares and deny the partners, who, in law, own the property and in whom the property is vested, the benefit of section 85.”
18. In a later decision, in CIT v. N. Gnanamani [1987] 163 ITR 313 (Mad), however, in which no reference is made to the judgment of this court in Purushothamdas Gocooldas [1976] 104 ITR 608 or CIT v. K. Saraswathi Ammal , a Bench of this court, answering the question whether partners of a firm could claim exemption under section 5(1)(iv) of the Act, when a house property, in fact, was acquired by a firm, has said as follows (at page 315) :
“In CIT v. Dadha and Co. [1983] 142 ITR 792, this court has categorically ruled that even if the properties of a firm are treated as properties held in common by all the partners, as a firm is not a legal entity and cannot hold properties, there could not be a division of the properties purchased in the name of the firm as amongst the partners by making entries in the accounts of the firm without actual dissolution of the firm, that even assuming that the firm’s properties were owned and enjoined in common by the partners, such common properties cannot be possessed and enjoyed in severalty unless there is a document in writing and that such a document will required registration if the value of the partner’s interest in the properties exceeds Rs. 100. This court has taken the view that by virtue of mere book entries, the immovable property of the firm cannot be transferred to the partners.”
19. A Bench of the Delhi High Court in the case of CIT v. A. K. Tandon [1992] 198 ITR 26 has referred to almost all the relevant case law on the subject and has said as follows (at page 44) :
“Having carefully considered the rival contentions of the partners and having gone through the various judgments cited before us to which we have made reference hereinbefore, we are of the opinion that the contentions raised on behalf of the assessee are well-founded. A plain reading of the statutory provisions supports this view. Section 5 which grants the exemptions under the Act refers to an assessee and a firm, not being an assessee under the Act, is not covered under section 5. It is an assessee alone who can avail of the exemption under section 5. In the face of this clear statutory provision, we are unable to subscribe to the view taken by the Andhra Pradesh and the Patna High Courts in the cases cited by the Revenue and referred to by us earlier. Another reason which impels us not to subscribe to the said view is again the statutory provision in section 4(1)(b) and rule 2 of the Wealth-tax Rules. Section 4(1) deals with computation of net wealth of an assessee. Sub-section (1)(b) thereof relates to a firm. The said sub-section makes reference to the prescribed manner. The only prescribed manner is the one contained in rule 2. Rule 2 does not contain any procedure for granting exemption under section 5(1)(iv) at the time of computation of the net wealth of a firm. Rule 2 appears to be quite exhaustive and whatever procedure is to be followed and wherever exemption has to be allowed, has been provide for. In sub-rule (3), the benefit of section 5(2) has been extended to a partner. If the benefit of section 5(1) was also to be extended, the same could have been so stated in rule 2 itself. There is nothing in section 4(1)(b) or rule 2 to suggest that a firm be deemed an assessee so as to allow the benefit of exemption under section 5(1)(iv) to it. We feel that taking the view as canvassed by the Revenue will be doing violence to the statutory provisions.
20. The concept of a partnership firm and partnership property as contained in the Partnership Act also compels us to take this view. A firm has no legal existence and as such it cannot hold any property. It is the partners who own the partnership property or assets. Therefore, it is only fair that they alone should have the benefit of the exemption under section 5(1)(iv) when their individual assessments are taken up which will include their respective shares in the net wealth of the partnership firm. We find preponderance of judicial opinion in favour of this view that we have taken. On behalf of the Revenue, reliance has been placed on the decision of the Madras, Patna and Andhra Pradesh High Courts. We have already noted the said judgments and found that the Andhra Pradesh and the Patna views treat the firm as an assessee. With utmost respect, we feel that this view is not consistent with the plain statutory provisions or the Rules. So far as the Madras High Court’s view expressed in Purushothamdas Gocooldas [1976] 104 ITR 608 is concerned, the same is purportedly based wholly on Addanki Narayanappa. . To us it appears that reliance placed on Addanki Narayanappa’s case, , by the Madras High Court is not correct. In fact, the Madras High Court has itself not subscribed to this view in a later judgment in CIT v. Saraswathi Ammal (K) . Besides this, various other High Courts including those who have ultimately held in favour of the Revenue on the question of exemption have demonstrated that the reliance placed by the Madras High Court on Addanki Narayanappa’s case, is not correct. Actually, we find that this Supreme Court decision dealing with the concept of partnership property supports the view that we have taken.
21. The Supreme Court was more concerned with the aspect of requirement of registration of documents at the time of distribution of assets on the dissolution of firm. Moreover, the mere fact that a partner cannot claim to be entitled to any portion of the property owned by a firm as exclusively belonging to him, will not, to our mind, completely disentitle him from seeking benefit of the exemption under section 5(1)(iv) of the Act so long as he is part owner of the house property even though as a partner in a firm. This is particularly so in view of the language of the relevant provisions of the statute granting the exemption. For purposes of the exemption provision, it does not appear to be necessary that a partner should be able to say that the property or any specific part thereof exclusively belongs to him.
22. It has been brought to our notice that a special leave petition filed in the Honourable Supreme Court on behalf of the Revenue against one of the decisions of the Madhya Pradesh High Court, taking the same view as we have taken in this judgment, had already been dismissed recently. (See [1989] 178 ITR (St.) 70-71)”.
23. The Delhi High Court has also taken notice of the amendment in the law by the insertion of sub-section (4) in section 5 with effect from April 1, 1989, which has introduced clearly a statutory sanction to the view taken above that is a partner of a firm is entitled to exemption under section 5(1)(iv) of the Act in respect of his share in a property belonging to the firm and added (at page 46) :
“The effect of this provision is that the view taken above has found statutory force. The case in hand relates to a period much prior to the said amendment coming into force. The submission on behalf of the assessee is that subsequent legislation may be looked into to see what ought to be the proper interpretation of the relevant provisions prior to the subsequent legislation. Counsel cites CIT v. Deepchand Kishanlal [1990] 183 ITR 299, which is a judgment of the Karnataka High Court and page 559 of the same volume which is a judgment of the Supreme Court in CIT v. Doraiswamy Chetty (P.) [1990] 183 ITR 559 in support of this submission. It was held in the Supreme Court judgment that though Explanation 2 was inserted in section 64 of the Income-tax Act with effect from April 1, 1980, and it did not have retrospective effect, it serves as a legislative exposition of the import of section 64(1) and (i).”
24. What is held in Purushothamdas Gocooldas is substantially diluted by the judgment of this court in the case of K. Saraswathi Ammal [1981] 127 ITR 404 and the judgment in the case of N. Gnanamani [1987] 163 ITR 313 (Mad), in our view, is not exactly to the point. It has, in fact, considered the case in a different angle altogether, that is when a co-partner claims that a certain immovable property, owned by the firm, has been transferred to him and the answer that even if the properties of a firm are treated as properties held in common by all the partners as a firm is not a legal entity and cannot hold properties, there cannot be a division of the properties purchased in the name of the firm as amongst the partners by making entries in the accounts of the firm without actual dissolution of the firm and that even assuming that the firm’s properties were owned and enjoyed in common by the partners, such common properties cannot be possessed and enjoyed in severality unless there is a document in writing and that such a document will require registration if the value of the partner’s interest in the property exceeds Rs. 100 is confined to the facts and the said case has really given out no ratio decidendi, which can restrain us from accepting the judicial consensus that,
(1) a firm has no legal existence and as such it cannot hold any property;
(2) it is the partners, who own the partnership property as such;
(3) partners alone should have the benefit of the exemption under section 5(1)(iv), when their individual assessments are taken up to the extent of their respective shares in the net wealth of the partnership firm;
(4) The mere fact that a partner cannot claim to be entitled to any portion of the property owned by a firm as exclusively belonging to him will not completely disentitle him from seeking the benefit of exemption under section 5(1)(iv) of the Act, so long as he is the owner of the house property even though as a partner in a firm;
(5) For the purposes of the exemption under section 5(1)(iv), it is not necessary that the partner should be able to say that the property or any specific part thereof exclusively belongs to him.
25. In spite of the judgment of the court in the case of Purushothamdas Gocooldas , contrary in some part to the view taken by us above, we feel no difficulty in reiterating the above law on the basis of the judicial consensus as the Delhi Full Bench judgment has categorically informed us that the above view in a judgment of the Madhya Pradesh High Court has been affirmed by the Supreme Court by the dismissal of the special leave petition, filed on behalf of the Revenue. The Revenue is obliged to follow the law which has been sanctioned by the Supreme Court.
26. We are supported in our view hot only by a number of authorities coming from the judgments of the Kerala High Court (Full Bench), Karnataka, Orissa, Calcutta and Madhya Pradesh High Courts, but also by the delineations which give great support to our view in the case of K. Saraswathi Ammal .
27. The answer to the question whether the basic exemption is available to the assessee has thus naturally to be against the Revenue. This, however will not give any substantial benefit to the assessee in the instant case, because the answer to the first question, whether the word “house” mentioned in section 5(1)(iv) of the Wealth-tax Act includes “cinema theatre”, in our view, must go against the assessee. A house, in general perception, is a building for human habitation. It can also be a building for a special purpose and that is why we get expressions like House of Commons, House of Lords, House of Representatives, etc. Extension of this, as found in several dictionaries, may also extend to any opera house or a theatre or cinema. Black’s Law Dictionary, 6th Edition, has suggested house in the words like domicile, home and residence. it has also indicated that the name house is also given to some persons, other than the legislative bodies, to some public institutions, commercial firms or joint stock companies and a public house, when used as a compound word to mean an inn or a house for the entertainment of the public or for the entertainment of all, who come lawfully and pay regularly, a place of public resort, particularly for purposes of drinking or gaming.
28. Speaking, however, on behalf of the court, in a Bench decision of the Orissa High Court, R. N. Misra, C.J., as he then was, in the case of CWT v. K. B. Pradhan [1981] 130 ITR 393, has said as follows (at page 395) :
“The word ‘house’ has no statutory definition and, therefore, it has to be given the common parlance meaning. The dictionary meaning of the words seems to be ‘building for dwelling in, a building in general, a dwelling place’. It also conveys the meaning of ‘abode’, habitation, etc.’ Though the concept of residence has been omitted from the provision by amendment, we are not prepared to accept the submission of the assessee’s counsel that ‘house’ or ‘a part of a house’ can cover a situation where the house is not habitable. We are prepared to go to the extent that if the house was once habitable and became uninhabitable on account of want of repairs, the exemption provision may yet operate. Where, however, the house is in the process of construction and, on account of the fact that it is not complete, has not reached a habitable stage, we do not think the concept of house can be extended to cover such an incomplete construction. The submission of counsel for the assessee that the use of the words ‘a part of the house’ has the meaning of an incomplete house is of no importance. Obviously, Parliament has intended to exempt a part of the house where the assessee’s interest extends to a part of it. The concept of habitability is inherent in the word ‘house’ and unless it is habitable, the abode would not answer the common sense meaning of a house. In the instant case, there is no clear finding by the Tribunal as to whether with the investment made during the two relevant years, the construction had reached a habitable stage. Merely from the fact that something more remained to be done in the year beyond the two years in review, it may not be presumed that the house had not come to a habitable condition on the valuation dates. While we do not agree with the assessee’s counsel that habitability is not the test, we are of the view that the Tribunal would do well in recording a finding as to the substantial position of the construction on the two relevant dates. If it reaches the conclusion that the construction had reached a habitable stage, that would amount to a house and the exemption would be available. If, however, it is found that the incomplete house was not in a habitable condition during either of the years, it would follow that the exemption would not be extended and the assessee’s claim would not be admissible. Since the matter has not been examined from the proper perspective, the finding is not clear. The question, as referred on the footing that an incomplete house has the meaning of a house not fit for habitation should ordinarily be answered against the assessee, but as in our opinion such an answer in the facts of the case would prejudice the assessee, we think it appropriate to suggest to the Appellate Tribunal while giving effect to our opinion to hear the parties and come to a definite conclusion as to whether, on the relevant dates, the construction had reached a stage of habitability and if it finds that it was habitable, it should be taken as a house and the exemption should be extended; otherwise, the view taken by the Wealth-tax Officer should be sustained and exemption would not be admissible.”
29. We have no manner of doubt that for the purpose of the benefit of exemption under section 5(1)(iv) of the Wealth-tax Act, the concept of habitability is inherent in the word “house” and unless it is habitable, the word would not answer the commonsense meaning of “house”. A cinema theatre cannot answer the requirement of the elements of habitation, as envisaged under the Act. This question thus must receive an emphatic no against the assessee. The two questions overmentioned are answered accordingly. No costs.