Section 16. Computation of net wealth of the firm or association and its allocation amongst the partners or members

16. Computation of net wealth of the firm or association and its allocation amongst the partners or members.— The net wealth of the firm or association of persons on the valuation date shall first be determined as if it were the assessee and, thereafter,— (i) that portion of the net wealth of the firm or association as is equal to the amount of its capital shall be allocated among the partners or members in the proportion in which capital has been contributed by them; (ii) the residue of the net wealth of the firm or association shall be allocated amongst the partners or members in accordance with the agreement of partnership or association for the distribution of assets in the event of dissolution of the firm or association or, in the absence of such agreement, in the proportion in which the partners or members are entitled to share the profits, and the sum total of amounts so allocated to a partner or member under clause (i) and clause (ii) shall be treated as the value of the interest of that partner or member in the firm or association: Provided that in determining the net wealth of the firm or association for the purposes of this rule, no account shall be taken of the exemptions in sub-sections (1) and (1A) of section 5. Explanation. —For the purposes of this rule,— (a) where the net wealth of the firm or association computed in accordance with this rule includes the value of any assets located outside India, the value of the interest of any partner or member in the assets located in India shall be determined having regard to the proportion which the value of assets located in India diminished by the debts relating to those assets bears to the net wealth of the firm or association; (b) where the net wealth of the firm or association computed in accordance with this rule includes the value of any assets which are exempt from inclusion in the net wealth under sub-sections (1) and (1A) of section 5, the value of the interest of a partner or member shall be deemed to include the value of his proportionate share in the said assets and, the provisions of sub-sections (1) and (1A) of section 5 shall apply to him accordingly; (c) where the net wealth of the firm or association computed in accordance with this rule includes the value of any assets referred to in sub-section (2) of section 5, the value of the interest of a partner or member shall be deemed to include the value of his proportionate share in the said assets, and the provisions of sub-section (2) of section 5 shall apply to him accordingly. PART F LIFE INTEREST (3) On the day specified in the notice issued under sub-section (2) or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by order in writing, assess the net wealth of the assessee and determine the sum payable by him on the basis of such assessment. (4) For the purposes of making an assessment under this Act, the Assessing Officer may serve, on any person who has made a return under section 14 or section 15 or in whose case the time allowed under sub-section (1) of section 14 for furnishing the return has expired, a notice requiring him, on a date to be specified therein,— (i) where such person has not made a return[5] [within the time allowed under sub-section (1) of section 14] to furnish a return of his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date, in the prescribed form and verified in the prescribed manner, setting forth the particulars of such net wealth and such other particulars as may be prescribed, or (ii) to produce or cause to be produced such accounts, records or other documents as the Assessing Officer may require. (5) If any person,— (a) fails to make the return required under sub-section (1) of section 14 and has not made a return or a revised return under section 15, or (b) fails to comply with all the terms of a notice issued under sub-section (2) or sub-section (4), the Assessing Officer, after taking into account, all relevant material which he has gathered, shall, after giving such person an opportunity of being heard, estimate the net wealth to the best of his judgment and determine the sum payable by the person on the basis of such assessment: Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the person to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (4) has been issued prior to the making of the assessment under this sub-section.] 1. Sub-section (1A) and (1B) omitted by Act 27 of 1999, s. 92 (w.e.f. 1-6-1999). Earlier sub-section (1A) inserted by Act 3 of 1989, s. 64 (w.e.f. 1-4-1989) and later amended by Act 36 of 1989, s. 28 (w.r.e.f. 1-4-1989). Sub-section (1B) inserted by Act 12 of 1990, s. 54 (w.r.e.f. 1-4-1989). 2. Subs. by Act 36 of 1989, s. 28, for "In a case referred to in sub-section (1), if the Assessing Officer" (w.r.e.f. 1-4-1989). 3. Subs. by s. 28, ibid ., for "he shall server or the Assessee" (w.r.e.f. 1-4-1989). 4. Subs. by Act 49 of 1991, s. 74, for the proviso (w.e.f. 1-10-1991). 5. Subs. by Act 12 of 1990, s. 54, for "before the end of the relevant assessment year" (w.e.f. 1-4-1990). 1[(6) Where a regular assessment under sub-section (3) or sub-section (5) is made,— (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment ; (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. 2* * * * *] 3* * * * *