Law:

Section:

Section 5(1)(xxxii) of the Wealth-tax Act, 1957 - Exemption - Interest of partner in an industrial undertaking - Assessment year 1979-80 - Assessee- HUF was a partner in a partnership firm - Assessee claimed exemption under section 5(1)(xxxii) in respect of its capital interest in said partnership firm, which was rejected by WTO but accepted by AAC and Tribunal - Whether where processing of goods was done by an outside agency which was in no way connected with business of firm, then assessee could not be said to have interest in a firm which was engaged in business of manufacture of goods and, therefore, she was not entitled to claim benefit of exemption under section 5(1)(xxxii) in respect of her share in value of its assets - Held, yes CASES REFERRED TO CWT v. Radhey Mohan Narain [1982] 135 ITR 372/10 Taxman 109 (All.) and CWT v. Mohinibai Kanaiyalal [1999] 240 ITR 636/105 Taxman 59 . (Guj.) Manish R. Bhatt and Mrs. Mauna M. Bhatt for the Petitioner. JUDGMENT M.S. Shah, J. - At the instance of the revenue, the following question of law is referred for our opinion in respect of assessment year 1979-80: "Whether the Tribunal is right in law and on facts in holding that the assessee is entitled to exemption under section 5(1)(xxxii) of the Wealth-tax Act in respect of her capital interest in the firm of M/s Raja Textile Mill?" 2. We have heard Mrs. Mauna Bhatt, learned Standing Counsel for the revenue. Though served, nobody appears on behalf of the respondent-assessee. 3. The assessee is a HUF and during the year under consideration i.e., 1979-80, it was a partner in a partnership firm of M/s. Raja Textile Mill. The assesee claimed exemption under section 5(1)(xxxii) of the Act in respect of her capital interest in the said partnership firm. The WTO rejected this claim. But in appeal, the learned AAC relying upon the ratio of the decision in the case of CWT v. Radhey Mohan Narain [1982] 135 ITR 3721 and Board's circular No. 347, dated 7-7-1982 accepted the assessee's claim and granted exemption to her under section 5(1)(xxxii) in respect of her capital interest in the said partnership firm. The Tribunal confirmed the order of the learned AAC. 4. At the hearing…

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