Law: Wealth Tax Act, 1957

Section: 5(1)((xxxi),5(1),5(1A),25

(a) Wealth Tax Act, 1957----- - Ss. 5(1)(xxxi), (xxxii) & 25-Exemption-Groundnut oil mill crushing groundnut kernel and extracting oil and cake-Involves an element of manufactures and processing-Such a mill in consequence an industrial undertaking-Assessee, partner of mill, held, entitled to exemption of value of assets, held, by firm. (b) Constitution of India- -Art. 226-Writ jurisdiction-Exemption not claimed in assess­ment proceedings or in appeal but claim put forward before Commis­sioner and disallowed-Assessee in circumstances, held, not estopped from filing civil petition. The assessee, who was a partner in M. L. N. Oil Mills a partnership firm manufacturing oil by the process of crushing of groundnut kernel, was assessed to wealth-tax and his investment in the firm was also included in the total wealth. The assessee did not object to the same in the assessment proceedings nor did he dispute the same in the appeal filed by him before the A. A. C. Subsequently; in revision under section 25 of the Wealth Tax Act, 1957, the assessee claimed that the partnership firm being an "industrial undertaking" within the meaning of the Explanation to section 5(xxxi), his interest in the said firm is exempt from wealth tax under section 5(1)(xxxii) of the Wealth Tax Act. The C. W. T. rejected the plea on the ground that the groundnut oil mill is not an industrial undertaking, but is a trading, concern 'and hence, section 5(1)(xxxii) has no application. Aggrieved, the assessee filed a writ petition under Art. 226 of the Constitution of India: Held, allowing the writ petition, that when the goods to which some labour is applied remain essentially the same commercial article, it would not amount to manufacture. If the goods change substantially arid a different commercially marketable article comes into existence by the process adopted, then there is an. element of manufacture. In the groundnut oil mill, groundnut kernel is put in a crusher and by the process of the crushing the groundnut kernel is crushed and oil and cake are extracted therefrom. Hence, there is not only an element of "manufacture" but also of "processing" involved in the undertaking and, hence, the…

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