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Explanation to section 5(1)(xxxi) of the Wealth-Tax Act, 1957 - Exemption - Industrial Undertaking - Whether to be treated as 'industrial undertaking', undertaking should itself carry out entire processing of goods - Held, no - Whether activity of a firm, which purchased raw cotton but got ginning and pressing done by outside agencies before selling cotton by packing them in shape of bales, amounted to processing of goods entitling capital invested in such firm to exemption under section 5(1)(xxxi) - Held, on facts, yes FACTS For the assessment year 1977-78, the assessee, being a partner in a partnership firm, claimed exemption under section 5(1)(xxxi) in respect of her capital invested in the said firm on the ground that the firm was an 'industrial undertaking'. The WTO rejected the claim on the ground that the firm did not carry out any processing and manufacturing activities. The AAC dismissed the assessee's appeal. On second appeal, the Tribunal found that the firm purchased raw cotton, got it ginned and pressed through outside agencies and then sold this cotton in the shape of bales, and held that this activity fell within the definition of an 'industrial undertaking' as per Explanation to section 5(1)(xxxi) . On reference: HELD In view of the meaning assigned to the term 'industrial undertaking' in the Explanation to clause (xxxi) of section 5(1), an undertaking engaged in the business or processing of goods in an industrial undertaking. The said Explanation nowhere lays down that the undertaking should itself carry out the entire processing of goods; if part of the processing procedure is carried out by some other agency, the undertaking will not cease to be an 'industrial undertaking' so long as it is engaged in the business of processing of goods. In the instant case, the Tribunal had found as a fact that though ginning and pressing was got done by the firm through other parties, the rest of the job was carried out by the firm itself. This activity amounted to processing of goods within the meaning of Explanation to section 5(i )(xxxi)and the assessee-partner was entitled to claim exemption under the said section on the capital invested by the assessee…

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