Law:

Section:

Section 5(1)(xxxii) of the Wealth-tax Act, 1957-Exemption-Assets forming part of industrial undertaking-Assessee was partner in a firm which purchased plain white cloth from outsiders and prepared therefrom printed and dyed bed spreads, scarves, garments, etc.-Whether assessee entitled to exemption under section 5(1)(xxxii) in respect of his interest in firm-Held, on facts, yes Facts For the assessment year 1973-74, the assessee, who was partner in a firm, which manufactured printed cloth, claimed relief under section 5(1)( xxxii) in respect of his interest in the firm. The WTO, having found that the firm had no fixed assets of its own and was getting its trade requirements of goods from others on job basis, held that the firm did not do any manufacturing or processing work. Consequently, he rejected the assessee's claim. On appeal, the AAC, inter alia, found (ii) that the firm purchased big rolls of plain cloth from outsiders; (ii) that the cloth thus purchased was got bleached and dyed in different colours; (iii) that after dyeing, rolls were cut into pieces, and got printed, washed and calendered; (iv) that thereafter, these pieces were cut into small size and converted into bed spreads, scarves, handicraft goods, garments, etc. On the basis of these findings, the AAC allowed the assessee's claim, which was upheld by the Tribunal. The Tribunal held that the firm was an industrial undertaking within the meaning of section 5(1)( xxxii). On reference: Held An undertaking in order to satisfy the test of an "industrial undertaking" as per the Explanation to section 5(1)(xxxii)must, inter alia, be engaged in the manufucture or processing of goods. Since the word "process" has not been defined in the Act, it should be understood in the sense in which it is understood in common parlance. On going through the dictionary meaning of the word "process", it is clear that in processing, the original article need not lose its identity altogether but some changes are brought into it. When cloth is dyed, printed and cut into pieces, the original identity of cloth is not lost but a change is brought about as a result of going through these different processes and the end…

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