Law:

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Section 5(1)(xxxi) and (xxxii) of the Wealth-tax Act, 1957 - Exemption - Assets of industrial undertaking - Assessee was a partner in a firm which was engaged in unearthing stones and boulders and crushing them in small pieces with help of machinery and power - Whether aforesaid firm was an 'industrial undertaking within meaning of Explanation to section 5(1)(xxxi) and, therefore, assessee was entitled to exemption under section 5(1)(xxxi) and (xxxii) in respect of his interest in firm - Held, yes Facts The assessee was a partner in a firm, which was engaged in extracting stones and boulders from quarries, crushing them to small pieces with the help of machinery and power and selling them as small chips. In the relevant assessment years the assessee claimed that the interest in the aforesaid firm was exempt under section 5(1)(xxxi) and (xxxii). The WTO disallowed the assessee's claim on the ground that the firm did not carry on any business of manufacturing or processing of goods or mining. However, on appeal, the AAC allowed the assessee's claim. On appeal by the revenue the Tribunal also upheld the order of the AAC. On reference: Held 'Industrial undertaking' in terms of the Explanation to section 5(7)(xxxi) means an undertaking engaged in the manufacture or processing of goods or in mining. The firm, in the present case, was engaged in unearthing boulders and crushing of the boulders amounted to mining. In that sense the firm of which the assessee was a partner would be held to be engaged in mining and, thus, the firm would be an industrial undertaking. Further, there could not be any manner of doubt that crushing the boulders to various sizes by machinery amounted to processing of goods. By the process of crushing boulders changed their nomenclature and their utility. In that sense there was least doubt that crushing of boulders was a manufacturing process. That being so, the firm under consideration was to be held to be an 'industrial undertaking' and thus the interest of the assessee in the firm had to be exempted. The order of the Tribunal was, therefore, justified. B.P. Rajgarhia and S.K. Sharan for the Applicant. JUDGMENT 1. These are references under…

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