Law:

Section:

Section 5(1)(xxxi) of the Wealth-tax Act, 1957 - Exemption - Assets of an industrial undertaking - Whether, even where raw materials are supplied to assessee by customers, he would be entitled to exemption under section 5(1)(xxxi) when end-product is made by him - Held, yes Facts The petitioner was carrying on the business of printing. He undertook job works such as printing of inland letters, labels, note-books, fancy wrappers and wedding cards, etc., with his offset printing machine. In addition to that, he also purchased raw materials like paper and cardboard and converted them into inland letters, note-books, labels, etc., and sold the same. The petitioner claimed exemption under section 5(1)(xxxi) , which was denied on the ground that his turnover regarding the job-works was Rs. 4,61,005 whereas the sale proceeds of his own products was only about Rs. 25,290 and that showed that the petitioner was doing only job work printing, and that, therefore, the business which he was carrying on was not an 'industrial undertaking' entitled to exemption. On writ, the petitioner contended that the revenue's stand that if only the petitioner purchased raw materials, then alone, he would be entitled to the exemption under section 5(1)(xxxi) was contrary to the spirit of the section and a plain reading of that provision would show that whether the petitioner purchased the raw materials or the customers supplied the raw materials the mere fact that he manufactured the end-product by himself would entitle him for the exemption under that exemption provision. Held There is nothing in section 5(1)(xxxi ) to suggest that the raw materials must be purchased by the petitioner himself. On the facts it was clear that the assessee was eligible for exemption under section 5(7)(xxxi ) either on the basis of being a manufacturer or in any event as a processor. Cases referred to CIT v. Ajay Printery (P.) Ltd. [1965] 58 ITR 811 (Guj.), CIT v. Commercial Laws of India (P.) Ltd. [1977] 107 ITR 822 (Mad.), CWTv. K. Lakshmi [1983] 142 ITR 656 (Mad.), CIT v. J.B. Kharwar & Sons [1987] 163 ITR 394 (Guj.) and CWT v. V.O. Angadi Veeriah Chettiar [1987] 167 ITR 341 (Mad.). Raja for the…

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