Law: Wealth Tax Act, 1957

Section: 27(1),5(1)(xxxii)

Wealth tax--- ----Exemption---Industrial undertaking---Construction of roads and buildings does not amount to manufacture or processing of goods---Manufacture of bricks merely incidental---Firm engaged in construction of roads and buildings is not an industrial undertaking---Partner of firm is not entitled to exemption--­Indian Wealth Tax Act, 1957, S.5(1)(xxxii). The assessee was a partner of a firm. The said firm acted as a civil contractor engaged in construction of roads, buildings and drains. The assessee claimed exemption under section 5(1)(xxxii) of the Wealth Tax Act, 1957, of the value of his interest in the assets of the firm on the ground that the entire assets of the firm formed part of an industrial undertaking belonging to the firm. The Wealth Tax Officer rejected the assessee's contention but the Tribunal accepted it. On a reference: Held, that construction of immovable properties like buildings, roads, drains, etc., cannot, either in the legal sense or in common parlance amount to manufacture or processing of goods. The manufacturing of bricks for execution of the works contract was wholly inconsequential for determination of the issue involved because it was merely an ancillary or incidental activity. The firm in which the assessee was a partner was not an industrial undertaking within the meaning of section 5(1)(xxxii) and the assessee was not entitled to exemption. Shantaben Chinubhai (Smt.) v. CWT (1992) 196 ITR 44 (Guj.) fol. CTT v. Minocha Brothers P. Ltd. (1986) 160 TTR 134 (Delhi); National Projects Construction Corporation Ltd. v. CWT (1969) 74 ITR 465 (Delbj); State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd. (1958) AIR 1958 SC 560; (1958) 9 STC 353 (SC) ref. JUDGMENT GOPICHAND BHARUKA, J.---In this reference made under section 27(1) of the Wealth Tax Act, 1957 (in short, "the Act" hereinafter), relating to the assessment year 1y75-76, the following question of law has been referred by the Tribunal for the opinion of this Court: "Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the firm, Messrs Agiwal and Company, in which the assessee was a partner was an industrial…

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