COMMISSIONER OF WEALTH TAX Vs. DAISY PAUL

JUDGEMENT

(1.) AT the instance of the Revenue, the Income-tax Appellate Tribunal has referred the following question of law for the decision of this court :

(2.) THE matter arises under the Wealth-tax Act. THE respondent is an assessee to wealth-tax. In the return of net wealth for the assessment year 1976-77, the assessee claimed deduction under Section 5(1)(xxxii) of the Wealth-tax Act of her interest in the firm, Messrs. Popular Garage. THE value of the interest was calculated by the assessee at Rs. 1,00,566. THE entire amount was claimed as exempt under Section 5(1)(xxxii) of the Act. Originally, the said amount was not included as assets in the wealth-tax assessment. However, the Commissioner of Wealth-tax, by order dated March 18, 1983, directed revision of the assessment by withdrawing the exemption granted by the Wealth-tax Officer. He held that the work carried out by the firm was only repairing of engines and engine parts and did not constitute any manufacture or processing of goods. In the appeal filed by the assessee, the Income-tax Appellate Tribunal held that though the activity carried on by the firm of repairing of engines and engine parts did not constitute any manufacture or production of articles, it amounted to processing of goods. In taking the said view, the Appellate Tribunal largely relied upon the decision of the Delhi High Court in Addl. CIT v. Kalsi Tyre (P.) Ltd. [1981] 131 ITR 636. It is, thereafter, at the instance of the Revenue that the question of law, formulated hereinabove, has been referred for the decision of this court.

(3.) IN coming to the above conclusion, the Appellate Tribunal was largely influenced by the decision of the Delhi High Court in Kalsi Tyre (P.) Ltd. 's case [ 1981 ] 131 ITR 636. The Appellate Tribunal held that the activity carried on by Messrs. Popular Garage is identical with that of retreading of tyres in the sense that an article which had worn out and had become useless is restored to a useful article but without bringing into existence a new article. We are of the view that the decision, which was heavily relied on by the Appellate Tribunal is distinguishable. IN Kalsi Tyre (P.) Ltd.'s case [1981] 131 ITR 636, the question arose, whether the activity of retreading of tyres amounts to "processing of goods", so as to say that the assessee is an "industrial company" entitled to concessional rate of tax as enjoined in Section 2(6)(d) of the Finance Act, 1968. The court was concerned with regard to the meaning to be given to the words contained in the Finance Act. After referring to the dictionary meaning and certain decisions, the court held that the Appellate Tribunal had pointed out in that case that, for all practical purposes and in the commercial sense of the term, the retreaded tyre is almost a new article and indeed it is well known that retreaded tyres are also separately sold in the market in the same way as newly manufactured tyres. IN this context, the court held that the activity of retreading of tyres amounts to processing of goods. It is doubtful, whether it can be said that, by reboring the engine, it could be said that a new commercial article or marketable goods as such is brought into existence so as to say that the ratio of Kalsi Tyre (P.) Ltd.'s case [ 1981 ] 131 ITR 636 is fully applicable in the instant case.