COMMISSIONER OF WEALTH TAX Vs. MOHINIBAI KANAIYALAL

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Ahmedabad Bench 'A', has referred the following question of law arising out of its appellate order in WTA No. 671/Ahd/80 for the A.Y. 1975-76 dated 30.5.1981. Though the order by itself does not record more than referring to the decision in WTA Nos. 274, 275 & 276/Ahd/80, the order made in those wealth tax applications have been made part of the statement of the case.

(2.) The facts and circumstances in which this question had arisen are that the assessee is a partner in M/s. Goklesh Silk Industries. The business activities of the said firm is to purchase grey cloth, its conversion to cloth through outside agencies and sale of the finished products. The assessee in her wealth tax assessment proceedings claimed her share in the firm M/s. Gokelsh Silk Industries exempt u/s 5(1)(xxxii) on the ground that the firm is an industrial undertaking of which assessee is a partner and the value of assessee's share in the assets of the said firm are exempt u/s 5(1)(xxxii), which reads as under:-

(3.) A plain reading of explanation suggests that in order that assessee's share in the value of assets forming part of an industrial undertaking belonging to a firm can be exempt from inclusion in his taxable wealth, the pre-requirement is that the firm must be engaged in the business of (i) generation of electricity or any other form of power, or distribution of electricity or any other form of power, or (2) construction of ships, or (3) manufacture of goods, (4) or processing of goods or (5) in mining. As the assessee's claim is to the firm being engaged in the processing of grey cloth into cloth ready for sale, we are to examine whether the assessee satisfies the condition of being a partner in the firm which is engaged in the business of processing cloth.