COMMISSIONER OF WEALTH TAX Vs. KANAKARAJAN K

JUDGEMENT

(1.) THE following question has been referred at the instance of the Commissioner of Wealth -tax, Madras

(2.) UNDER section 5(1) of the Wealth -tax Act, 1957 (hereinafter called" the Act" ), wealth -tax shall not be payable by an assessee in respect of the assets mentioned in the various clauses in that section and such assets shall not also be included in the net wealth of the assessee. Under clause (xxxii) of that section, the asset to be excluded for the purpose of wealth -tax is the value of the interest of the assessee in the assets forming part of an industrial undertaking belonging to a firm of which the assessee is a partner. The assessee in this case is a partner in a firm called M/s. K. A. Veeri Chetty and Son, Vembadithalam. He claimed exemption in respect of the assessment year 1974 -75 on the capital employed by him in the said firm under section 5(1) of the Act. The Explanation to section 5(l), clause (xxxi), of the Act states that for the purposes of clauses (xxxa), (xxxi), (xxxii) and (xxxiv), the term "industrial undertaking" means

(3.) THE same judgment dealt with the wealth -tax exemption claims of two other partners in the firm of M/s. K. A. Veeri Chetty and son. One of the partners, who filed T.C. No. 153 of 1980, disclosed certain facts which showed that the firm's employees were engaged in cleaning, reeling, cutting, etc., of art silk yarn and cutting the cloth brought by the weavers and then folding and packing the same for sale. On this ground, the assessee was held to be engaged in processing the goods and, therefore, entitled to the benefit of the exemption. The other partner who was the assessee in T.C. No. 1351 of 1977, though had not brought out facts that this particular partnership firm was engaged in cleaning, reeling, cutting, etc., of art silk yarn, since in the other case T.C. No. 153 of 1980 relating to the same firm there were facts disclosing those activities, that was relied on and it was held that the assessee was entitled to the exemption claimed. We have verified the records relating to this case and find that T.C. No. 1351 of 1977 related to the assessment year 1975 -76 and T.C. No. 153 of 1980 related to the assessment year 1976 -77. However, in both these cases, the assessing officer has followed his earlier order relating to the assessment year 1974 -75. The present two tax cases relate to the assessment years 1974 -75 and 1975 -76. The decision in CWT v. K. Lakshmi therefore, will squarely apply to these cases also which is only an assessment relating to another partner of the same firm. Accordingly, we answer the question referred in the affirmative and against the Revenue. The respondent will be entitled to his costs. Counsel's fee is Rs. 500.