COMMISSIONER OF WEALTH TAX Vs. NATARAJAN A N

JUDGEMENT

(1.) BY these reference applications relating to assessment years 1979-80 and 1980-81, the Tribunal referred the following question of law, for the opinion of this court, under section 27(1) of the Wealth-tax Act, 1957 :

(2.) THE point for consideration is whether the partnership firm should be treated as industrial undertaking so as to claim exemption under section 5(1)(xxxii) of the Wealth-tax Act. THE assessee claimed exemption under section 5(1)(xxxii) of the Wealth-tax Act out of the share income derived from a partnership firm, which is said to be engaged in manufacturing activities. THE Wealth-tax Officer in the original assessment granted exemption in respect of the assessee's share in the partnership firm since the firm is an industrial undertaking. So also, in the case of another partner, the Wealth-tax Officer granted exemption in respect of the assessee's share in the partnership firm. According to the Commissioner of Income-tax, such an allowance of exemption is erroneous and prejudicial to the interests of the Revenue. THE Commissioner of Income-tax, therefore, set aside the assessment and directed the Wealth-tax Officer to redo the assessment for both the assessment years. On appeal, the Tribunal accepted the assessee's contention that the firm in which he is the partner is an industrial undertaking, and therefore his share income is exempted under section 5(1)(xxxii) of the Wealth-tax Act. This view was taken by the Tribunal, following an earlier order of its own in the case of Smt. Annai Jayabarathi, Virudhunagar, in W.T.A. Nos. 340 and 341 (Mds.) of 1977-78, dated July 30, 1980.