COMMISSIONER OF WEALTH TAX Vs. G NALLAKRISHNAN

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal referred the following question for the opinion of this Court, under S. 27(1) of the WT Act, 1957 :"Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the assessee is entitled to exemption under S. 5(1)(xxxii) of the WT Act, 1957 ?" *

(2.) THE assesseeG. Nallakrishnaninvested a sum or Rs. 79, 680 in a firm called M/s. Asia Engineering Company engaged in building activity on a large scale. Its activities comprised of construction of several large buildings of complex designs, involving large amounts of reinforced concrete works, fabrication of steel for windows, door frames etc. In the asst. yr. 1975-76 and the valuation date being 31st Dec., 1974, the assessee claimed that these activities undertaken by the firm constituted manufacturing activities. THErefore, the assessee claimed that the investment of Rs. 79, 680 made in the said firm should be exempt from the levy of wealth-tax under S. 5(1)(xxxii) of the WT Act, 1957, hereinafter referred to as the 'Act'. THE WTO disallowed the claim for the reason that in his opinion that the carrying on of construction activities by the said firm did not mean that the firm was an industrial undertaking. On appeal, the AAC confirmed the disallowance made by holding that for the purpose of claiming exemption under S. 5(1)(xxxii) of the Act, the firm should be engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. In the opinion of the AAC none of the activities undertaken by the said firm could be said to be activities contemplated under S. 5(1)(xxxii) of the Act, and, therefore, the building activities could not be considered as manufacturing activity could not be considered as manufacturing activity nor processing of goods so a to entitle it to the exemption contemplated under S. 5(1)(xxxii) of the Act.

(3.) THE point for consideration is whether the assessee is entitled to the benefit under S. 5(1)(xxxii) of the Act with regard to the intermediary activities in which the company is engaged in manufacturing steel fabrication work, making doors and windows and also making reinferred concrete works, since, according to the assessee these activities are being done independently and not as an integral part of the main business of construction. Even otherwise, according to the assessee if the intermediary products are made or manufactured and went into the construction work, then also the assessee is entitled to the benefit under S. 5(1)(xxxii) of the Act on the investment made with regard to intermediary activities.