COMMISSIONER OF WEALTH TAX Vs. ALOK PRAKASH

JUDGEMENT

(1.) These two references have been made at the instance of the Revenue. The Tribunal, Delhi, has referred the only one question of law under Section 27(1) of the WT Act, 1957 (hereinafter referred to as 'the Act') in WT Ref. No. 45 of 1986 for opinion to this Court which is as follows : Whether, in a case of mere purchase and sale of ornaments without having any machinery or any labour employed, benefit under Section 5(1)(xxxi) of the WT Act can be allowed to an assessee ? Whereas two questions have been referred in WT Ref. No. 100 of 1986 which are as follows : 1. Whether an assessee like the one before the Hon'ble Tribunal could claim the benefit of exemption under Section 5(1)(xxxi) of the WT Act, 1957, merely on the basis of purchase and sale of ornaments and by employing self-employed persons as labour on piece to piece work basis.

(2.) Whether the assessee could be considered as an industrial undertaking on the facts of this case and legally entitled to exemption conferred by Section 5(1)(xxxi) of the WT (Act), 1957 ? 2. The assessment years involved in the WT Ref. No. 45 of 1986 are 1981-82 and 1982-83. Whereas, in WT Ref. No. 100 of 1986, the assessment year involved is 1980-81. The respondents in both the cases are partners in a firm known by the name and style as M/s Bhagat Jewellers, Sarafa, situate at Meerut. The firm deals in purchase and sale of gold ornaments on the basis of orders obtained from the customers. The ornaments are got manufactured by the firm from various goldsmiths on labour charge basis. The firm has not installed any machinery nor any person was employed directly for the manufacturing of the ornaments. The respondents claimed exemption under Section 5(1)(xxxi) of the Act on the ground of the firm being an industrial undertaking. The WTO has disallowed the exemption which order was reversed by the AAC in appeal who had accepted the claim of the respondents which order has been upheld by the Tribunal.

(3.) We have heard Shri A.N. Mahajan, the learned standing counsel for the Revenue and Shri Amitabh Agrawal holding the brief of Shri P.K. Jain on behalf of the assessee-respondents. The learned standing counsel submitted that in order to enable an assessee to claim exemption under Section 5(1)(xxxi) of the Act, it is essential that the industrial undertaking should belong to him and further it should be engaged in the manufacture or processing of goods. The idea underlying is that the manufacture or processing of goods should be done in the industrial undertaking belonging to the assessee and not on job work basis from outside. At least any one mode of process should be undertaken by the assessee in his undertaking, The learned counsel for the respondents, however, submitted that the respondents have been getting the gold ornaments manufactured as per the requirements of the customers on labour charges and there is no such requirement that manufacturing activities should be done at its own premises.