COMMISSIONER OF WEALTH TAX Vs. MUBARAKALI KHAN

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has sought our opinion on the following two questions :

(2.) THE dispute relates to the assessment years 1973-74 and 1974-75. THE assessee during these years was a partner in two firms, viz., M/s. Mubarak Ali andamp; Co. and M/s. Mujahid Ali andamp; Co. THEse firms were engaged in manufacture of biris, and the assessee's contention was that, as these firms were an industrial undertaking as defined in the Explanation to Section 5(1)(xxxi), the assessee's share in the aforesaid firm was liable to be exempted from payment of tax in view of Section 5(1)(xxxii). This contention did not find favour with the WTO, but it succeeded before the AAC. THE matter was then taken up by the revenue before the Tribunal but the appeal failed.

(3.) THE process by which biris are made has already been noticed earlier. It is clear that from the tendu leaves and the tobacco, a new and different article, viz., biris, emerge as a result of various processes to which tendu leaves and the tobaccos were subjected. THE firm was as such an industrial undertaking as contemplated by the Explanation to Section 5(1)(xxxi). Once this position is reached, the assessee was clearly entitled to exemption of the value of his shares held in two firms on account of Section 5(1)(xxxii). THE Tribunal was as such right in treating the firm as an industrial undertak- ing within the meaning of the Explanation to Section 5(1)(xxxi) and granting exemption under Section 5(1)(xxxii). We, accordingly, answer both the questions in the affirmative, in favour of the assessee, and against the department. THE assessee is entitled to its costs, which are assessed at Rs. 200. Counsel's fee is assessed at the same figure.