COMMISSIONER OF WEALTH TAX Vs. JAGDISH SINGH SEKHAR

JUDGEMENT

(1.) THESE are references under S. 17(1) of the WT Act, 1957 (hereinafter to be referred to as " the Act"). The question referred to us for our opinion is as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal has rightly held that the business of the firm, M/s Bharat Stone Works, Bokaro Steel City, is an "industrial undertaking" within the meaning of the Explanation to S. 5(1)(xxxii) of the WT Act, 1957, and so the assessee is entitled to the benefit under S. 5(1) (xxxii) of the said Act ? "

(2.) THE assessment years in the present references are 1974 -75 and 1975 -76. The assessee is a partner in a firm, M/s Bharat Stone Works, Bokaro Steel City. The firm is engaged in extracting stones and boulders from quarries, crushing them to small pieces with the help of machinery and power and selling them as small chips. In the years in question, the assessee filed a return showing net wealth at Rs. 1, 14,875 and Rs.1,45,660, respectively. The assessee claimed that his interest in the factory (stone crushing plant) was exempt in terms of S. 5(1), cls. (xxxi) and (xxxii) of the Act. The WTO rejected the stand of the assessee on the footing that unearthing of stones and boulders and crushing them to small pieces did not involve any manufacturing or processing of goods or mining. The assessee appealed against the order of the WTO. The AAC by a consolidate order accepted the plea of the assessee holding that the activity of the assessee was a mining/manufacturing process. An appeal by the Revenue before the Tribunal was filed which was dismissed. The Revenue, being aggrieved by the order of the Tribunal, claimed reference before this Court. Hence, the present references before us.

(3.) SEC . 4 of the Act, lays down what assets are to be included to constitute the net wealth of the assessee. Sec. 5 lays down the assets which are not to be included in the tally of assessable items of the assessee. Clauses (xxxi) and (xxxii) prescribe that the value or interest in any industrial undertaking has to be exempted in the calculation of net taxable wealth. Clause (xxxi) was inserted in the Act in 1972 by the Finance Act 16 of 1972. It reads as follows: