COMMISSIONER OF WEALTH TAX Vs. LATA NAWALKHA

JUDGEMENT

(1.) THIS is a reference application under Section 27(1) of the Wealth-tax Act, 1957, at the instance of the Commissioner of Wealth-tax, Jaipur, to decide the following question, of law, namely :

(2.) THE assessee is an individual. She is a partner in the firm, M.D. Jewellers, Jaipur. THE assessee claimed exemption under Section 5(1)(xxxii) of the Wealth-tax Act, 1957, on the plea that M.D. Jewellers is an industrial undertaking. THE Wealth-tax Officer rejected the contention of the assessee. According to the Wealth-tax Officer, the character of the stone is not changed and there was no manufacturing or processing of the stones in the business carried on by the assessee. THE assessee appealed to the Appellate Assistant Commissioner. In the appeal, it was contended that the law does not require that the "industrial undertaking" should be of national importance or should be registered as an industrial undertaking. It was also contended that the partnership firm, M.D. Jewellers, Jaipur, used to purchase rough emeralds known as "kharad" from the local market. After sorting out the rough emeralds, according to size, they were given to the karigars who cut, shaped and polished them in their own workshops or factories. THE karigars were paid labour charges, according to the work done. Thus, it was wrong to say that in the business carried on by the assessee no manufacturing or processing was involved. It was also pleaded that simply because the assessee was not having any plant or machinery or workshop for carrying on the work of manufacturing, the claim of exemption under Section 5(1)(xxxii) cannot be disallowed. However, the plea put forth by the assessee before the Appellate Assistant Commissioner failed and feeling dissatisfied the assessee preferred an appeal before the Tribunal. THE Tribunal, vide order dated July 11, 1980, allowed the appeal of the assessee and reversed the finding of the Appellate Assistant Commissioner. On an application being moved by the Revenue before the Tribunal, the Tribunal referred the present question for answer by this court. We have heard Mr. G.S. Bapna, learned counsel appearing for the Revenue, and Mr. N.M. Ranka, learned counsel for the assessee. Mr. Bapna contended that the Tribunal committed an error in granting the benefit of Section 5(1)(xxxii) to the assessee in the absence of a specific finding that the manufacturing or processing of goods is done either wholly or even in some part by the firm of which the assessee is a partner. In support of his contention, he placed reliance on a Division Bench judgment of this court : CWT v. Vimal Chand Daga (HUF) [1988] 172 ITR 264. Before we proceed to determine as to whether the Tribunal had recorded the requisite finding to bring the case within the ambit of Section 5(1)(xxxii) or not, we think it proper to refer to the findings of the Tribunal while reversing the finding of the Appellate Assistant Commissioner as under :