Industrial undertaking exemption under wealth-tax requires clear findings on the firm's own manufacturing or processing activity.

Exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957 required clear findings that the assessee's firm itself carried on the relevant manufacturing or processing activity and qualified as an industrial undertaking. The Rajasthan HC noted that the Tribunal had not recorded specific findings on the full manufacturing chain, the stages performed directly by the firm, or whether work done through labourers formed part of the firm's own activity or that of an outside agency. In the absence of those factual findings, the statutory exemption could not be granted on the material before it, and the matter was sent back to the Tribunal for fresh adjudication.

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Issues: Whether the Tribunal was justified in granting exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957, without recording clear findings on the manufacturing or processing activity carried on by the firm and the extent to which such activity was performed by the firm itself.

Analysis: The exemption depended on the firm being an industrial undertaking, which in turn required clear factual findings about the entire manufacturing or processing chain, the specific stages carried on directly by the firm, and whether the work done through skilled labourers was part of the firm's own activity or that of an outside agency. In the absence of such findings, the statutory benefit could not be granted. The Court agreed with the earlier view that the matter had not been examined in the correct factual perspective and that the relevant tests for determining an industry and the nature of the labour relationship had to be applied first.

Conclusion: The Tribunal was not justified in allowing the exemption on the material before it, and the question was not answered on merits; the matter had to go back for fresh adjudication.

Final Conclusion: The reference ended with the issue sent back to the Tribunal for reconsideration in light of the governing factual and legal requirements, with no order as to costs.

Ratio Decidendi: Exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957 can be granted only when the Tribunal records clear and specific findings showing that the assessee's firm itself carried on the relevant manufacturing or processing activity so as to qualify as an industrial undertaking.

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