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of <h1>Court rules in favor of firm outsourcing manufacturing, qualifies as industrial undertaking under Wealth-tax Act</h1> The High Court of Allahabad ruled in favor of the assessee firm, M/s. H. Maula Buksh Sons and Co., in a case concerning the interpretation of ... Exemptions, Wealth Tax Issues: Interpretation of 'manufacturing or processing of goods' under section 5(1)(xxxii) of the Wealth-tax Act, 1957; Determination of whether a firm qualifies as an industrial undertaking under the Act.In this judgment delivered by the High Court of Allahabad, the court addressed two common questions referred by the Appellate Tribunal regarding the assessment year 1974-75 under the Wealth-tax Act, 1957. The first issue was whether the fabrication of leather boots constituted manufacturing or processing of goods under section 5(1)(xxxii) of the Act. The second issue involved determining if a firm, M/s. H. Maula Buksh Sons and Co., qualified as an industrial undertaking under the same provision, despite not manufacturing the leather boots itself. The assessees, partners in the firm, claimed that the firm's activities of manufacturing and processing leather boots made it an industrial undertaking exempt under the Act.The Revenue opposed the claim, arguing that the firm did not manufacture the boots but outsourced the manufacturing to contract laborers. However, the Tribunal accepted the assessees' contention, stating that the firm's activities qualified it as an industrial undertaking under section 5(1)(xxxii) of the Act. The court referred to previous decisions where similar scenarios were considered, emphasizing that the nature of the activity, not the ownership of fixed assets, determined whether a firm qualified as an industrial undertaking. Relying on these precedents, the court held that the firm in question should be characterized as an industrial undertaking despite outsourcing the manufacturing of leather boots.Ultimately, the court answered both questions in favor of the assessees and against the Revenue, concluding that the firm qualified as an industrial undertaking under section 5(1)(xxxii) of the Wealth-tax Act, 1957, even though it engaged in manufacturing leather boots on a job basis through contract laborers.
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