Wealth-tax exemption for a partner's industrial undertaking interest extends to land and buildings forming part of the undertaking.

The exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957, was held to cover a partner's interest in an industrial undertaking, including the land and buildings forming part of that undertaking. Applying an earlier Patna High Court view, the value attributable to the factory shed and factory office building could not be excluded from the assessee's exempt interest merely because those assets were part of the firm's industrial unit. The departmental objection to deduction of that value therefore failed, and the exemption claim was upheld.

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Issues: Whether, for the purpose of exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957, the value of factory shed and factory office building forming part of the firm's industrial undertaking could be excluded from the assessee's interest in the firm's assets.

Analysis: The question stood covered by an earlier decision of the same court, which had already examined the scope of the exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957. That decision held that the exemption is available in respect of the interest of a partner in an industrial undertaking and extends to the land and building constituting part of such undertaking. Following that binding view, the claimed deduction of the value attributable to the factory shed and factory office building was not sustainable.

Conclusion: The question was answered in the affirmative in favour of the assessee and against the Department.

Final Conclusion: The reference was answered by holding that the assessee was entitled to the claimed exemption, and the departmental objection to deduction of the value of the factory shed and factory office building failed.

Ratio Decidendi: The exemption for a partner's interest in an industrial undertaking under section 5(1)(xxxii) of the Wealth-tax Act, 1957, extends to land and buildings forming part of that undertaking.

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