1988 (11) TMI 85 - HC - Wealth-tax

Court grants exemption for printing business under Wealth-tax Act, emphasizing broad interpretation of 'industrial undertaking.'

The court allowed the writ petitions challenging the denial of exemption under section 5(1)(xxxi) of the Wealth-tax Act for the assessment years 1974-76 ... Exemptions, Wealth Tax Issues:Assessment under Wealth-tax Act for the years 1974-76 and 1975-76; Claim of exemption under section 5(1)(xxxi) of the Act; Denial of exemption by authorities; Interpretation of 'industrial undertaking' for exemption eligibility.Analysis:The judgment pertains to two writ petitions challenging the denial of exemption under section 5(1)(xxxi) of the Wealth-tax Act for the assessment years 1974-76 and 1975-76. The petitioner, engaged in printing business, claimed exemption but was denied based on the turnover comparison between job works and own products. The key contention was whether the petitioner's activity qualified as an 'industrial undertaking' for exemption. The petitioner argued that manufacturing end-products, regardless of raw material source, should entitle exemption. The court analyzed relevant precedents and the Act's provisions to determine eligibility.The court examined section 5(1)(xxxi) of the Act, which exempts assets of an 'industrial undertaking.' It noted that the provision does not specify that raw materials must be self-purchased for exemption eligibility. The court found merit in the petitioner's argument that manufacturing or processing end-products qualifies for exemption. Citing precedents like CIT v. Ajay Printery Pvt. Ltd. and CIT v. Commercial Laws of India (P.) Ltd., the court emphasized the distinction between raw materials and final products in manufacturing, supporting a broad interpretation of 'manufacture' and 'process.'The court referenced decisions such as CWT v. K. Lakshmi and CIT v. J. B. Kharwar and Sons to highlight the judiciary's consistent liberal interpretation of manufacturing and processing activities for exemption purposes. It acknowledged the expansive approach taken by courts in defining these terms. Ultimately, the court allowed the writ petitions, quashed the impugned order, and directed authorities to grant relief to the petitioner. The judgment emphasized the broad interpretation of manufacturing and processing activities to determine eligibility for exemption under the Wealth-tax Act.