Industrial undertaking status for dyeing and printing units upheld where processing converts cloth into a different end product.

Firms engaged in dyeing, printing and converting plain white cotton cloth into saris were treated as industrial undertakings for section 5(1)(xxxii) of the Wealth-tax Act, 1957, because processing need not destroy the original identity of the article if it produces a different end product. Applying that principle, the firms' activities amounted to processing and the assessees' interest in the firms qualified for exemption.

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Issues: Whether firms engaged in dyeing and printing white cotton cloth and preparing saris therefrom formed an "industrial undertaking" within the meaning of section 5(1)(xxxii) of the Wealth-tax Act, 1957, so as to entitle the assessees to exemption in respect of their interest in the firms.

Analysis: The activity carried on by the firms consisted of dyeing, printing and converting plain white cloth into processed products. The Court followed its earlier view that processing need not destroy the original identity of the article; if the activity brings about a change in the material and results in a different end product, the undertaking answers the description of an industrial undertaking. Since the present firms carried on activities similar to those earlier held to amount to processing, the assessees' interest in the firms qualified for exemption.

Conclusion: The firms were industrial undertakings within section 5(1)(xxxii) of the Wealth-tax Act, 1957, and the assessees were entitled to the claimed exemption; the answer was in the affirmative and in favour of the assessees.

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