Court defines "industrial undertaking" under Wealth Tax Act, requiring direct involvement in manufacturing process.

The court clarified that the term "industrial undertaking" under the Wealth Tax Act includes activities like manufacturing or processing of goods but not merely instructing others to manufacture. The court held that direct involvement in the manufacturing process is necessary for an assessee to be considered engaged in manufacturing. Various cases were decided based on whether the assessee was involved in manufacturing or processing activities, with outcomes varying depending on the specific facts of each case. The court rejected a request for remand, emphasizing the assessee's duty to disclose all relevant facts. The tax cases were disposed of without costs.

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Issues Involved:
1. Interpretation of "industrial undertaking" u/s 5(1)(xxxii) of the W.T. Act, 1957.
2. Determination of whether the assessee is engaged in the manufacture or processing of goods.
3. Applicability of exemption based on the assessee's involvement in manufacturing or processing activities.

Summary:

Issue 1: Interpretation of "industrial undertaking" u/s 5(1)(xxxii) of the W.T. Act, 1957
The court examined the definition of "industrial undertaking" as provided in the Explanation to s. 5(1)(xxxii) of the W.T. Act, 1957. The term includes undertakings engaged in the generation or distribution of electricity, construction of ships, manufacture or processing of goods, and mining. The court clarified that the expression "in the business" applies only to the generation or distribution of electricity or any other form of power and not to the manufacture or processing of goods.

Issue 2: Determination of whether the assessee is engaged in the manufacture or processing of goods
The court emphasized that "engaged in manufacturing" requires the assessee's direct involvement in the manufacturing process, which could include employing laborers. The court rejected the contention that goods manufactured by an outside agency under the assessee's instructions or specifications would qualify as the assessee being engaged in manufacturing. However, the court acknowledged that involvement in any processing activity that contributes to the end product qualifies as "processing of goods."

Issue 3: Applicability of exemption based on the assessee's involvement in manufacturing or processing activities
- T.C. Nos. 1369 and 1370 of 1977: The assessee purchased materials and had them woven by outside weavers. The court held that this did not constitute engagement in manufacturing or processing of goods. The question was answered in the negative and in favor of the Revenue.
- T.C. No. 1351 of 1977: The assessee, a partner in a firm involved in cleaning, reeling, cutting, etc., was held to be engaged in processing of goods. The question was answered in the affirmative and against the Revenue.
- T.C. Nos. 1386 and 1604 of 1977: Similar facts to T.C. Nos. 1369 and 1370 of 1977 led to the same conclusion. The question was answered in the negative and against the assessee.
- T.C. No. 186 of 1978: For M/s. Goodwill & Co., the facts were similar to other cases where the assessee was not engaged in manufacturing. For M/s. V.G.L. Company, partial manufacturing by the assessee qualified for the exemption. The question was answered in the affirmative for V.G.L. Company and in the negative for Goodwill & Co.
- T.C. No. 187 of 1978: Identical to T.C. No. 186 of 1978, the question was answered similarly.
- T.C. Nos. 384 and 385 of 1978: The firm engaged in dyeing and twisting yarn was held to be engaged in processing of goods. The question was answered in the affirmative and against the Revenue.
- T.C. No. 394 of 1978: The assessee's activities of purchasing materials and having them woven by outside weavers did not qualify as engagement in manufacturing. The question was answered in the negative and against the assessee.
- T.C. No. 153 of 1980: The assessee's involvement in cleaning, reeling, cutting, etc., qualified as processing of goods. The question was answered in the affirmative and against the Revenue.
- T.C. Nos. 630 and 631 of 1981: Similar to T.C. Nos. 1369 and 1370 of 1977, the assessee was not engaged in manufacturing or processing. The question was answered in the negative and against the assessee.

Request for Remand:
The court declined the request for remand, stating that it is the primary duty of the assessee to disclose all relevant facts without demur. The erroneous approach of the Tribunal regarding the word "business" did not justify a remand.

Conclusion:
The tax cases were disposed of accordingly, with no order as to costs.

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