1984 (10) TMI 84 - AT - Wealth-tax

Tribunal grants exemption under Wealth Tax Act for firm's processing activities.

KESHABLAL HANSRAJ PATEL. Versus WEALTH TAX OFFICER.

KESHABLAL HANSRAJ PATEL. Versus WEALTH TAX OFFICER. - TTJ 023, 361, Issues:Assessment of wealth under the WT Act, 1957 - Claim for exemption under s. 5(1)(xxxii) - Definition of 'industrial undertaking' - Whether activities amount to processing of goods - Application of CBDT Circular No. 329 dt. 22nd Feb., 1982 - Limitation under s. 5(1A) of the Act.Analysis:The appeal was filed by the assessee against the order of the AAC related to the assessment of the assessee's wealth for the assessment year 1977-78 under the WT Act, 1957. The main issue in this appeal was the assessee's claim for exemption under s. 5(1)(xxxii) of the Act based on the decision of the Calcutta High Court in a specific case. The assessee, a partner in a firm engaged in processing logs into planks and boards, argued that the firm qualified as an industrial undertaking under the Explanation to s. 5(1)(xxxii) and should be exempt. However, the WTO and AAC rejected the claim, citing different court decisions. The representative for the assessee referred to various legal precedents and a CBDT Circular to support the claim.The Tribunal analyzed the definition of 'industrial undertaking' under s. 5(1)(xxxii) and the term 'processing of goods.' While the Act does not define 'process,' it was established that processing has a broader scope than manufacturing. Legal precedents were cited to illustrate that certain activities, even if not amounting to manufacturing, could qualify as processing. The Tribunal referred to the Supreme Court's decision in a case involving ore extraction and processing, where the Court held such activities amounted to processing of goods. The Tribunal also discussed the CBDT Circular, which indirectly supported the assessee's case as the firm was not merely converting trees into firewood but engaged in processing goods.Based on the legal principles and precedents discussed, the Tribunal held that the firm in question was indeed involved in the processing of goods, entitling the assessee to the relief under s. 5(1)(xxxii) of the Act. However, the Tribunal agreed that the relief should be subject to the limitation specified in s. 5(1A) of the Act. Therefore, the Tribunal allowed the appeal, directing that the assessee's claim for exemption be accepted but subject to the specified ceiling.In conclusion, the Tribunal's decision favored the assessee's claim for exemption under s. 5(1)(xxxii) based on the nature of the firm's activities as processing of goods. The judgment also addressed the limitation under s. 5(1A) of the Act, ensuring the relief granted to the assessee was within the prescribed boundaries.