Industrial undertaking exemption applies to organised handloom manufacturing activity; partnership interest qualified for wealth-tax relief.

Interest in a partnership firm engaged in systematic handloom saree production was treated as an interest in an industrial undertaking for wealth-tax exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957. The Tribunal noted that the firm purchased yarn and other materials, employed weavers, and carried on organised, continuous manufacturing activity; on that factual basis, the assessee's claim for exemption was upheld. Authorities relied on by the Revenue were distinguished because they concerned firms not owning looms and materially different facts. The revenue objection therefore failed, and the exemption was maintained.

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Issues: Whether the assessee's interest in the partnership firm engaged in handloom saree activities qualified for exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957 as an interest in an industrial undertaking.

Analysis: The facts for the year under appeal were found to be identical to the earlier assessment years, when the Tribunal had already held that the partnership firm systematically purchased yarn and other materials, employed weavers, and carried on organised and continuous manufacturing activities. The contrary reliance placed on decisions concerning firms not owning looms was held to be distinguishable on facts. The Tribunal also found support in the decision treating similar business activities as manufacture or processing for tax purposes.

Conclusion: The assessee's partnership interest was held eligible for exemption under section 5(1)(xxxii) of the Wealth-tax Act, 1957, and the Revenue's objection failed.

Final Conclusion: The appeal was resolved by upholding the exemption claim and maintaining the order in favour of the assessee.

Ratio Decidendi: A partnership engaged in systematic and continuous manufacture of handloom goods through organised production activities constitutes an industrial undertaking for purposes of the wealth-tax exemption.

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