Manufacture test for industrial undertaking exemption applied to pickle and spice preparation, securing wealth-tax relief.

Preparation of pickles, masalas and spices was treated as manufacture because the process transformed raw materials into a new and distinct product with a different character and use. On that settled test, the partnership firm was regarded as an industrial undertaking, and the assessee's interest in the firm qualified for exemption under section 5(1)(xxxii) of the Wealth-tax Act. The exemption therefore applied to the value of that interest, and the wealth-tax computation was required to be reduced accordingly.

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Issues: Whether the assessee's interest in a partnership firm engaged in preparing pickles, masalas and spices qualified for exemption under section 5(1)(xxxii) of the Wealth-tax Act on the footing that the firm was an industrial undertaking engaged in the manufacture of goods.

Analysis: The activity of preparing pickles and spices was treated as resulting in a product different from the raw materials used. Applying the settled test of manufacture, the process was held to involve more than mere preparation and to bring into existence a new and distinct article having a different character and use. The firm's business was therefore regarded as manufacture of goods and as falling within the expression industrial undertaking for the purpose of the exemption.

Conclusion: The assessee was entitled to exemption under section 5(1)(xxxii) of the Wealth-tax Act in respect of the value of the interest in the firm's industrial undertaking.

Final Conclusion: The exemption claim succeeded and the assessed wealth-tax liability was directed to be reduced accordingly.

Ratio Decidendi: Preparation of goods that transforms raw materials into a new and distinct product with a different character and use constitutes manufacture for the purpose of the industrial undertaking exemption.

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