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Delhi High Court
Commissioner Of Wealth-Tax New … vs S.C. Sethi And A.N. Sethi on 3 August, 2000
Equivalent citations: 2000 (56) DRJ 578
Author: A Pasayat
Bench: P . Arijit, D.K.Jain


Arijit Pasayat, C.J.

1. Heard.

These two references have been made under Section 27(1) of the Wealth- tax Act, 1957(in short the ‘Act’) by the Income-tax Appellate Tribunal, Delhi Bench ‘A’ (in short the ‘Tribunal’). Since identical questions are involved, the two cases are taken up together for disposal. The common question referred for opinion of this Court is as follows:

“Whether on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was legally correct in holding that the firm in which the assessee was a partner which had been buying brass articles, getting them nickle or silver plated from parties doing job work and thereafter soldering and engraving such articles so as to make them fit for export as fancy articles, was engaged in the processing or manufacturing of goods as to qualify the assessee for exemption under Section 5(1)(xxxii) of the Wealth-tax Act, 1957?”

2. Factual position which needs to be noted is as follows: Assessee is a partner in firm M/s. Regal Trading Corporation. Business activities of the firm consist of buying brass articles from the market, getting them nickled or silver plated from parties doing job work for the assessee and thereafter soldering and engraving such articles so as to make them fit for export as fancy articles to the foreign markets. As it was assessee’s stand that the firm is an exporter of such goods, claim before the revenue authorities was that the capital of the assessee with the said firm is exempt under the provisions of Section 5(1)(xxxii) of the Act. Wealth-tax Officer opined that the firm was not carrying on any manufacturing process and, therefore, assessee is not entitled to relief claimed. Appellate Assistant Commissioner (in short the ‘AAC’) also rejected the claim. In appeal before the Tribunal, first the case of the assessee S.C. Sethi (WTR No.15/82) was taken up. Tribunal recorded the following factual finding:

“On very careful perusal of the provisions contained in Sec. 5(1)(xxxii) of the Act read with the Explanation to Clause (xxxii), we are of the opinion that the assessee is engaged in the processing of goods. It has been held by the AAC, which is not in challenge before us at the instance of the Revenue, that the firm in which the assessee is a partner is in fact buying various articles from different dealers in Moradabad and then sends the same to various parties for plating, soldering and engraving. It has been explained to us in the court that after the job work is done by the parties, the assessee finally assembles the parts, does the necessary soldering or gets them done and sells the products so made in the market by exports as products of its own. This process, in our opinion, is covered within the meaning given to the phrase, `processing of goods’ in Explanation to Clause (xxxii) which is also applicable to clause (xxxii) of sub section (1) of Section 5 of the Act. In our opinion, therefore, the authorities below erred in refusing to give necessary exemption to the assessee in respect of his interest in that firm. We set aside the orders of the authorities below on this issue and direct the WTO to compute the interest of the assessee in the firm and exempt u/s. 5(1)(xxxii).”

Following the said decision, the claim was allowed in A.N. Sethi’s case which is the subject matter of adjudication in WTR No. 46/82.

3. Learned Counsel for the revenue submitted that Tribunal has recorded a finding which is not factually established by the assessee. It is stated that no final activity which made the articles fit for export pursuant to any process of manufacture or processing was undertaken.

In spite of service of notice there is no appearance on behalf of the assessee.

4. The conclusions of the Tribunal which have been quoted above are essentially factual, giving rise to no question of law. Therefore, we decline to answer the references.

5. The references are accordingly returned unanswered.

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