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1986 Supreme(Pat) 84
PATNA HIGH COURT
Uday Sinha and Nazir Ahmad JJ.
Commissioner Of Wealth Tax
Versus
Panna Devi Dalmia
Taxation Case No. 192 of 1976 ;
Decided On : MARCH 07, 1986
A cold storage is an industrial undertaking and entitled to statutory exemption under Sec. 5(1)(xxxii) of the Wealth-tax Act, 1957.
Headnote:
WEALTH TAX - Industrial undertaking - Cold storage - Whether a cold storage is an industrial undertaking and entitled to statutory exemption under Sec. 5(1)(xxxii) of the Wealth-tax Act, 1957.
Fact of the Case:
The assessee, an individual, had invested in a cold storage firm. The Wealth-tax Officer sought to include the value of her holdings in the cold storage in computing her net wealth under the Wealth-tax Act, 1957. The assessee contended that her interest in the cold storage was exempt under Sec. 5(1)(xxxii) of the Act, which exempts the value of assets forming part of an industrial undertaking belonging to a firm or association of persons of which the assessee is a partner or member.
Finding of the Court:
The Tribunal held that the cold storage was an industrial undertaking and entitled to the statutory exemption under Sec. 5(1)(xxxii) of the Wealth-tax Act, 1957.
Issues: Whether a cold storage is an industrial undertaking and entitled to statutory exemption under Sec. 5(1)(xxxii) of the Wealth-tax Act, 1957.
Ratio Decidendi: The court held that a cold storage is an industrial undertaking within the meaning of Sec. 5(1)(xxxii) of the Wealth-tax Act, 1957. The court reasoned that the term "industrial undertaking" includes an undertaking engaged in the business of processing goods, and that the process of storing potatoes in a cold storage to prevent their decay constitutes processing of goods. The court also held that a cold storage is a plant and comes under an industrial undertaking.
Final Decision: The court answered the question referred to it in the affirmative, in favor of the assessee and against the Revenue.
1. This is a reference under Sec.27(1) of the Wealth-tax Act, 1957 (hereinafter called "the Act"). The question referred for our opinion is whether a cold storage is "an industrial undertaking" and reads as follows :
"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that cold storage is also a plant and comes under an industrial undertaking and is entitled to statutory exemption as provided under Sec. 5(1)(xxxii) of the Wealth-tax Act, 1957 ?"
2. In this reference, we are concerned with the assessment year 1973-74, The assessee is an individual. She (for, the assessee is a lady) had invested large amount in a firm, M/s Vishnu Cold Storage. The value of her holdings was to the tune of Rs. 1,50,000. The Wealth-tax Officer intended to include the value of her holdings in the cold storage for the purpose of reckoning her liability under the Act. The assessee contended that her interest in the cold storage was not liable to be included in terms of Sec. 5(1)(xxxii) of the Act. The Wealth-tax Officer rejected her claim. She, however, succeeded before the Appellate Assistant Commissioner and the Appellate Tribunal. Hence, the reference at the instance of the Revenue.
3. Sec.3 of the Act is the charging section providing that tax shall be charged in respect of the net wealth of every individual, Hindu undivided family and company on the valuation date. Sec. 4 enumerates the assets to be included in computing the net wealth of an individual. As a corollary to Section 4, in Sec. 5 of the Act, it is provided what assets shall not be included. It provides that subject to the provisions of Sub-section (1A), wealth-tax shall not be payable by the assessee in respect of certain assets and those assets shall not be included in the net wealth of the assessee. Then follows several clauses. We are concerned in this case with Clause (xxxii) which reads as under:
"the value, as determined in the prescribed manner of the interest of the assessee in the assets (not being any land or building or any rights in any land or building or any asset referred to in any other clause of this sub-section) forming part of an industrial undertaking belonging to a firm or an association of persons of which the assessee is a partner, or, as the case may be, a member."
4. This clause was inserted by the Finance Act, 1972, and came into force with effect from April 1, 1973. Along with Clause (xxxii) Was also inserted Clause (xxxi). The said clause carried an Explanation which reads as follows :
"Explanation.--For the purposes of this clause and Clause (xxxii), the term industrial undertaking means an undertaking engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining,"
5. The command of the law in terms of Clauses (xxxi) and (xxxii) is that " industrial undertaking" means an undertaking engaged in the business of processing of goods besides other matters. In this case, we are not concerned with "the business of generation or distribution of electricity nor with the construction of ships or in the manufacture of goods or mining". It is patent that the expression "industrial undertaking" in Clause (xxxi) must include processing of goods. The cold storage is engaged in storing potatoes. It has, therefore, to be seen whether by virtue of storing potatoes, a cold storage falls within the ambit of the expression "industrial undertaking".
6. P. Ramanatha Aiyar in his Law Lexicon has stated at page 1023 that "process" is a word which may be applied either to methods of action such as legal proceedings, or to the treatment of substance in transforming and reducing it to a different state and the means of such treatment. Later it is stated " process is a mode of treatment of certain materials to produce a given result; it is an act or a species of acts performed upon the subject-matter to
