To claim the benefit of section 5(1)(xxxii) of the Wealth-tax Act, 1957, the assessee must prove the existence of the ingredients of the provision, including that the assessee's undertaking is engaged in the business of manufacture or processing of goods and that the requisite findings of fact have been recorded by the Tribunal.

1. - This order shall dispose of Wealth-tax References Nos. 66 of 1981, 110 of 1984, 111 of 1984, 117 of 1984, 118 of 1984, 6 of 1985, 14 of 1985, 57 of 1985, 60 of 1985, 65 of 1985, 83 of 1986, 84 of 1986 and 75 of 1986, all of which are similar matters involving the same point for decision.

2. This reference under section 27(1) of the Wealth-tax Act, 1957, is at the instance of the Commissioner of Wealth-tax, Jaipur, to decide the following question of law, namely:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that M/s. Vimal Gems and M/s. Jus Gems are industrial undertakings within the meaning of the Explanation to section 5(1)(xxxi) read with clause (xxxii) of the Wealth-tax Act, 1957, and the assessee being a partner is entitled to exemption under section 5(1)(xxxii) of the said Act in respect of his interest in the assets of these partnership firms ? "

3. The relevant assessment year is 1977-78. The assessee claims to be an " industrial undertaking " within the meaning of the Explanation to clause (xxxi) of sub-section (1) of section 5 of the Wealth-tax Act, 1957, and on this basis it claims the benefit of clause (xxxii) of sub-section (1) section 5 of the Act. These provisions read as under:

Explanation to clause (xxxi) of sub-section (1) of section 5 of the Act:

"Explanation.-For the purposes of clause (xxxa), this clause, clause (xxxii) and clause (xxxiv), 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; Section 5(1)(xxxii).-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. The Wealth-tax Officer rejected the assessee's claim and the Appellate Assistant Commissioner affirmed that view dismissing the assessee's appeal. Further appeal of the assessee to the Tribunal has been allowed. Hence, this reference at the instance of the Commissioner.

5. The facts found proved by the Tribunal on the basis of which the above question of law has been decided by the Tribunal in the assessee's favour are now stated. The assessee is a partner in two firms which carry on the business of purchasing rough emerald from local market and then convert it into tawdda, potta and cut emerald by processing. It is said that in this process, rough emeralds are sorted out, converted into ghats and finally shaped, polished and coloured and that manufacturing is got done through skilled labourers who are paid on the basis of work done. The assessee contended that the firms of which he is a partner manufacture and process emerald and this activity make them " industrial undertakings " entitled to the benefit of section 5(1)(xxxii) read with the Explanation to section 5(1)(xxxi) of the Act. The Tribunal has held in the assessee's favour on these findings alone.

6. Learned counsel for the Revenue contended that there is no finding of the Tribunal that the manufacture or processing of goods is done either wholly or even in part by the firms of which the assessee is a partner and, therefore, the requisite finding to give the benefit of these statutory provisions is absent. Learned counsel further contends that the Tribunal was not justified in giving this benefit to the assessee without recording the findings requisite to attract this statutory provision.

7. In reply, learned counsel for the assessee strenuously urged that the benefit of this provision was rightly given to the assessee. He argued that the skilled labourers through whom the work was got done by these firms we