The main legal point established in the judgment is that a firm engaged in manufacturing and processing qualifies as an industrial undertaking under the Wealth-tax Act, entitling the partners to exemption under Section 5 (1) (xxxii).

( 1 ) AT the instance of the Revenue, the following question has been referred under Section 27 (1)of the Wealth-tax Act, 1957 : " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the firm in which the assessee was a partner was an industrial undertaking within the meaning of the Explanation to Section 5 (1) (xxxi) of the Wealth-tax Act, 1957, and was entitled to exemption under Section 5 (1) (xxxii) of the Wealth-tax Act, 1957 ?"

( 2 ) THE respondent assessee is an individual and the valuation date for each assessment was the last date of the relevant calendar year. The assessee is a partner in a registered firm, M/s. Indian cold Storage and Industries Co. , Meerut, which carries on the business of running cold storage and also manufactured ice. In respect of his interest in the aforesaid firm amounting to Rs. 87,686 for the assessment year 1973-74 and the valuation of his interest in the said firm for the subsequent year 1974-75 being Rs. 96,006, the assessee claimed exemption under Section 5 (1) (xxxii) of the Wealth-tax Act on the ground that the firm, M/s. Indian Cold Storage and industries Co. , Meerut, was an industrial undertaking within the meaning of the Explanation to section 5 (1) (xxxi) and, consequently, he was entitled to the exemption claimed.

( 3 ) THE Wealth-tax Officer did not accept the claim for exemption made by the assessee. Aggrieved, the assessee filed two appeals before the Appellate Assistant Commissioner for both the years. The appeals were dismissed by the Appellate Assistant Commissioner. The assessee, thereafter, went up in second appeal to the Income-tax Appellate Tribunal. The Income-tax appellate Tribunal upheld the contention of the assessee and, by finding that the appellant is a partner of the firm which was engaged in manufacturing and processing, held that the assessee was entitled to exemption under Section 5 (1) (xxxii) of the Wealth-tax Act. As a result, the two appeals of the assessee were accepted. The Department thereafter moved an application for making a reference to this court.

( 4 ) FINDING that the question involved was one of law, the Income-tax Appellate Tribunal referred it to the High Court. This question has already been reproduced by us above. The controversy, therefore, is whether the assessee was entitled to the benefit of Section 5 (1) (xxxii) of the wealth-tax Act. He could get its benefit, if it was established that the firm, of which he was a partner, was engaged in an industrial undertaking as denned in the Explanation to Section 5 (1) (xxxi ). The Explanation reads as under : " For the purposes of Clause (xxxa), this clause, Clause (xxxii) and Clause (xxxiv), the term industrial undertaking means an industrial 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 Wealth-tax Officer and the Appellate Assistant Commissioner did not accord benefit to the assessee on the finding which has not been approved by the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal, after consideration of the evidence and the circumstances relevant, found that the assessee was engaged in the business of manufacturing ice and also in processing of potatoes. On this finding, the view of the Income-tax Appellate Tribunal was that the Explanation to Clause (xxxi) of Section 5 (1) applied.

( 6 ) BEFORE us, the Department urged that the view of the Tribunal is erroneous. We are unable to accept the same. The controversy which arises for decision before us is covered by the decision of our High Court in Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd. [1977] 107 ITR 816. In this case, the Division Bench held that the term " processing of goods " as used in Section 2 (7) (d) of the Finance Act need not be of such a nature as to result in the manufacture of good