COMMISSIONER OF WEALTH TAX vs S.C. SETHI and Another

Arijit Pasayat, C J.

Heard.

These two references have been made u/s 27(1) of the Wealth Tax Act, 1957 (hereinafter referred to as the ''Act''), by the Income Tax Appellate Tribunal, Delhi Bench ''A'' (hereinafter referred to as ''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 Tribunal was legally correct in holding, that the firm in which the assessed was a partner which had been buying brass articles, getting them nickel 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 assessed for exemption u/s 5(1)(xxxii) of the Wealth Tax Act, 1957 ?"

Factual position which needs to be noted is as follows : assessed 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 nickel or silver plated from parties doing job work for the assessed 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 assessor�s stand that the firm is an exporter of such goods, claim before the revenue authorities was that the capital of the assessed 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, assessed is not entitled to relief claimed. Appellate Assistant Commissioner (hereinafter referred to as the ''AAC'') also rejected the claim. In appeal before the Tribunal, first the case of the assessed S.C. Sethi (WT Ref. No. 15/82) was taken up. Tribunal recorded the following factual finding :

"On very careful perusal of the provisions contained in section 5(1)(xxxii) of the Act read with the Explanation to clause (xxxi), we are of the opinion that the assessed is engaged in the processing of goods. It has been held by the Appellate Assistant Commissioner, which is not in challenge before us at the instance of the revenue , that the firm in which the assessed 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 the engraving. It has been explained to us in the court that after the job work is done by the parties, the assessed 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 (xxxi) 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 assessed in respect of his interest in that firm. We set aside the orders of the authorities below on this issue and direct the Wealth Tax Officer to compute the interest of the assessed 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 WT Ref. No. 46/82.

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.

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.

The references are accordingly returned unanswered.