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Interpretation of whether the firm qualifies as an industrial undertaking for exemption under section 5(1)(xxxii) of the Wealth-tax Act. Analysis: The judgment pertains to a case where the respondent assessee, an individual partner in a firm engaged in running a cold storage and manufacturing ice, claimed exemption under section 5(1)(xxxii) of the Wealth-tax Act for the assessment years 1973-74 and 1974-75. The primary issue was whether the firm qualified as an industrial undertaking within the meaning of the Explanation to section 5(1)(xxxi) of the Act. The Wealth-tax Officer initially rejected the exemption claim, leading the assessee to appeal to the Appellate Assistant Commissioner, who also dismissed the appeals. Subsequently, the Income-tax Appellate Tribunal ruled in favor of the assessee, stating that the firm's activities constituted manufacturing and processing, making it eligible for the exemption. The controversy revolved around the interpretation of the term "industrial undertaking" as defined in the Explanation to section 5(1)(xxxi) of the Wealth-tax Act. The Tribunal's decision was based on finding that the firm was engaged in manufacturing ice and processing potatoes, meeting the criteria outlined in the Act. The Department contested this view, arguing that the Tribunal's interpretation was flawed. However, the High Court, relying on precedent, including the decision in Addl. CIT v. Farrukhabad Cold Storage (P.) Ltd., held that the term "processing of goods" did not necessarily require the manufacture of goods but rather the adaptation of goods for a specific purpose. The Court emphasized that the firm's activities of manufacturing ice and processing potatoes fell within the scope of the Act's definition of an industrial undertaking. Furthermore, the Court referenced the case of CWT v. Mubarakali Khan, which considered the term "manufacture" in a similar context. The High Court reiterated that the Tribunal's findings clearly established that the firm was involved in both manufacturing and processing activities, aligning with the statutory definition of an industrial undertaking. Consequently, the Court ruled in favor of the assessee, affirming their entitlement to the exemption under section 5(1)(xxxii) of the Wealth-tax Act and awarded costs of Rs. 300 to the assessee. In conclusion, the judgment underscores the importance of interpreting statutory definitions within the legal framework and relying on established precedents to determine entitlement to exemptions under tax laws. The Court's decision reaffirmed the assessee's claim based on the firm's activities falling within the ambit of an industrial undertaking as defined by the Wealth-tax Act.
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