1982 (10) TMI 75 - AT - Wealth-tax

Summary

Issues:
- Whether poultry farming qualifies as an industrial undertaking under section 5(1)(xxxii) of the Wealth Tax Act, 1957.
- Whether the assessee is entitled to exemption under section 5(1)(x) for tools and instruments used in the poultry business.

Analysis:

Issue 1: Poultry Farming as an Industrial Undertaking
The appeals and cross-objections were against the AAC's order related to the assessment years 1976-77 and 1977-78. The revenue contended that poultry farming does not fall under the definition of an industrial undertaking as per section 5(1)(xxxii) of the Wealth Tax Act. The assessee argued in favor of the AAC's decision, citing precedents from the Punjab & Haryana High Court and the Allahabad High Court. The Tribunal analyzed the definition of "industrial undertaking" and "processing of goods" as per the Act and the court judgments. It was established that the poultry farming business met the criteria of an industrial undertaking based on registration as a small scale industrial unit and industry publications. The Tribunal concluded that the assessee's interest in the firm qualified for exemption under section 5(1)(xxxii) of the Act.

Issue 2: Exemption under Section 5(1)(x) for Tools and Instruments
Regarding the cross-objections by the assessee, the argument was made that there is no significant difference between business and profession or vocation. The assessee claimed exemption under section 5(1)(x) for tools and instruments used in the poultry business. The revenue opposed this claim, stating that the assessee's interest in the firm was the only consideration for exemption, and the distinction between profession or vocation and business was crucial. The Tribunal clarified that the exemption under section 5(1)(x) is for tools and instruments necessary for carrying on a profession or vocation, subject to a maximum limit. Since the assessee was a partner in the firm and not independently carrying on a profession or vocation, the claim for exemption under section 5(1)(x) was rightly rejected by the authorities. Therefore, the cross-objections of the assessee were dismissed.

In conclusion, the Tribunal dismissed both the appeals of the revenue and the cross-objections of the assessee, upholding the exemption for the assessee's interest in the poultry farming firm as an industrial undertaking under section 5(1)(xxxii) while rejecting the claim for exemption under section 5(1)(x) for tools and instruments.