1969 (1) TMI 14 - HC - Wealth-tax

Summary

Issues Involved:
1. Whether the appeals preferred by the revenue are defective and untenable.
2. Whether the appeal filed by the revenue for the assessment year 1959-60 was within time.
3. Whether the delay in filing the appeal for the assessment year 1959-60 should be condoned.
4. Whether the assessee-company is entitled to exemption under section 45(d) of the Wealth-tax Act.

Detailed Analysis:

1. Whether the appeals preferred by the revenue are defective and untenable:
The Tribunal held that the appeals filed by the revenue were in order. Although the initial consolidated appeal was defective as it encompassed two assessment years, the revenue rectified this by filing a separate appeal for the assessment year 1959-60. The Tribunal observed that the first appeal was impliedly confined to the assessment year 1958-59. Regarding the non-filling of the relief column, the Tribunal deemed that the relief claimed was clear and thus did not invalidate the appeals. The court agreed with the Tribunal's view, answering the first question in the affirmative and against the assessee.

2. Whether the appeal filed by the revenue for the assessment year 1959-60 was within time:
The Tribunal found that the appeal for the assessment year 1959-60, filed on January 16, 1962, was within time. The court concurred with this finding, answering the second question in the affirmative and against the assessee.

3. Whether the delay in filing the appeal for the assessment year 1959-60 should be condoned:
Even if the appeal was assumed to be barred by time, the Tribunal held that it was a fit case for condoning the delay, as prayed for by the revenue. The court agreed with this view, answering the third question in the affirmative and against the assessee.

4. Whether the assessee-company is entitled to exemption under section 45(d) of the Wealth-tax Act:
The main issue revolved around whether the assessee, a government-owned corporation engaged in constructing dams and barrages, qualified as an "industrial undertaking" under section 45(d) of the Wealth-tax Act. The Tribunal held that the company was primarily engaged in construction, and its manufacturing activities (processing steel, crushing stones, etc.) were incidental and did not qualify for the exemption. However, the court disagreed, noting that the manufacturing activities were of considerable magnitude and not merely incidental. The court emphasized that the term "engaged" implies continuous occupation in manufacturing as a principal business, not just occasional participation. The court referred to the Supreme Court's interpretation in the case of Regional Provident Fund Commissioner, Bombay v. Shri Krishna Metal Manufacturing Co., which suggested that if incidental activities are of large magnitude, they may be considered principal activities from a business point of view. The court concluded that the assessee's manufacturing activities were substantial and integral to its business, thus qualifying it for exemption under section 45(d). The court answered the fourth question in the negative and against the revenue, granting the assessee exemption and awarding costs fixed at Rs. 200.