G.K. Sharma, J. - (1.) THE Commissioner of Wealth-tax, Jaipur, has filed this reference application under Section 27(3) of the Wealth-tax Act, 1957 (for short, hereinafter, "the Act"), in respect of the assessment year 1977-78,
(2.) THE assessee, Smt Kanchan Devi, filed a return of wealth on August 30, 1977, showing a total wealth at Rs. 5,11,960. THE assessee claimed exemption under Section 5(1)(xxxii) of the Act in respect of the capital of the assessee in the firm, M/s. Ratnalaya. Inquiries were made front the assessee as to whether the firm, M/s. Ratnalaya, was an industrial undertaking. THE assessee filed a reply stating that no registration of M/s. Ratnalaya, being an industrial undertaking, was necessary with the Industries Department, Jaipur. THE assessee was then asked to give bifurcation of the assets that were employed for the purpose of processing, as laid down in Rule 2H of the Wealth-tax Rules, 1957. No bifurcation was given by the assessee. THE Wealth-tax Officer, after examining the case of the assessee, did not accept her claim for exemption under Section 5(1) (xxxii) of the Act. Against the order of the Wealth-tax Officer, the assessce-non-petitioner filed an appeal before the Appellate Assistant Commissioner of Wealth-tax. The said appeal was accepted and the order of the Wealth-tax Officer was set aside ; and also a direction was given to determine the quantum of exemption to which the assessee was entitled in respect of her investment in the firm, M/s. Ratnalaya, in which she was a partner during the relevant assessment year. Against the order of the appellate court, the Wealth-tax Officer filed an appeal before the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal opined that the order of the assessment officer was not based on material on record, and that the estimate was made on conjectures and surmises, which did not stand to reason. It further opined that the order of the Appellate Assistant Commissioner of Wealth-tax was very well reasoned and hence, no interference was called for. The Income-tax Appellate Tribunal ultimately opined that the facts of the assessee's case warranted the conclusion that M/s. Ratnalaya was an industrial undertaking within the meaning of Section 5(1)(xxxi) of the Act and that the Appellate Assistant Commissioner of Wealth-tax was justified on facts and in law in directing the Wealth-tax Officer to allow exemption to the assessee under Section 5(1)(xxxii) of the Act in respect of the assessee's capital employed in M/s. Ratnalaya. With these observations, the appeal of the Revenue was dismissed. The Revenue then moved an application for reference under Sub-section (1) of Section 27 of the Act and required the Income-tax Appellate Tribunal to draw up a statement of the case and refer it to the High Court, for its opinion, on the question framed by the Revenue, which is as under : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the findings of the Appellate Assistant Commissioner that M/s. Ratnalaya is an industrial undertaking and, therefore, the assessee is entitled to exemption under Section 5(1)(xxxii) of the Wealth-tax Act, 1957, in respect of her capital employed in M/s. Ratnalaya." The Income-tax Appellate Tribunal did not agree with the Revenue and rejected the reference application under Section 27(3) of the Act. Mr. Surolia, learned counsel for the petitioner, argued that M/s. Ratnalaya is not registered with the industries department. According to him, the firm, M/s. Ratnalaya, does not employ any labour, machinery, tools or implements for getting work done, and people used to take raw material from the firm to their houses, and after completing the work, they used to return the material to the firm for which the labourers used to be paid. This, according to Mr. Surolia, means that those persons are not regularly employed by the firm. He also argued that no hours of work are prescribed for this work, and that, the persons who take raw material to their houses, work at their houses, as and when and as long as they please. So, according to him, no working hour is fixed for their work by the firm, M/s. Ratnalaya. He also argued that there is no supervision of working of those persons, because they take raw material to their houses. Apart from this, everytime persons working are different. Sometimes, somebody takes raw material and returns it after completion of work to the firm, and sometimes, some other person comes and takes raw material. So, Mr. Surolia argued that it cannot be said that some persons were employed by the firm, M/s. Ratnalaya. Thus, it cannot be said that M/s. Ratnalaya is an industrial undertaking/department, he submitted. Mr. Surolia also argued that the reasons given by the Income-tax Appellate Tribunal are not correct, which has based its order on the basis of the assessment of the assessee for the year 1976-77. According to him, while passing the assessment order for the year 1976-77, the Appellate Assistant Commissioner of Wealth-tax followed his earlier order which was not appealed against by the Revenue before the Tribunal, and in that order, M/s. Ratnalaya was held to be an industrial undertaking. Similarly, following the same order for the assessment year 1976-77, the Appellate Assistant Commissioner, while passing order for the assessment year 1977-78, held that M/s. Ratnalaya was an industrial undertaking, and the Tribunal upheld the order of the Appellate Assistant Commissioner. So, while passing order on the application filed under Section 27(1) of Act, the Tribunal has opined that the order of the Tribunal cannot be said to give rise to any question of law much less the question of law as suggested by the Revenue in the present reference application.
(3.) MR. Surolia also argued that the principle of res judicata does not apply in such cases, and that every assessment order involves a separate question which has to be assessed on its merit. Mr. N.M. Ranka, learned counsel appearing on behalf of the assessee-non-petitioner, on the other hand, argued that while assessing for the assessment year 1976-77, it was held that M/s. Ratnalaya was an industrial undertaking, and that, no appeal was filed against that order by the Revenue (sic). Even the appellate authority as well as the Tribunal have upheld the order of the Wealth-tax Officer (sic). The facts of every assessment, according to Mr. Ranka, are identical, and so, it is now not open to the Revenue to contest that M/s. Ratnalaya is not an industrial undertaking. It was also argued by Mr. Ranka that Section 5(1)(xxxi) of the Act, which defines the term, "industrial undertaking" is clear. The Explanation to this Sub-section reads as under : "Explanation.--For the purposes of Clause (xxx-a), this clause, Clause (xxxii) and Clause (xxxiv), the term 'industrial undertaking' means an 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 ;" It was also contended by Mr. Ranka that the employer does not engage any labourer. The labourers take goods for processing to their houses. They get money for the work done by them. So, the goods are taken by the persons for sorting out goods which are worth processing and seeing which part is worth further processing, for giving better shape, and, thirdly, they used to take the goods for polishing them at their houses. Therefore, the work done by the firm, M/s. Ratnalaya, is covered by the term, "industrial undertaking" argued Mr. Ranka. Mr. Ranka has fairly conceded that no doubt, the question as to whether M/s. Ratnalaya is an industrial undertaking or not, is certainly a question of law. But, according to him, every question of law is not referable to this court. So, he argued, this question which has been decided by both the lower courts, has been finally decided. There is concurrent finding of both the courts below that M/s. Ratnalaya is an industrial undertaking and this conclusion has not been challenged by the Revenue, submitted Mr. Ranka. Therefore, according to Mr. Ranka, it is not a fit case for making reference to this court, and that, the Tribunal has, therefore, correctly rejected the reference application moved by the Revenue. ;