Judgment:
1. This reference under Section 27(1) of the Wealth-tax Act, 1957, at the instance of the Revenue, is to answer the following questions of law, namely:
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that Rule 2B(2) of the Wealth-tax Rules was not applicable in the assessee's case and consequently in deleting the addition made by the Wealth-tax Officer ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that Messrs. Maliram Pooranmal is an industrial undertaking within the meaning of Section 5(1)(xxxii) and subsequently in holding that the value of the assessee's interest in the firm is exempt under Section 5(1)(xxxii) of the Wealth-tax Act ?'
2. The relevant assessment year is 1981-82 in respect of which this reference has been made for answering the above questions of law arising out of the Tribunal's order in support of the assessee.
3. So far as the first point referred is concerned, the same had been the subject-matter of a decision of this court given in a catena of cases and, in the facts and circumstances of such cases which are identical to the facts of this case, the court has answered the reference against the Revenue and in favour of the assessee holding that the Tribunal's view is correct that the condition precedent for invoking, Rule 2B(2) of the Wealth-tax Rules, has not been satisfied. Thus, question No. 1, is answered against the Revenue and in favour of the assessee. Regarding question No. 2, the dispute is as to whether the Tribunal was right in holding that Messrs. Maliram Pooranmal is an industrial undertaking within the meaning of Section 5(1)(xxxii) and subsequently in holding that the value of the assessee's interest in the firm is exempt under Section 5(1)(xxxii) of the Wealth-tax Act.
4. We have perused the order of the Tribunal and find that no specific finding has been given in this respect and the matter has not been decided in the facts and circumstances of this case. In fact, the order of the Tribunal on this point requires proper application of mind and the entire material should have been perused and then a finding should have been given as to whether the assessee is an industrial undertaking within the meaning of Section 5(1)(xxxii). Reference in this connection may be made to the case of CWT v. Vimal Chand Daga (HUF) [1988] 172 ITR 264, wherein an identical situation has taken place and this court held as under (headnote) ;
'The Tribunal had not recorded the requisite findings of fact on the basis of which alone the benefit of the statutory provision could be given to the assessee. It was necessary for the Tribunal to record a clear finding about the entire activity or the various steps or stages in the manufacture or processing of these gems beginning from the point where the same was purchased in the local market and ending with the pointwhere it was made marketable and sold by the assessee's firm. It had then to be further found as to which, if any, of the various steps or stages of this manufacture or processing activity between these two end points was performed by the assessee's firms directly so as to be treated as being done by the assessee's firms themselves and also whether the activity got done through the skilled labourers who were paid on the basis of work done was an activity of the firms themselves and not of an outside agency. For this purpose, the jural relationship between the assessee's firms and those skilled labourers had to be determined and it had to be decided whether the employer-employee relationship existed between them as claimed on behalf of the assessee.
In view of the above, we consider it appropriate to require the Tribunal to decide the matter afresh with advertence to the observations contained herein. Merely calling for an additional statement of case will not solve the difficulty because the entire matter is required to be re-examined and, in the circumstances of the case, the parties have also to be given an opportunity to produce further material if they so desire to enable the Tribunal to record its findings. It is clear that as a result of misapprehension of the requirements of these statutory provisions by both the sides as well as the Tribunal and the authorities below it, the attention of none was directed towards the real points in controversy. In such a situation and on account of the fact that the question is of considerable importance since it affects the entire gem industry in this area, it will be appropriate to require the Tribunal to decide the matter afresh after giving both the sides an opportunity to produce further material, if they so desire ( at page 268).'
5. In such a situation, the question being of considerable importance being based on the facts and circumstances of the case required to be decided by the Tribunal. In fact, the question of law does not arise out of the Tribunal's order as there is no finding of fact and it is not possible to decide the question of applicability of the statutory provisions of which the assessee has claimed the benefits.
6. In this view of the matter, we decline to answer the question and require the Tribunal to decide the matter afresh as indicated above.