Anshuman Singh, J.
1. This is a reference application under Section 27(1) of the Wealth-tax Act, 1957, at the instance of the Commissioner of Wealth-tax, Jaipur, to decide the following question, of law, namely :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the firm, Vineet Trading Corporation, is an industrial undertaking and the assessee being one of its partners, i.e, entitled to exemption under Section 5(1)(xxxii) of the Wealth-tax Act, 1957, in regard to her capital investment in the said firm ?'
2. The assessee is an individual. She is a partner in the firm, M.D. Jewellers, Jaipur. The assessee claimed exemption under Section 5(1)(xxxii) of the Wealth-tax Act, 1957, on the plea that M.D. Jewellers is an industrial undertaking. The Wealth-tax Officer rejected the contention of the assessee. According to the Wealth-tax Officer, the character of the stone is not changed and there was no manufacturing or processing of the stones in the business carried on by the assessee. The assessee appealed to the Appellate Assistant Commissioner. In the appeal, it was contended that the law does not require that the 'industrial undertaking' should be of national importance or should be registered as an industrial undertaking. It was also contended that the partnership firm, M.D. Jewellers, Jaipur, used to purchase rough emeralds known as 'kharad' from the local market. After sorting out the rough emeralds, according to size, they were given to the karigars who cut, shaped and polished them in their own workshops or factories. The karigars were paid labour charges, according to the work done. Thus, it was wrong to say that in the business carried on by the assessee no manufacturing or processing was involved. It was also pleaded that simply because the assessee was not having any plant or machinery or workshop for carrying on the work of manufacturing, the claim of exemption under Section 5(1)(xxxii) cannot be disallowed. However, the plea put forth by the assessee before the Appellate Assistant Commissioner failed and feeling dissatisfied the assessee preferred an appeal before the Tribunal. The Tribunal, vide order dated July 11, 1980, allowed the appeal of the assessee and reversed the finding of the Appellate Assistant Commissioner. On an application being moved by the Revenue before the Tribunal, the Tribunal referred the present question for answer by this court. We have heard Mr. G.S. Bapna, learned counsel appearing for the Revenue, and Mr. N.M. Ranka, learned counsel for the assessee. Mr. Bapna contended that the Tribunal committed an error in granting the benefit of Section 5(1)(xxxii) to the assessee in the absence of a specific finding that the manufacturing or processing of goods is done either wholly or even in some part by the firm of which the assessee is a partner. In support of his contention, he placed reliance on a Division Bench judgment of this court : CWT v. Vimal Chand Daga (HUF) [1988] 172 ITR 264. Before we proceed to determine as to whether the Tribunal had recorded the requisite finding to bring the case within the ambit of Section 5(1)(xxxii) or not, we think it proper to refer to the findings of the Tribunal while reversing the finding of the Appellate Assistant Commissioner as under :
'We have heard the parties and perused the records. The facts of the case are not disputed. The assessee is one of the partners in the firm, M.D. Jewellers, Jaipur. The business of the firm is to purchase rough emeralds from the local market and to manufacture rough emeralds into tawdda, potta, etc., of cut emeralds. In this process rough emeralds are first sorted out. Subsequently, they are cut ; later on they are converted into ghats and finally shaped and then polished and coloured. Thus, the manufacturing is not done through the skilled labourers who were paid in accordance with the work done by them. As a matter of fact, the aforesaid facts would go to show that the said firm is definitely an industrial undertaking. The method of manufacturing emeralds involved the process. We may also point out that for claiming to be an industrial undertaking, it is not necessary that the assessee or the firm should own plant and machinery for doing such processing or manufacturing. In support of this proposition, we are fortified by the case of Mubarakali Khan (supra). Even the finding of the Tribunal dated July 31, 1979, given in the case of W.T.A. No. 92/JP/78-79 (supra) goes to show the same thing.'
3. We have carefully perused the facts of the case of CWT v. Vimal Chand Daga (HUF) [1988] 172 ITR 264 which are almost identical to the facts of the case and the controversy involved was also almost the same. The facts of the case of CWT v. Vimal Chand Daga (HUF) [1988] 172 ITR 264 briefly stated are that the assessee was a partner in two firms which carried on the business of purchasing rough emeralds from the local market and then converted them into 'tawdda', 'potta' and cut emeralds by processing. It was stated that in this process, rough emeralds are sorted out, converted into 'ghats' and finally shaped, polished and coloured and that manufacturing is got done through skilled labourers who are paid on the basis of work done. The assessee claimed that the firms of which he was a partner manufacture and process emerald and this activity makes them 'industrial undertakings' entitled to the benefit of Section 5(1)(xxxii) read with the Explanation to Section 5(1)(xxxii) of the Act. The aforesaid facts were found proved by the Tribunal and on that basis the Tribunal granted the benefit of Section 5(1)(xxxii) of the Act read with the Explanation. The finding of the Tribunal was reversed by this court in the case of CWT v. Vimal Chand Daga (HUF) [1988] 172 ITR 264 on the ground that no finding of fact was recorded by the Tribunal for holding that the firm was an 'industrial undertaking' and the matter was remanded back to the Tribunal to decide the matter afresh. This court after examining the matter recorded the finding (at page 267) ; '. . . we find that the Tribunal has not recorded the requisite findings of fact on the basis of which alone the benefit of the above statutory provision can 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 with the point where the same were purchased in the local market and ending with the point where they were made marketable and sold by the assessee's firms. It has -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 is 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 skilled labourers who are paid on the basis of work done is an activity of the firms themselves and not of an outside agency. For this purpose, the jural relationship between the assessee's firms and these skilled labourers has to be determined and it has to be decided whether the employer-employee relationship exists between them as claimed before us on behalf of the assessee. We may add that the meaning of an 'industry' defined in Section 2(j) of the Industrial Disputes Act as indicated in Bangalore Water Supply and Sewerage Board v. A. Rajappa, : (1978)ILLJ349SC may also be borne in mind in this context. The triple tests indicated the existence which show prima facie that there is an 'industry' in that enterprise would also be helpful for this purpose. The matter has not been decided by the Tribunal or any of the authorities below it in this perspective for the obvious reason that the case was not put up by the parties in the correct perspective. Reference was made before us to a book Indian Gemmology by Raj Roof Tank which is stated to be an authoritative book on the subject in order to show the various stages of the manufacturing or processing activity of the gems beginning with the raw material known as 'kharad' and ending up with the gems in the marketing form. A perusal of the same indicates that there are several stages in between these two end points which together constitute the manufacture or processing of these goods. There is no finding by the Tribunal as to which, if any, of these several steps in the manufacture or processing of the goods is carried on by the assessee's firms directly and whether the work got done through the skilled labourers is not the entire manufacturing or processing activity. Without these findings of fact, it is not possible to decide the question of applicability of the statutory provision, of which the assessee has claimed the benefit'.
4. We have carefully gone through the Division Bench judgment of thiscourt in CWT v. Vimal Chand Daga (HUF) [1988] 172 ITR 264 and we findourselves in full agreement with the view that in the absence of the findingsas indicated by the Division Bench of this court in the case of CWT v.Vimal Chand Daga (HUF) [1988] 172 ITR 264 the Tribunal committed anerror in granting exemption to the assessee under Section 5(1)(xxxii) of theAct.
5. We, therefore, decline to answer the question and require the Tribunal to decide the matter afresh in the light of the dictum laid down by this court in CWT v. Vimal Chand Daga (HUF) [1988] 172 ITR 264. There would be no order as to costs.