1. ' V.S. DAVE, J.---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 2-B(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)
2. (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?"
3. ' The relevant assessm ent 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.
4. ' 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 2-B(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.
5. ' We have perused the order of the Tribunal and find that no specific fmding 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 whereAhe same was purchased in the local market and ending with the point where 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 rums 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.
6. ' 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 wasdirected 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)."
7. ' 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.
8. ' In this view of the matter, we decline to answer the question and require the Tribunal to decide the matter afresh as indicated above.
9. Matter remanded.
10. 1994 PLD 323 [202 ITR 584] [Supreme Court of India] Present: S. Ranganathan, V. Ramaswami and Yogeshwar Dayal, JJ UNION OF INDIA and another versus A. SANYASI RAO and others IA. Nos. 1 to 105 in CA.. Nos. 4290-4394 of 1989, decided on 31st March, 1992.
11. Income-tax- ----High Court judgment---Suspension of operation of High Court judgment---Profits and gains from business of trading in certain goods---Computation of---Stay of judgment of High Court in A.
12. Sanyasi Rao v. Oovermment of A.P. (1989) 178 ITR 31 (AP)---As a result of judgment of High Court, Department unable to complete assessments involving application of section 44-AC-- Assessm ents bound to get time-barred---Department permitted to complete assessments of assesses involving cases under section 44-AC irrespective of observations of High Court regarding limited operation of section 44-AC--Indian Income Tax Act, 1961, S.44-AC.
13. The Supreme Court suspended the operation of the Andhra Pradesh High Court judgment in A.
14. Sanyasi Rao v. Government of A.P. (1989) 178 ITR 31 because as a result of the judgment of the High Court, the Department was unable to complete assessments involving the application of section 44-AC of the Income Tax Act, 1961, and the assessments were getting time-barred. The Department was allowed to complete the assessments of assessees involving cases under section 44-AC of the Income Tax Act, 1961, irrespective of the observations of the High Court regarding the limited operation of section 44-AC.
15. Sanyasi Rao (A.) v. Government of A.P. (1989) 178 ITR 31 (AP) ref. Dr. V. Gaurishankar, Senior Advocate (S. Rajappa, Ms. A. Subhashini and P. Parameshwaran, Advocate with him) for the Petitioners.
16. ' S. RANGANATHAN, J.---IA. Nos. 1-105: Issues notice to the respondent returnable in eight weeks.
17. ' Pending further orders, we suspend the operation of the High Court's judgment under appeal with the result that the Department will be free to complete assessments of the various assessees concerned without being bound by the High Court's observations regarding the limited operation of that section.
18. ' S.L.P. (C) Nos. 3944-4087 of 1992 and IA. No, 1-74 of 1992 in S.L.P. (C) of 1992: ' It has been mentioned on behalf of the Union of India that these S.L.Ps. Have been filed by the Union of India against the judgments of the Orissa and Punjab and Haryana High Courts following the decision of the Andhra Pradesh High Court in A. Sanyasi Rao v. Government of A.P. (1989) 178 ITR 31, which is the subject-matter of CA. Nos. 4290-4394 of 1989. These S.L.Ps. Have not yet been listed and one batch is also out of time.
19. ' These S.L.Ps. Are taken on board. Issue notice to the respondents returnable in eight weeks.
20. ' In the meantime, it is mentioned on behalf of the Union of India that as a result of the High Court judgment, the Department is unable to complete assessments involving the application of section 44-AC and that these assessm ents are bound to be time-barred today, i,e, March 31, 1992. It is, therefore, prayed that there should be an interim order of suspension of the operation of the judgment of the High Court.
21. ' In the meantime, following our directions in I.As. Nos. 1 to 105 in C.As. Nos. 4290-4394 of 1989, we direct that there shall be a stay of operation of the impugned judgments. The effect of it will be to permit the Department to complete assessments involving cases under section 44-AC irrespective of the observation in the judgments of the High Court of limited applicability of these sections.