1. This appeal has been filed by the assessee against the order dated 28-8-1982 of the AAC, relating to the assessment year 1977-78.
2. The assessee is an individual. The subject-matter of this appeal relates to the assessment of the assessee's wealth under the Wealth-tax Act, 1957 ('the Act').
3. The only ground taken in this appeal states that the assessee's claim for exemption under Section 5(1)(xxxii) of the Act should have been allowed on the authority of the decision of the Calcutta High Court in the case of Addl. CIT v. A. Mukherjee & Co. (P.) Ltd.  113 ITR 718.
4. The assessee is a partner of a firm, styled, Balharsah Timber Depot, whose business activities consisted of purchasing logs and converting them with the help of sawing machines, planks and sized boards as per the specifications of its clients. The case of the assessee was that the firm was engaged in the processing of goods and so it came under the Explanation to Section 5(1)(xxxii), so that it becomes entitled to the relief under Section 5(1)(xxxii). The WTO did not agree with the claim of the assessee and rejected the same.
5. The assessee appealed to the AAC and reiterated his claim, relying on the decision in the case of Noka Narasimhulu v. WTO  2 Taxman 141 (AP) and CIT v. Radha Nagar Cold Storage (P.) Ltd.  126 ITR 66 (Cal.). The AAC did not accept the claim of the assessee, relying on the decision of the Kerala High Court in the case of CIT v. Casino (P.) Ltd.  91 ITR 289.
6. Shri P.P. Lahiri, the learned representative for the assessee, urged before us that the claim of the assessee should have been accepted. He drew our attention to the decision of the Supreme Court in the case of Chowgule & Co. v. Union of India  47 STC 124 and the decision of the Calcutta High Court in the case of Om Prakash Gupta v. CCT  16 STC 935. He further referred to the Board's Circular No. 329, dated 22-2-1982 [see Taxmann's Direct Taxes Circulars, Vol. I, 1985 edn., p.
533] relying on the above authority, he urged that the claim of the assessee should have been accepted.
7. Shri K. Subbarao, the learned representative for the department, on the other hand, supported the order of the AAC. He said that the aforesaid circular of the Board did not apply to the facts of the present case because the assessee was not a forest contractor taking coupes on lease.
8. We have considered the contentions of both the parties as well as the facts on record. Section 5(1)(xxxii) exempts the value of the interest of the assessee in the assets of a firm, which is an industrial undertaking. The Explanation to Section 5(1)(xxxi) defines 'industrial undertaking' as an undertaking engaged in processing of goods (apart from other activities). The short question that is raised in this appeal is as to whether the activities carried on by the assessee before us can be said to be processing of goods. The term 'process' has not been defined in the Act. However, it is well settled that 'processing' has a wider meaning than the term 'manufacture'. At some point 'processing' and 'manufacturing' may merge, but a certain activity may amount to 'processing' even though it may not amount to 'manufacture' vide the decision in the case of Mahabirprasad Birhiwala v. State of West Bengal  31 STC 628 (Cal.), wherein the powdering of 'whole' black pepper and turmeric was held to be processing of goods. Similarly, in the case of Om Prakash Gupta (supra), the mere converting of camphor powder into camphor cubes was held to be processing of goods. In the case of Chowgule & Co. (supra), the Supreme Court considered the meaning of the word 'processing' and held that the nature and extent of processing may vary from case to case, but where any commodity is subjected to process or treatment with a view to its development or preparation in the market, it would amount to processing of that commodity. In this case, the Supreme Court has referred with approval to the decision of the Calcutta High Court in the case of Om Prakash Gupta (supra). In the case of Chowgule & Co. (supra), the assessee was extracting ore from the mines, washing, screening and dressing them and mixing different varieties of ore to produce a marketable ore. The Supreme Court held that the activity of that assessee amounted to processing of goods. In the case of Indian Copper Corpn. v. CCT  16 STC 259 (SC), the assessee mined copper and iron ore from its own mines and purchased different kinds of goods and used them to make the ores fit for the market. It was held that the activity of the assessee amounted to manufacturing of goods and this case has been approved by the Supreme Court in the case of Chowgule & Co. (supra).
9. Coming to the Board's Circular No. 329, dated 22-2-1982, we find that it states as under : 1. A reference was made to the Board as to whether undertakings engaged in extraction of timber and other forest produce by leasing out forests would be entitled to deductions under Sections 80HH and 80J [of the Income-tax Act, 1961].
2. The matter was considered by the Board in consultation with the Ministry of Law which had given an opinion that the answer to the question posed would depend on the nature of the activity of the forest lessees; however, if the process involved is not merely conversion of standing trees into fire-wood but also manufacture of new saleable commodities, the benefit of deduction under Sections 80J and 80HH would be available.
It is clear that the circular issued says that mere conversion of standing trees into fire-wood will not amount to 'manufacture'. The circular is not concerned with the meaning of 'processing of goods' as it refers to Sections 80J and 80HH of the Income-tax Act, 1961 only.
But this circular indirectly helps the case of the assessee, because the assessee was not engaged merely in producing fire-wood and the case of the assessee was not that the firm, in which he was a partner, was a manufacturer. In the case of A. Mukherjee & Co. (P.) Ltd. (supra), the Calcutta High Court held that the publisher of books, which gets the books printed and bound and offers them for sale is engaged in processing of goods. In this case, the Calcutta High Court referred to the Kerala High Court decision in Casino (P.) Ltd.'s case (supra) with approval. In particular, it was held by the Calcutta High Court that the essential question is whether a commodity which in a commercial sense is different from the raw materials has resulted. If so, the activity amounts to manufacture. Applying the above tests laid down by the aforesaid authorities, we hold that the activity in which the firm in question was engaged was indeed engaged in the processing of goods and so the assessee was entitled to the relief under Section 5(1)(xxxii). We, therefore, direct that the assessee's claim be accepted.
10. However, at the time of hearing of this appeal, Shri K. Subbarao urged before us, as an alternative argument that in the event of the assessee's claim being accepted, it should be subjected to the limit under Section 5(1A). We agree, the relief to be given to the assessee under Section 5(1)(xxxii) should be limited to the ceiling specified in Section 5(1A).
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