This appeal filed by assessee is against order of AAC dated 5- 4-1983 for assessment year 1979-80, for which valuation date was 30-4- 1978. 2. In wealth-tax return filed for assessment year 1979-80, assessee gave details of immovable properties of Rs. 1,49,960, claimed exemption of Rs. 1,03,910 under section 5(1) (xxxii) of Wealth-tax Act 1957 ('the Act') and offered balance of Rs. 46,050 as assessable to wealth-tax as under: "Immovable Properties: Building leased out to Preinthalmanna Rice & Oil Mills, Rs. Preinthalmanna 40,000.00 State Warehousing Corporation 35,000.00 Value of building & machinery at Premier Flour Mills 74,960.00 ------------ 1,49,960.00 Less exemption under section 5(1)(xxxii) 1,03,910.00 ------------ Balance 46,050.00" ------------ In assessment made on 20-12-1979, WTO accepted assessee's claim and taxed immovable property of Rs. 46,050. As WTO noticed that assets in rice and oil mills at Perinthalmanna and Premier Oil Mills, Pollachi were leased out to two firms by name Printhalamanna Rice & Oil Mills and Iqbal & Co., respectively, and as assessee was not partner in said two firms, WTO felt that exemption under section 5(1) (xxxii) was not admissible to assessee. In order to rectify this mistake, notice under section 35 of Act was issued to assessee. In reply dated 21-10-1980, assessee stated that exemption was admissible under section 5(1) (xxxii) was claimed in original assessment by mistake and that exemption was admissible under section 5(1) (xxxii) as both properties were industrial assets belonging to assessee. WTO did not accept assessees contention on ground that even for purpose of exemption under section 5(1) (xxxii) industrial undertakings shouldn't only belong to he assessee but also business of industrial underacting must be carried don by assessee. Since business was not carried on by assessee, but assets were only leased out, WTO rejected assessee's claim and rectified assessment under section 35 by denying exemption originally allowed. 3. In appeal filed before AAC, assessee argued that there was no mistake apparent from record to be rectified and that assessee's claim should have been allowed under section 5(1) (xxxii) since industrial undertakings belonged to assessee. AAC held that WTO's action in seeking recourse to provisions of section 35 was justified. He also upheld action of WTO in denying exemption under section 5(1) (xxxii) to assessee. Aggrieved by order of AAC assessee preferred present appeal. 4. At time of hearing, assessee's counsel urged that he WTO was not justified in resorting to section 35 as there was no mistake apparent from record. He further pointed out that wealth-tax is levied under power derived under entry 86 of Union List of constitution of India and that entry authorized tax on capital value of assets forming part of industrial undertaking belonging to assessee. From entry 86 it is clear that criterion for levying wealth-tax is ownership of capital assets. From section 5(1) (xxxii) it is clear that criterion for exemption assets forming part of industrial undertaking is their ownership by assessee and not industrial activity of assessee using said assets. In support of his argument, he relied on decision of Bombay Bench of Tribunal in case of Tribunal in case of International computers Indian Mfr. Ltd. v. ITO [1983] 5 ITD 60 wherein it is stated that section 33 of Income-tax Act, 1961 laid down that in order to be entitled for higher rate of development rebate machinery should be installed for purpose of business of production of articles specified in Fifth Schedule of 1961 Act and that no further condition that assessee itself should own business is of producing specified articles has been stipulated. It was held in that case that higher development rebate could not, therefore, be denied as assets were, in fact, used for production of articles specified in fifth Schedule. Similarly, in present case he ownership of assets forming part of industrial undertakings is condition precedent for granting exemption and not industrial activity of assessee using those assets. assessees counsel was fair enough to bring to our notice decision of Madras High Court in case of WCT v. P. T. N. Shenbagamoorthy [1983] 144 ITR 724 wherein it was held that assessee, who owned salt pans but who had leased out same to third party, could not be held to be actually engaged in manufacture of salt and, consequently, could not get exemption under section 5(1) (xxxii). He further submitted that in view of above arguments advanced decision of Madras High Court need not be followed. 5. departmental representative submitted that WTO was justified in invoking section 35 as assessee claimed exemption under section 5(1) (xxxii) and WTO granted exemption under section 5(1) (xxxii). Section 5(1) (xxxii) comes into play only when assets forming part of industrial undertaking belonged to firm or AOP of which assessee is partner or member as case may be. In this case, as assessee is owner of assets, section 5(1) (xxxii) is not applicable and WTO is fully justified in resorting to section 35 for denying exemption originally granted under section 5(1) (xxxii). He also referred to decision of Madras High Court in case of CWT v. K. Lakshmi [1983] 142 ITR 656. 6.1 We considered rival submissions. assessee claimed exemption under section 5(1) (xxxii) and WTO granted exemption under section 5(1) (xxxii) in original assessment. very fact that assessee claimed exemption before WTO in rectification proceedings as well as before AAC and before use under section 5(1) (xxxii) clearly shows that there is mistake apparent from record. Further assessee herself in her there is mistake apparent from record. Further assessee herself in her reply dated 21-10-1980 admitted that her claim under section 5(1) (xxxii) was by mistake. In circumstances we upheld validity of rectification. 6.2 We may now consider merits of case. Supreme Court in these of Sudhir Chandra Nawn v. WTO [1968] 69 ITR 897 stated as under: "The Wealth-tax Act, 1957, is within he legislative competence of Parliament under entry 86 of List I of Seventh Schedule to constitution of India. tax which is contemplated by entry 86 of List I of Schedule VII to Constitution of India is not directly tax on lands and buildings. It is tax on capital value of assets of individuals and components of assets of assessee; it is imposed on total assets which assessee owns, ..." (p. 897) Section 2(m) of Act defines net wealth as amount by which aggregate value of all assets belonging to assessee in excess of aggregate value of debts owned by assessee. Thus, it is clear that ownership of assets is criterion for levy or exemption as case may be. heading of section 5(1) refers to 'Exemptions in respect of certain assets'. Section 5(1) says that wealth-tax shall not be payable by assessee in respect of following 'assets' and such 'assets' shall not be included in net wealth of assessee. Section 5(1) (xxxii) speaks to assessee. expression 'belonging to assessee' qualifies word 'assets' and not words 'industrial undertaking'. This view is fortified by fact that section 5(1) (xxxi refers to 'assets. In our view, two conditions required are: 'assets' should belong to assessee and further 'assets' should form part of industrial undertaking. It is nowhere laid down in said section that assessee should carry on industrial activity of manufacturing or processing of goods by on industrial activity of manufacturing or processing of goods by using those assets besides being their owner. He Legislature intended that assessee should also carry on industrial undertaking, they would have provide so as has been done in clause (xxi) of sub-section (1) of section 5 which exempts 'that portion of net wealth of company established with object of carrying on industrial undertaking in India within meaning of Explanation to clause (d) of section 45 , as is employed by it in new and separate unit set up after commencement of this Act by way of substantial expansion of its undertaking' or in clauses (ix) and (x) of sub-section (1) of section 5 which speak of 'the tools, implements and equipment used by assessee for cultivation' and 'tools and instruments necessary to enable assessee to carry on his profession or vocation'. Since we have taken above view, with due respect we beg to differ from view taken by their Lordships of Madras High Court in case of P. T. N. Shenbagamoorthy (supra). We, therefore, direct WTO to allow assessee exemption under section 5(1) (xxxi). 7. In result, appeal is partly allowed. *** SMT. S. FATHIMABI v. WEALTH-TAX OFFICER