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Commissioner of Wealth-tax Vs. His Highness Maharaja Vibhuti NaraIn Singh - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 228 of 1975
Judge
Reported in[1979]117ITR246(All)
ActsWealth Tax Act, 1957 - Sections 5(1); Finance (No. 2) Act, 1971
AppellantCommissioner of Wealth-tax
RespondentHis Highness Maharaja Vibhuti NaraIn Singh
Appellant AdvocateAshok Gupta, Adv.
Respondent AdvocateV.B. Upadhya, Adv.
Excerpt:
- .....stone, and whether or not worked or sewn into any wearing apparel;(b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel.....' 5. the explanation made it quite clear that the term 'jewellery' was taken in its wider meaning. it included ornaments whether studded with precious jewels or not. it was, however, argued that the explanation was prospectively added. it was not available for an assessment year prior to 1972. we are unable to agree. the phrase 'but not including jewellery' was added with effect from april 1, 1963. the word 'jewellery 'as commonly understood includes ornaments made of precious stones. in our opinion, the explanation only made explicit what was implicit in the.....
Judgment:

Satish Chandra, C.J.

1. For the assessment years 1964-65 and 1965-66, wealth-tax returns were filed by the assessee in the status of HUF and individual separately. The WTO included the value of jewellery as assessable. This inclusion was upheld in appeal and the assessee took the matter to the Tribunal. The Tribunal held that ornaments which were studded with jewels or jems (whether imitation or genuine) would not be exempt but ornaments which are not studded as such, will be exempt from wealth-tax. The Tribunal remanded the matter for recomputation of the value of the jewellery accordingly.

2. At the instance of the Commissioner, the Tribunal has referred for our opinion two questions:

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in setting aside the Appellate Assistant Commissioner's order by which he refused to permit the assessee to claim exemption under Section 5(1)(viii) as the point did not arise out of the assessment order and the Wealth-tax Officer had not investigated whether the jewellery was mainly intended for personal use of the assessee ?

2. Whether the word 'jewellery' intended for personal use of the assessee within the meaning of Section 5(1)(viii) of the Wealth-tax Act, 1957, would exclude ornaments made of gold, silver, platinum or any other precious metal or any alloy for the assessment years 1964-65 and 1965-66 and whether the Tribunal was legally correct in holding that Explanation 1 which was added to Section 5(1)(viii) by Section 32 of the (Finance) Act,1971, could not be pressed into service in interpreting the word 'jewellery'prior to April 1, 1972?'

3. Section 5(1)(viii) of the W.T. Act provided :

'5. (1) Subject to the provisions of Sub-section (1A) wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee--...

(viii) furniture, household utensils, wearing apparel, provisions and other articles intended for the personal or household use of the assessee.'

4. The Supreme Court in CWT v. Arundhati Balkrishna : [1970]77ITR505(SC) construed this provision to hold that the value of jewellery was exempt from inclusion in the net wealth, as the jewellery and ornaments were intended for the personal use of the ladies of the family. This decision was rendered in 1970. Its effect has been taken away by the Finance (No. 2) Act of 1971. Clause (viii) was amended retrospectively to be effective from April 1, 1963. The following words were added at its end : 'but not including jewellery'. This Finance Act added two provisos and two Explanations but the same were made operative prospectively from April 1,1972. Clause (viii), after its amendment, reads as follows:

'(viii) furniture, household utensils, wearing apparel, provisions and other articles intended for the personal or household use of the assessee, but not including jewellery......

Explanation 1.--For the purposes of this clause and Clause (xiii), 'jewellery' includes--

(a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel;

(b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel.....'

5. The Explanation made it quite clear that the term 'jewellery' was taken in its wider meaning. It included ornaments whether studded with precious jewels or not. It was, however, argued that the Explanation was prospectively added. It was not available for an assessment year prior to 1972. We are unable to agree. The phrase 'but not including jewellery' was added with effect from April 1, 1963. The word 'jewellery 'as commonly understood includes ornaments made of precious stones. In our opinion, the Explanation only made explicit what was implicit in the provision from its inception. This view finds support from the decision of the Gujarat High Court in CWT v. Jayantilal Amratlal : [1976]102ITR105(Guj) . We are in respectful agreement with the Gujarat High Court.

6. Learned counsel for the assessee invited our attention to the decision of the Orissa High Court in State of Orissa v. Jamula Srirangam [1961] 12 STC 135. In that case, the term 'jewellery' occurring in the sales tax notification came up for consideration. Sale of jewellery other than gold ornaments was taxable. The notification made a distinction between jewellery and gold ornaments specifically. The meaning of the word 'jewellery' was amplified by another notification dated July 15, 1951, to include precious stones, etc. It is in this context that the court observed that imitation stones and imitation jewels were taxable while ornaments consisting of pure gold and set with stones were 'jewellery '. In our case, there is no material distinction between jewellery and ornaments in the context that one is studded with precious stones and the other is not. This case is distinguishable. In Ganeshilal and Sons v. Commr, of ST [1971] 27 STC 150, this court interpreted the word 'jewellery' occurring in the sales tax notification to include ornaments studded with precious stones. This case is also not very helpful because it interpreted the notifications issued under the Sales Tax Act which were differently worded.

7. In the result, the second question is answered in the negative, in favour of the department and against the assessee. In this view, it is not necessary to decide the first question. The same is accordingly returned unanswered. In the circumstances, we make no order as to costs.


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