1. The Income-tax Appellate Tribunal Delhi Bench 'A' (hereinafter called the Tribunal) has made this reference to this Court under Section 66 (1) of the Indian Income-tax Act, 1922 (hereinafter called the Act). His Highness Maharaja Udai Bhan Singhji, Ruler of Dholpur died issueless on 22nd October, 1954. After his death, the movable property possessed by the deceased Maharaja Udai Bhan Singhji was sealed by the Government of India. Maharaja Rana Hemant Singhji (hereinafter called the assessee) was thereafter recognised as the successor to the deceased Maharaja and the assets which the Government of India had sealed were released and handed over to Rajmata, the guardian of the assessee. Part of the assets consisting of gold sovereigns, old silver rupee coins and silver bars were sold for Rs. 20,94,785/-. The Income-tax Officer, Bharatpur while assessing the assessee for the assessment year 1.958-59 computed Rs. 3, 44,303 as capital gains on these sales taking into account the market value of the assets sold as on 1st January, 1954 as given hereunder:--
The assessee objected to the taxation of the said amount on the ground that the various articles -- sovereigns, silver coins and silver bars -- were held for the personal use of the assessee and the members of his family and as such they fell within Clause (ii) of Section 2 (4A) of the Act. The Income-tax Officer negatived this objection raised on behalf of the assessee. The assessee filed an appeal before the Appellate Assistant Commissioner, B--Range, Jaipur, but was unsuccessful. The assessee filed an appeal to the Tribunal. The Tribunal also rejected the appeal.
2. On the application of the assessee, the following question has been referred by the Tribunal to this Court:--
'Whether on the facts and in the circumstances of the case the assets sold were capital assets within the meaning of Section 2 (4A) chargeable to capital gains tax under Section 12-B of the Income-tax Act, 1922?'
3. The main point which has been urged before this Court on behalf of the assesses is that the said articles were the personal effects of the assessee and were excluded by virtue of the definition of capital assets under Section 2 (4A) from being included in capital assets. The relevant part of the definition of capital assets in Section 2 (4A) runs as follows:--
'(4-A) 'Capital asset' means property of any kind held by an assessee, whether or not connected with his business, profession or vocation, but does not include -- (i) .....
(ii) personal effects, that is to say, moveable property (including wearing apparel, jewellery, and furniture) held for personal use by the assessee or any member of his family dependent on him;
It is contended that according to the custom of the family, these articles were taken out twice a year for Puja once for Mahalakshmi Puja and again on Diwali and thus they formed part of the property meant for Puja and was thus articles of personal use. In support of this, the assessee has filed an affidavit of Shri Harisingh, Chief A. D. C., of the assessee. Reference in this connection may be made to the judgment of the Appellate Assistant Commissioner of Income-tax. The Appellate Assistant Commissioner has given the finding that the silver bars were never used for Puja. The Tribunal has taken the view that the use of these articles in the manner mentioned by the assessee did not mean that these items were held by the assessee for his personal use and they did not fall within Clause (ii) of Section 2 (4-A) of the Act.
4. We are of the view that the Tribunal has taken the correct view. In order to constitute an article to be part of personal effects, it is necessary that the article must be associated with the person of the possessor and must more or less have intimate relation with the possessor. In Section 2 (4-A) (ii) personal effects have been explained as any moveable property held for the personal use by the assessee or any member of his family dependent on him. In a sense, the definition is wider inasmuch as if any article is in personal use even of any member of the family of the assessee who is dependent on him, it may constitute personal effects of the assessee, but it is necessary that the article must be in personal use. Law does not say that any kind of use will be sufficient to constitute a property as 'personal effects'. The use must be of personal nature though such use may be occasional. A treasure placed before Goddess Laxmi while performing Puja would not make such treasure an item of personal use.
Learned counsel for the assessee has relied on K. D. Joseph v. Esther Phillips, 1934 AC 348 in which 'personal effects' have been explained in connection with the construction of a will. It has been observed:
'The question is whether the bequest on its true construction is only of things which can properly be treated as personal effects, that is to say, physical chattels, having some personal connection with the testator such as articles of personal or domestic use or ornament, clothing, furniture and so forth which would not include money or securities for money or whether in the actual contents it extends to the choses in action represented by the pass books and the promissory notes.'
But these observations do not in any way support the case of the assessee. On the other hand, they lend support to the view taken by the Tribunal.
5. If mere placing of treasure before Goddess Lakshmi when it is worshipped on Diwali or some other occasion is to constitute personal effects, then a person will escape payment of wealth-tax as Section 5 (1) (viii) lays down that wealth tax shall not be payable by an assessee on 'furniture, household utensils, wearing apparel, provisions and other articles intended for the personal or household use of the assessee.'
6. In interpreting the provisions of the Act also, we cannot adopt the view that merely because the gold sovereigns, silver coins and the bullion were placed before Goddess Lakshmi at the time of Puja, they become articles of personal use of the asses-see.
7. It is contended by learned counsel for the assessee that if the assessee has made any collection which might give him solace or pleasure whenever he looks at the collection, such collection must be deemed to be personal to the assessee and that collection may be taken as 'personal effects'. It is too wide a construction of the expression 'personal effects' and it is not possible for us to accept it.
8. For the aforesaid reasons, we answer the reference in the affirmative. We assess Rs. 200/- as costs to be paid by the assessee to the Department.