S.K. Mal Lodha, J.
1. The following question has been referred for our opinion by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur ('the Tribunal' herein) :
'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that gold ornaments and jewellery became capital asset only from April 1, 1973, and not prior to it and, therefore, there was no capital gain to the assessee as a result of sale of gold ornaments and jewellery during the previous year relevant to the assessment year 1973-74?'
The assessee is an individual. The assessment year under consideration is 1973-74. It was found by the Income-tax Officer during the course of the assessment proceedings that the assessee had sold ornaments duringthe accounting year relevant to the assessment year 1973-74 for Rs. 33,426. The gold ornaments were sold for Rs. 40,300. The case of the assessee was that till the previous year relevant to the assessment year 1973-74, gold ornaments were not included in the definition of 'asset' and so no capital gain was payable on the sale of such ornaments. The Income-tax Officer was of the opinion that jewellery articles came within the definition of 'asset' with effect from April 1, 1973, in accordance with the Finance Act, 1972. By his order dated January 29, 1976, the Income-tax Officer worked out the capital gains at Rs. 13,560. The assessment was completed at Rs. 78,702.
2. An appeal was preferred and the Appellate Assistant Commissioner took the view, after consideration of contentions raised on behalf of the assessee, that the gold ornaments were sold before the relevant amendment came into force from April 1, 1973, and, therefore, on their sale no capital gain tax was payable.
3. The Department went in appeal and the Tribunal agreed with the view taken by the Appellate Assistant Commissioner and confirmed his finding that the sale of gold ornaments took place prior to April 1, 1973, and so there was no capital gain. At the instance of the Commissioner of Income-tax, the aforesaid question has been referred for our opinion as, according to the Tribunal, it is a question of law arising out of its order dated July 13, 1977.
4. Having heard the learned counsel for the Revenue and the assessee, we have reached the conclusion that the finding of the Tribunal that there was no capital gain to the assessee as a result of the sale of gold ornaments and jewellery was right. For the present purpose, we shall accept the finding that the sale of gold ornaments took place prior to April 1, 1973, which is essentially a finding of fact and being based on consideration of the relevant material and as such cannot be assailed by the Revenue. The sale of the gold ornaments and jewellery had taken place from March 29, 1972, to March 31, 1972, as is borne out from the order of the Appellate Assistant Commissioner to which he arrived at on the basis of the sale bills and other evidence. The Finance Act of 1972 came into force with effect from April 1, 1973. By virtue of the amendment, gold ornaments and jewellery became capital assets from April 1, 1973, and not before that. Sub-section (14) of Section 2 of the Income-tax Act, 1961 (No. XLIII of 1961) ('the Act' herein), as in force from April 1, 1973, is as under:
'(14) 'capital asset' means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include-
(i) any stock in trade, consumable stores or raw materials held for the purposes of his business or profession ;
(ii) personal effects, that is to say, movable property (including wearing apparel and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him.
Explanation.--For the purposes of this sub-clause, '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.'
It was rightly not disputed by the learned counsel for the Revenue that the Finance Act of 1972 is not retrospective and, therefore, whatever substantive rights had accrued to the assessee prior to April 1, 1973, they could not be taken away. In these circumstances, no valid exception can be taken to the finding recorded by the Appellate Assistant Commissioner that there was no capital gain to the assessee as a result of the sale of gold ornaments and jewellery which was affirmed by the Tribunal in appeal filed by the Department.
5. For the aforesaid reasons that the gold ornaments and jewellery became capital assets only from April 1, 1973, the finding of the Tribunal is right and justified, and so no capital gain to the assessee accrued as a result of the sale of gold ornaments and jewellery during the previous year relevant to the assessment year 1973-74.
6. The aforesaid question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
7. There will be no order as to costs of this reference.
8. A copy of this order shall be sent to the Tribunal as required by Section 260(1) of the Act.