Commissioner of Wealth Tax vs Smt. Godavaribai R. Podar

Bharucha, J.—We are called upon in this reference under the WT Act to say what is covered by the word ''jewellery''. We claim no expertise on the subject and must take the assistance of judicial decisions on the same point and the dictionary.

The assessee contended before the WTO that her ornaments were exempt from wealth tax by reason of s. 5(1)(viii) of the WT Act. Her ornaments were made of gold and were not studded with precious or semiprecious stones. The WTO did not accept the assessee''s contention. In appeal, the AAC granted to the assessee the exemption she claimed. The Revenue appealed to the ITAT. The Tribunal found that the order of the AAC was correct.

Arising out of the Tribunal''s finding, the following question is referred to us :

"Whether, on the facts and in the circumstances of the case, Explanation 1 to s. 5(1)(viii) could be invoked for the assessment years under appeal, even though the said Explanation came into operation only w.e.f. 1-4-1972, and whether the value of gold ornaments not containing precious stones could therefore be added in the wealth-tax assessment ?"

Sec. 5(1)(viii) of the WT Act and Explanation 1 thereto read thus :

"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 but not included jewellery."

"Explanation 1 : For the purpose 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."

The words "but not including jewellery" in the operative part of cl. (viii) and Explanation 1 thereto were inserted into the WT Act by Finance (Number 2) Act, 1971. The said words were inserted with retrospective effect from 1-4-1973, but Explanation 1 was inserted with prospective effect from 1-4-1972.

It was submitted by Mr. Jetley, ld. counsel for the Revenue, that the said Explanation 1 also operated retrospectively from 1-4-1963 and that the word ''jewellery'' as used in the said cl. (viii) meant such jewellery as was defined by the said Explanation 1. The assessee''s gold ornaments were, therefore, in his submission, jewellery within the meaning of the said cl. (viii) even in respect of the assessment years with which we are here concerned, being asst. yrs. 1966-67 to 1971-72. In the alternative, Mr. Jetley submitted that the assessee''s gold ornaments, though not studded with gems, were covered within the ordinary meaning of the word ''jewellery'' and that, accordingly, she could not get any exemption in respect thereof.

In support of his first submission, Mr. Jetley drew our attention to two judgments of this Court being Mukundkumari Vs. K.V.S. Namoondari, 17Th Ito, D-i Ward, Bombay and Another, , and Commissioner of Wealth Tax Vs. Rasesh N. Mafatlal, . These judgments have not considered the effect of the said Explanation 1. In fact, they would seem to have proceeded upon the basis that the said Explanation 1 operates prospectively. These judgments, therefore, do not assist us.

In Commissioner of Wealth-tax Vs. His Highness Maharaja Vibhuti Narain Singh, , cited by Mr. Jetley, it was urged before the Allahabad High Court that the said Explanation 1 had been prospectively added and was not available for assessment years prior to 1972. The Allahabad High Court found itself unable to agree. It said that the said words "but not including jewellery" were added w.e.f. 1-4-1963. The word ''jewellery'' as commonly understood included ornaments made of precious stones. In its opinion, the said Explanation 1 only made explicit what was implicit in the provision from its inception.

Mr. Dalvi, ld. counsel for the assessee drew our attention to the Circular dt. 6-1-1972 issued by the CBDT. It contains Explanatory Notes to the Finance (Number 2) Act, 1971. In paragraphs 102 to 106, the Circular deals with the "Withdrawal of exemption from wealth tax in respect of jewellery, etc.". It is stated therein that the said cl. (viii) had been amended retrospectively from 1-4-1963 so as to exclude jewellery from the exemption thereby given. Further, the term ''jewellery'' had been given "an extended meaning prospectively" so as to include, inter alia, ornaments made of gold, silver, platinum or any other precious metals whether or not containing any precious or semi-precious stones. The Circular incorporates in paragraph 105 the relevant portion of the Finance Minister''s reply to the debate on the relevant Bill, which also refers to "the extended meaning of the term ''jewellery''. In paragraph 106 the Circular again says, "The exclusion of jewellery from the per view of the exemption is operative retrospectively from the assessment year 1963-64. The extended meaning of the term ''jewellery'' ..... will become effective from 1-4-1972, i.e., for the assessment year 1972-73 and subsequent assessment years."

Having regard to the clear phraseology of the Finance (Number 2) Act in regard to the amendment of the said cl. (viii) and the said Explanation 1 and the contemporaneous exposition thereof given in the said circular by the CBDT, we must hold, disagreeing, with respect the Allahabad High Court, that the said Explanation 1 operates only prospectively, i.e. from 1-4-1972 and not retrospectively from 1-4-1963 or at all. This means that the word ''jewellery'' used in the said cl. (viii) must be interpreted independently of the definition given in the said Explanation 1 for the period between 1-4-1963 and 31-3-1972.

This brings us to the alternative argument advanced by Mr. Jetley. There are judgments of various High Courts which need to be noted in this connection, and we do so chronologically.

In Commissioner of Wealth Tax, Gujarat I Vs. Jayantilal Amratlal, , the Gujarat High Court was concerned with a case in which exemption from wealth tax was claimed in respect of gold, silver and other ornaments which were studded with jewels. It was contended that these ornaments were entitled to the exemption by virtue of the said cl. (viii) for Assessment Years subsequent to the asst. yr. 1962-63 on the ground that such ornaments were included in the definition of ''jewellery only from 1-4-1972. The Gujarat High Court repelled this contention. It considered, in doing so the natural of the word ''jewellery''. The definition given by the said Explanation 1, it said, included ornaments as jewellery which, de hors it, could not have been other than articles of jewellery. The dictionary meaning of the word ''jewellery'' also suggested to it that ornaments made of gold, silver or platinum studded with precious stones were items of jewellery.

The Calcutta High Court, in Commissioner of Wealth Tax Vs. Aditya Vikram Birla, , noted the dictionary meaning of the word ''jewellery'' and found that it was not so wide or clear as to bring all valuable ornaments within it''s hold. It appeared to the court that, in popular parlance, jewellery connoted the use of stones, precious, semi-precious or even imitation, in ornaments. The court noted the widespread use of ornaments and jewellery in India and the connotation of various types thereof as described in various local languages. In Hindusthani and Bengali, it noted, a clear distinction was made between ornaments which were made of gold or silver and ornaments which were set with stones. It was for this reason, the Court stated, that the said Explanation 1 was introduced and the meaning of the word ''jewellery'' was extended to include ornaments made of gold, silver, platinum or other precious metals. If the court was to accept the contention that, in its ordinary meaning, the word ''jewellery'' included all ornaments made out of precious metals, with or without stones, then the introduction of the said Explanation 1 with prospective effect would become redundant and absurd. The court could not impude redundancy to a clause embodied in a statute. The Court, accordingly held that ornaments not studded with stones were not includible in the net wealth of the assessee for the asst. yr. 1970-71.

In the case of Smt. Meera Jaiswal Vs. Commissioner of Wealth-tax, the Punjab and Haryana High Court dealt with a case of gold ornaments in the context of s. 5(1)(viii). It found that there were two equally plausible views about the meaning of the word ''jewellery''. According to one view, it in included all ornaments, whether studded with jewels or not, and, according to the other view, ordinary gold ornaments did not fall within that word. The court said that if it accepted the latter definition of the word, it would mean that a large number of assessee who hold the bona fide belief that ordinary gold ornaments were not included in the term ''jewellery'' would be exposed to the danger of penalties being imposed upon them for not having disclosed such ornaments in their wealth-tax returns. Thus the court was disinclined to do. The court approved of the observations made by the Calcutta High Court in Aditya Vikram Birla''s case, cited above, and held that gold ornaments could not be included in the assessee''s net wealth for the relevant assessment year.

A Full Bench of the Madhya Pradesh High Court, in Commissioner of Wealth-tax Vs. Smt. Tarabai Kanakmal, , found that the dictionary meaning of the word ''jewellery'' was not so wide as to cover all ornaments. The ordinary meaning of the word, as known now, would only embrace precious and semi-precious stones and gold and silver ornaments which contained precious or semi-precious stones. It was in this sense that the word ''jewellery'' as used in the said s. (viii) had to be understood before 1-4-1972. The Full Bench was unable to accept the argument that the inclusive definition contained in the said Explanation 1 was added merely as a matter of abundant caution. In its opinion, it was intended to read a wider meaning into the word ''jewellery'' w.e.f. 1-4-1972. The very fact that the said words but not including jewellery" were retrospectively added w.e.f. 1-4-1963 and the said Explanation 1 was added from 1-4-1972 by the Finance (Number 2) Act showed the clear intention of Parliament that the wider meaning of the word ''jewellery'' as contained in the said Explanation 1 was not to be applied to any Assessment Year prior to 1-4-1972.

A contrary view was taken by the Delhi High Court in Commissioner of Wealth Tax Vs. Smt. Savitri Devi, . Mrs. Leila Seth, J., speaking for the Court, was unable to accept the interpretation placed upon the word ''jewellery'' in the case of Aditya Vikram Birla (supra), among others. She said that the word ''jewellery'' as set out in the dictionaries and understood in common parlance included gold ornaments. They were almost always a jeweller''s job. The Hindi word for jeweller''y certainly within its meaning. The terms of the said Explanation 1 could not take away the ordinary meaning of the word ''jewellery''. The artificially enlarged meaning provided for by it included by way of abundant caution the meaning of the word.

We have consulted the dictionaries ourselves. The Oxford English Dictionary defines ''jewellery'' as "jeweller''s work; gems or ornaments made or sold by jewellers; especially precious stones in mountings''. The New Webster''s English Dictionary defines ''jewellery'' as "jewels; articles made of gold, silver, precious stones or similar materials for personal adornment."

As the Oxford English Dictionary appears to suggest, the word "jewellery" may be derived from either the word ''jewel'' or the word ''jeweller''. As derived from the word ''jewel'', ''jewellery'' suggests an ornament that contains a precious stone or stones. As derived from the word ''jeweller'', ''jewellery'' suggests an ornament made by a jeweller. Whereas the former derivation excludes ornaments of gold, silver and the like not containing precious stones from the ambit of jewellery, the latter does not; for ornaments of gold, silver and the like, though devoid of precious stones, are still the handi-work of a jeweller. The word ''jewellery'', then, is capable of two meanings; embracing only ornaments made of precious metals which contain precious stones and embracing ornaments made of precious metals regardless of whether or not they contain precious stones.

It, therefore, becomes necessary to ascertain the intention of the legislature in amending the said cl. (viii). The said word "but not including jewellery" in the said cl. (viii) were expressly given retrospective effect from 1-4-1963, but the definition of the word ''jewellery'' as contained in the said Explanation 1 was given effect to only prospectively, i.e. from 1-4-1972. Had the legislature intended that the word ''jewellery'' in the said word "but not including jewellery" in the said cl. (viii) should bear the meaning given to it in the said Explanation 1 even during the period 1-4-1963 to 1-4-1972, the said Explanation 1 would also have been given, in express terms, retrospective effect. The this was not done indicates clearly that the word ''jewellery'' was, until 1-4-1972, not to bear the meaning given in the said Explanation 1. This intention is also clear from the Circular of the CBDT to which reference has been made. The Circular, it will be further noted, speaks of the "extended definition" of jewellery given in the said Explanation 1. The intention was, therefore, that, on and after 1-4-1972, the word "jewellery" in the operative part of the said cl. (viii) should bear not only its ordinary meaning but something more. That something more, patently, was the reference to gold, silver and platinum and other like ornaments which did not contain a precious or semi-precious stone.

In the circumstances, the word ''jewellery'' as used in the said cl. (viii) cannot, for the period prior to 1-4-1972, be held to include within it''s embrace ornaments made of gold or silver or platinum or other precious metal or alloy thereof which do not contain a precious or semi-precious stone or stones.

The question must, accordingly, be answered in the negative and in favour of the assessee.

There shall be no order as to costs.