The Commissioner of Wealth-Tax Patiala vs Rajeshwar Prarshad

D.K. Mahajan, J.—The income tax Appellate tribunal, Chandigarh Bench, have referred the following question of law for our opinion:--

Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the deletion of the amount of Rs. 30,700/- being the value of ornaments?

The assessment year is 1967-68. The assessee is an individual. In his wealth tax return, the net wealth was declared as 4,05,911. This amount included a sum of Rs. 60,700/-, the value of the jewellery. The Wealth-tax Officer included the entire value of the jewellery in the net wealth of the assessee. The assessee appealed to the Appellate Assistant Commissioner and claimed exemption in terms of section 5(1) (viii) of the Wealth Tax Act, 1957, on the ground that the ornaments meant for personal use were not liable to tax. The Appellate Assistant Commissioner accepted the contention of the assessee. He deleted a sum of Rs. 30,700/- out of Rs. 60,700/- being the value of gold ornaments. The department was dissatisfied with the order of the Appellate Assistant Commissioner and preferred an appeal to the income tax Appellate Tribunal. The Tribunal has affirmed the decision of the Appellate Assistant Commissioner and dismissed the appeal so far as the jewellery is concerned. It was allowed partly with regard to two other items with which we are not concerned. The Commissioner of Wealth-tax then moved an application u/s 27 (1) of the Wealth Tax Act, 1957, for referring the question of law set out above for the opinion of this Court. That application was allowed and this is how the matter has been placed before us.

There is no representation for the assessee. The notice of actual date has been sent to the assessee by registered post and there is compliance with the rules.

The learned counsel for the Commissioner urges that initially clause (xv) of section 5(1) of the Wealth-tax Act, 1957, allowed an exemption with regard to jewellery to the extent of Rs. 25000/- and that exemption was withdrawn by the Finance Act of 1963. By the Finance (No. 2) Act, 1971, clause (viii) of section 3(1) of the Wealth-tax-Act was amended. The original clause read like this--

5(1) Wealth-tax shall not be payable by an assessee in respect of the following assets, arid such assets shall not be included in the net wealth of the assessee---

X X X X X

(viii) furniture, household utensils, wearing apparel, provisions

and other articles intended for the personal or household use of, the assessee;

x x x x x

and the amended clause reads like this--

5(1)(viii) furniture, household utensils, wearing apparel, provisions and other ''articles intended for the personal or household use of the assessee but not including jewellery.

The result of this amendment was that the decision of the Supreme Court in Commissioner of Wealth-tax, Gujarat Vs. Arundhati Balkrishna, , to the effect that jewellery used on the person Of the assessee was exempt under this clause was nullified. It is in this context that the decision of the Appellate Assistant Commissioner and that of the Tribunal has to be examined. The Appellate Assistant Commissioner while dealing with this matter observed as follows :-

In my view after the amendment and the claim of the assessee that these were meant for personal use, the value of ornaments was entirely excludible from the wealth, being exempt. In the past the assessee was keeping gold also. The value of gold is, however, includible. Hence, the net wealth is reduced the extent of value of ornaments i.e. Rs. 700/-

The Appellate Tribunal while dealing with this matter observed as

follows :--

The other ground partains to the exemption granted u/s 5(1)(viii) of the Wealth Tax Act for treating the jewellery as meant for personal use. The learned Departmental Representative urged that the exemption has been specifically withdrawn by clause 32 of the Finance (No. 2) Act, 1971, brought on the statute Book in the year 1971 with retrospective effect from 1st April, 1963, and therefore the Appellate Assistant Commissioner was not right in giving the relief.

The learned counsel for the assessee, on other hand, urged that the Explanation 1 to clause 32 of the Finance (No. 2) Act of 1971 grants exemption up to 31st March, 1972 in respect of ornaments. The details of the jewellery have been placed before us. It consists of two items of Rs. 700/-as cost of chain and two rings and cost of other ornaments weighing 250 tolas as Rs. 30,000/-. It was Urged by the learned counsel that these are ornaments and, therefore, exempt even under the explanation because there is a difference between the ornaments and jewellery. The ornaments are normally of gold and the jewellery is embedded with precious stones. He also relied on an order of the income tax Appellate Tribunal (Jaipur Bench) reported in the Taxation'' Vol. XXXI, Section 6, page 418 (December issue).

We are of the view that the instant case is a case of ornaments and the Revenue nas missed the bus. The order of the Appellate Assistant Commissioner on this point is confirmed.

It appears from the order of the Tribunal that they were of the view that there is a difference between the ''ornaments'' and ''jewellery''. Both these expressions are not defined. Therefore, we have to fall back on the dictionary meaning. In Shorter Oxford English Dictionary, ''jewellery'' means ''jewellers'' work; gems or ornaments made or sold by the jewellers; jewels collectively, or as a form of adornment". The Word ''jewel'' means, according to this Dictionary, "an article of value used for adornment usually of the person; a costly ornament especially one made of gold, silver, or precious stones......" In the same Dictionary, the meaning of the word ''ornament'' is stated to be "any adjunct or accessory ; equipment, furniture, attire, trapping, anything used, or serving to adorn ; a decoration, embellishment .....". It may be mentioned that these words are not terms of art and what has to be seen is what in fact are the articles or, in other words, whether the articles fall within the ambit of the word ''jewellery''. It is not disputed that these ornaments are of gold and are meant for wearing on the person of the assessee. There fore, they would fall within the ambit of the phrase ''jewellery''. No playing with words will take them out of that category. In our opinion, the Tribunal fell in this error and that has led to a wrong decision of the matter.

For the reasons recorded above, we answer the question referred to us in the negative, that is, in favour of the department and against the assessee. As there is no representation for the assessee, there will be no order as to costs.

C.G. Suri, J.

I agree.