HANUMAN MAL SEKHANI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE question which arises for determination in this reference relates to the interpretation and application of Section 5(l)(viii) of the Wealth-tax Act, 1957.

(2.) THE assessee is an individual who owned 3,505 tolas of gold ornaments prior to 1949 which were received by him from his father. THE assessee sold 1,133 tolas of gold ornaments on various dates, retaining 2, 372 tolas of gold ornaments with him. When the question relating to the inclusion of the value of the said gold ornaments in the net wealth of the assessee arose in connection with his assessment to wealth-tax pertaining to the assessment year's 1959-60, 1962-63, 1963-64, 1964-65, 1965-66, 1967-68 and 1968-69, a plea was taken by the assessee that the said gold ornaments did not belong to him but they were the exclusive property of his wife, Smt. Pushpa Devi, to whom he had gifted the said gold ornaments in the year 1949 at the time of engagement with her. According to the assessee, the gift was made by him to his wife prior to the coming into force of the Wealth-tax Act, and so the value of the gold ornaments could not be included in his wealth under Section 4(1)(a)(i) of the Act. THE Wealth-tax Officer did not accept the assessee's case of gift of the gold ornaments before his marriage and the value of the said ornaments was worked out at the rate of Rs. 145 per tola in the assessment order. Appeals preferred before the Appellate Assistant Commissioner were dismissed. In the further appeals preferred by the assessee before the Income-tax Appellate Tribunal, a new plea was raised on his behalf that even if the gold ornaments are includible in the net wealth of the assessee under Section 4(1 )(a)(i) of the Act, yet they were excluded on account of the exemption provided by Clause (viii) of Sub-section (1) of Section 5 of the Act, as they were used by his wife who was a member of his household. This argument was advanced in the alternative, besides the argument based on the alleged gift said to have been made by the assessee to Smt. Pushpa Devi in the year 1949 before their marriage had taken place. THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as " the Tribunal"), rejected the assessee's story about the alleged gift, It was held that the assessee was married in May, 1957, and there was no evidence on record to support the assertion of the assessee that the gold ornaments in question were gifted by the assessee to Smt. Pushpa Devi in the year 1949 or they were with Smt. Pushpa Devi since the year 1949. It was held by the Tribunal that if the gold ornaments were gifted by the assessee to his wife at or about the time of his marriage which took place in May, 1957, the said gold ornaments were includible in the net wealth of the assessee in terms of Section 4(1)(a)(i) of the Act. THE Tribunal proceeded to hold that the gold ornaments were not articles intended for the personal use of the assessee, more so, as no such claim was advanced on behalf of the assessee at any stage. THE Tribunal was also of the view that the gold ornaments could not be held to be articles intended for personal or household use of the assessee, as in its view the word "household" was used in Section 5(1)(viii) in contradistinction to the word " personal " and that the articles meant for the personal use of the wife could not be held to be articles of household use. THE Tribunal further held that as in Explanation 1 added to Section 5(l)(viii) with effect from April 1, 1972, the words "but not including jewellery" occurred, the exemption did not include gold ornaments up to March 31, 1972. However, in view of the fact that the gold ornaments in the present case were not intended for personal or household use of the assessee as such, they could not be exempted from payment of wealth-tax under Clause (viii) of Section 5(1) of the Wealth-tax Act.

(3.) THE question whether jewellery belonging to an assessee would fall under Clause (xv) alone or jewellery intended for personal or household use of the assessee could be exempt from payment of tax under the Act under Clause (viii) was raised before the Gujarat High Court in CWT v. Mrs. Arundhati Balkrishm [l968] 70 ITR 203. THE learned judges of the Gujarat High Court held that the scheme of Section 5 appeared to be that if any particular asset or assets of the assessee fell within any one of the clauses of Section 5(1), such asset or assets must not be included in the net wealth of the assessee. Under Clause (xv) of Section 5(1), jewellery belonging to the assessee up to the maximum limit of Rs. 25,000 was not includible in the net wealth, while under Clause (viii), exemption could be claimed only in respect of jewellery and ornaments which were intended for the personal use of the assessee like any other articles of personal use. THEir Lordships expressed the view that jewellery and ornaments though they can be collectively described as jewellery, if they fall within the four corners of Section 5(1)(viii) can be excluded from the net wealth of the assessee and need not necessarily be governed by Section 5(l)(xv), but the exemption under Section 5(l)(viii) would be available only when the article was intended for the personal use of the assessee concerned and, in that event, the exemption would apply to all articles of jewellery and ornaments intended for personal use, irrespective of the limit of Rs. 25,000 which is imposed by the Legislature in respect of jewellery and ornaments falling under Clause (xv) of Sub-section (1) of section 5.