TMI Blog1979 (2) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Rs. Rs. Rs. (i) Gold ornaments 13,300 14,000 17,100 (ii) jewellery 86,700 96,000 1,09,700 (iii) Loose diamonds 3,20,000 3,50,000 3,80,000 -------------- -------------- -------------- 4,20,000 4,60,000 5,06,800 -------------- -------------- -------------- The assessee claimed before the WTO that the value of the jewellery, gold ornaments and loose diamonds should not be taken into account in computing the net value, as they were exempt under s. 5(1)(viii) of the W.T. Act. The WTO negatived this plea following a decision of the Patna High Court in Pandit Lakshmi Kant Jha v. CWT [1968] 69 ITR 545. On appeal, the AAC, following a decision of the Supreme Court in CWT v. Arundhati Balkrishna [1970] 77 ITR 505, held that the entire value of the jewellery, gold ornaments and loose diamonds was exempt under s. 5(1)(viii). The WTO appealed to the Tribunal and the Tribunal had to consider two questions, namely : (1) Whether loose diamonds were articles intended for the personal use of the assessee? and (2) Whether they were exempt from wealth-tax under s. 5(1)(iii) of the Act ? The Tribunal held that there was sufficient justification to hold that the loose diamonds we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1), the only test which was required to be considered was the test of ownership, while under cl. (viii) the test to be considered was whether the articles in respect of which the exemption was claimed were intended for the personal use of the assessee. Since s. 5 provided for exemption from liability to wealth-tax if the assessee was in a position to point out that his or her case fell within any particular clause, the fact that under another clause the exemption could be claimed, only up to a particular amount in respect of the same property (reference is to cl. (xv)) would not stand in the way of the assessee. The case was taken on appeal to the Supreme Court whose decision is reported in CWT v. Arundhati Balkrishna [1970] 77 ITR 505. By judgment dated 25th February, 1970, the Supreme Court held that s. 5(1)(xv) dealt with jewellery in general, whether intended for the personal use of the assessee or not, and that jewellery intended for the personal use of the assessee came within the scope of s. 5(1)(viii). Accordingly, the value of the jewellery intended for the personal use of the assessee was held to be exempt under s. 5(1)(viii). After this judgment, Parliament made cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and two Explanations to the said clause (viii) with effect from 1st April, 1972. The first proviso seeks to exclude from the purview of clause (viii) furniture, utensils and other articles which, though held for personal or household use of the assessee, are made of, or contain (whether by way of embedding, covering or otherwise), gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals. By virtue of the second proviso the exemption in respect of conveyances, i.e., motor cars or other mechanically propelled vehicles, aircraft or boats, will be available only to the extent their value does not exceed, in the aggregate, the sum of twenty-five thousand rupees. Under the first Explanation, it is being made clear that for the purposes of the said clause (viii) and also clause (xiii) of section 5(1) (relating to exemption from wealth-tax of heirlooms other than jewellery), the term ' jewellery ' will include-- (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Oxford Dictionary, even " gems " would fall within the category of jewellery. The question whether loose diamonds or loose stones come within the scope of jewellery has not been examined in any Indian case. There is, however, a decision of the Court of Appeal in In re Whitby, Public Trustee v. Whitby [1944] 1 Ch 210 on the point. In that case, a testator made a bequest of all the residue of his personal chattels as defined in s. 55(1)(x) of the Administration of Estates Act, 1925. By a codicil dated 13th June, 1940, he excluded from the bequest " all articles of jewellery and other chattels and effects ...... which were now deposited for safe custody" at a named safe deposit. The Public Trust took out summons to ascertain whether the unmounted diamonds passed in the bequest of personal chattels, and whether under the provision in the codicil, the articles excluded from the bequest were those deposited at the safe deposit at the date of the codicil or those deposited at the date of the testator's death. When the matter came up before Uthwatt J., as he then was, he held that the word " jewellery " in the definition of personal chattels did not include the unmounted stones. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are of value in the community where they are used. A belt of cowry shells, a necklace of bears' claws, a head ornament of sharks ' teeth, though possessing no value in themselves, are esteemed valuable in the communities where they are worn ; and we, therefore, constantly find them referred to in books written in English language ......" The word " jewellery " appears to have developed a separate connotation in the United States. As our laws are based on the British model principally, we would prefer to follow and rest our conclusion in the way in which the word is understood in Great Britain, i.e., gems are also jewellery. The Supreme Court has pointed out in CWT v. Arundhati Balkrishna [1970] 77 ITR 505 at page 511, after referring to the several provisions in s. 5 of the W.T. Act in which the word " jewellery " occurs : " From an analysis of the various provisions in section 5, it appears to us that therein there are four provisions dealing with jewellery, viz., (1) jewellery intended for the personal use of the assessee-section 5(1)(viii) ; (2) jewellery that is heirloom-section 5(1)(xiii) ; (3) jewellery in the possession of any Ruler-section 5(1)(xiv) ; and (4) jew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the mills with whose business the assessee was connected. He kept these articles in glass show case for display in his drawing room. In his assessment for the assessment year 1959-60 under the W.T. Act, he claimed exemption in respect of these articles under s. 5(1)(viii). The Bombay High Court held that merely because the gold caskets were kept in the show case they did not become part of the furniture and the rest of the articles could not be considered to be household utensils as the expression did not embrace within its sweep gold articles meant for ornamental use for special occasion. At page 212, the Bombay High Court considered the question as to whether these articles were intended for personal or household use. In dealing with this aspect it was observed (p. 212) : " We think that the expression ' intended for the personal or household use ' would mean normally commonly or ordinarily intended for the personal or household use according to the ordinary ideas, habits, customs and notions of the class of society to which the assessee belongs or according to the well established habits, customs and traditions of the family of the assessee. The mere possibility, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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