Smt. Meera Jaiswal Vs. Commissioner of Wealth-tax - Court Judgment

M.R. Sharma, J.

1. For the assessment year 1968-69, the assessee submitted a wealth-tax return mentioning therein that she also possessed gold ornaments of the value of Rs. 25,000. The WTO recorded those ornaments as an 'asset' within the meaning of the W.T. Act (hereinafter referred to as 'the Act') and framed the assessment. The contention of the assessee that these ornaments were exempt from the operation of the Act during the relevant period did not prevail either with the AAC or with the Income-tax Appellate Tribunal, Chandigarh Bench. At her instance, the Appellate Tribunal has referred the following question oflaw for our opinion ;

'Whether, on the recorded findings in the case, the Tribunal has been right in law in holding that the gold ornaments were not exempt under Section 5(1)(viii) of the Wealth-tax Act, 1957 ?'

2. It has been argued on behalf of the assessee that these gold ornaments were articles of her personal use and did not fall within the meaning of assets exigible to tax.

3. Section 5(1)(viii) of the Act, as it stood before the promulgation of the Finance Act (No. 2 of 1971), on August 10, 1971, read as under:

'5. (1) 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 asses-see.'

4. This provision came up for consideration before a Division Bench of the Gujarat High Court in CWT v. Mrs. Arundhati Balkrishna : [1968]70ITR203(Guj) , wherein it was held as under (p. 224):

'So far as the dictionary definition is concerned, even according to the dictionary meaning, 'jewellery and ornaments' though they can be collectively described as 'jewellery', can, if they fall within Section 5(1)(viii), be excluded and are not necessarily governed by Section 5(1)(xv) of the Act.'

5. This judgment was appealed against and the decision on this point was affirmed by the Supreme Court of India in CWT v. Arundhati Balkrishna : [1970]77ITR505(SC) , in the following terms (p. 510) :

'There is no dispute that the jewels in question were intended for the personal use of the assessee ; but it is said on behalf of the revenue that Section 5(1)(viii) does not apply to jewels as these articles are specifically provided for under Section 5(1)(xv). On the other hand it is urged on behalf of the assessee that Section 5(1)(xv) deals with jewellery which are not intended for the personal use of the assessee, such as heirloom or other jewellery which are retained as valuable assets or intended for the use of persons other than the assessee, whereas Section 5(1)(viii) takes in only such jewellery as are intended for the personal use of the assessee. We think the contention advanced on behalf of the assessee is the correct one. It is well known that jewellery is widely used as articles of personal use by the ladies in this country, specially by those belonging to the richer classes. That being so, jewellery intended for the personal use of the assessee comes within the scope of Section 5(1)(viii). But the jewellery mentioned in Section 5(1)(xv) need not be articles intended for the personal use of the assessee. That provision deals with jewellery in general. The two provisions deal with different classes of jewellery. That is made further clear by Section 5(1)(xiii) which says that wealth-tax shall not be payable by an assessee in respect of any drawings, paintings, photographs, prints and other heirloom not falling within Clause (xii) and not intended for sale but not including jewellery. If the contention that jewellery is exclusively dealt with by Section 5(1)(xv) is correct, then there was no occasion for the legislature to refer to jewellery in Section 5(1)(viii). 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) jewellery in general--Section 5(1)(xiv). UnderSection 5(1)(xv), as it stood at the relevant time, every assessee was entitled to deduct a sum of Rs. 25,000 from out of the value of the jewellery in her possession whether the same was intended for her personal use or not but under Section 5(1)(viii), the value of all the jewellery intended for the personal use of the assessee stands excluded in the computation of the net wealth of an assessee.'

6. In view of this authoritative pronouncement made by their Lordships of the Supreme Court, the question posed for our decision has prima facie to be answered in favour of the assessee.

7. Mr. Awasthy, the learned counsel for the revenue, has, however, contended that the law was subsequently amended with retrospective effect and the result of this amendment is that 'jewellery' cannot be termed as articles of personal use regarding which an assessee can claim exemption under Section 5(1)(viii) of the Act.

8. By virtue of the Finance (No. 2) Act of 1971, the words 'but not including jewellery' were added towards the end of Clause (viii) of Section 5(1) of the Act and two Explanations were also added to this clause.

9. It has been contended on behalf of the revenue that this amendment was clarificatory in nature and the gold ornaments always fell within the definition of the word 'jewellery'. According to Mr. Awasthy, 'jewellery' had been dealt with in some other clause of Section 5 and as such it did not fall under Section 5(1)(viii) of the Act. In support of this submission, the learned counsel has placed reliance on CWT v. Jayantilal Amratlal : [1976]102ITR105(Guj) . In that case, the court held that the amendment introduced in Section 5(1)(viii) of the Act had to be given retrospective effect. The learned counsel also relied upon CWT v. His Highness Maharaja Vibhuti Namin Singh : [1979]117ITR246(All) , wherein a similar view was taken.

10. With utmost respect to the learned judges who decided these cases,we are unable to accept the view taken by them.

11. Admittedly, there were equally two plausible views about the meaning of the word 'jewellery'. According to one view, it included all ornaments whether studded with jewels or not and according to the other ordinary gold ornaments did not fall within the meaning of the term 'jewellery'. If we accept the extended definition of this term that would mean that quite a large number of assessees who had 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 under the Act for not having disclosed such ornaments in their wealth-tax returns. In other words, by a process of interpretation, we would be creating an ex post facto quasi-criminal offence. This is something which we are wholly disinclined to do.

12. Besides, a Division Bench of the Calcutta High Court in CWT v. Aditya Vikram Birla : [1978]114ITR711(Cal) , after an exhaustive discussion of the entire case-law, observed as under (p. 719);

'It appears to us that the dictionary meaning of the word 'jewellery' is not so wide or clear as to bring in all valuable ornaments within its fold. On the contrary, it appears to us that in the popular parlance 'jewellery' connotes use of stones, precious, semi-precious or even imitation in the ornament concerned.

Furthermore, in construing this word, it will not be safe to go only by the original or modern English meaning. We have to keep in view the widespread use of ornaments and jewellery in our country and the specific connotation of various types of jewellery in use in the country and described in the various local languages. In Hindustani and Bengali at least a clear distinction is made between ornaments which are made of gold or silver and ornaments which are set with stones.

In our opinion, it is for this very reason that the Explanation was introduced by the Finance (No. 2) Act 1971, and the meaning of the word 'jewellery' was extended to include ornaments made of gold, silver, platinum or any other precious, metal or alloy containing one or more such precious metals whether or not containing any precious or semi-precious stones.

If we accept the contentions of Mr. B.L. Pal and hold that in its ordinary meaning the term 'jewellery' always included all ornaments made out of precious metals with or without stones, then the introduction of the above Explanation to Section 5(1)(viii) with prospective effect would be redundant and also absurd. We cannot impute a redundancy to any clause which has been embodied in a statute. If the Explanation was added to the section for reasons of greater caution as held by the Gujarat High Court in the case of 'Jayantila1 Amratlal : [1976]102ITR105(Guj) , then it was all the more necessary to make the Explanation retrospective as the main amendment and not prospective.'

13. We are in respectful agreement with this view and hold that the gold ornaments of the assessee could not be included in her net wealth for the relevant assessment year.

14. For the reasons aforementioned, we answer the question of law in the negative, i.e., in favour of the assessee and against the revenue. No costs.

B.S. Dhillon, J.

15. I agree.