2003 (3) TMI 79 - HC - Income Tax

Whether on the facts and in the circumstances of the case the Tribunal was correct in law in allowing the exemption under section 5(1)(xii) of the Wealth-tax Act in respect of seven items of jewellery claimed to represent art treasures? - we reframe the question as follows Whether on the facts and in the circumstances of the case the Tribunal was right in allowing the exemption under section 5(1)(xii) of the Wealth-tax Act in respect of seven items of jewellery claimed to represent works of art and not intended for sale ? - The question is accordingly answered in favour of the assessees and against the Revenue.

Summary

Issues Involved:
1. Whether the seven items of jewellery qualify as "works of art" under section 5(1)(xii) of the Wealth-tax Act.
2. Whether these items were "not intended for sale" and thus eligible for exemption under section 5(1)(xii) of the Wealth-tax Act.

Detailed Analysis:

1. Qualification as "Works of Art":
The primary issue was whether the seven items of jewellery could be classified as "works of art" under section 5(1)(xii) of the Wealth-tax Act. The court noted that the Director General, Archaeological Survey of India, had declared these seven items as "art treasures," which implies they are "works of art" with artistic or aesthetic value. The court emphasized that the Wealth-tax Act does not define "work of art," but the definition from the Antiquities Act, which includes "any human work of art," could be considered. The court referred to multiple legal precedents to support the principle that related provisions in different Acts should be read together when they have a bearing on the same subject. The court concluded that the seven items, being declared as "art treasures," qualify as "works of art" under section 5(1)(xii) of the Wealth-tax Act.

2. Intention for Sale:
The second issue was whether these items were "not intended for sale," a requirement for exemption under section 5(1)(xii). The court examined the history of the items and noted that although the trustees initially attempted to sell them, the Government of India intervened in 1979, stopping the sale and taking custody of the items. Since then, the items remained in the custody of the Union Finance Secretary, and no further attempts to sell them were made. The court held that the prohibition on selling these items, combined with their custody by the government, demonstrated that they were "not intended for sale" during the relevant assessment years (1980-81 to 1986-87). Therefore, the items met the second requirement for exemption under section 5(1)(xii).

Conclusion:
The court concluded that the seven items of jewellery qualify as "works of art" and were "not intended for sale," thus meeting the criteria for exemption under section 5(1)(xii) of the Wealth-tax Act. The Tribunal's decision to allow the exemption was upheld. The court reframed the question to: "Whether on the facts and in the circumstances of the case, the Tribunal was right in allowing the exemption under section 5(1)(xii) of the Wealth-tax Act in respect of seven items of jewellery claimed to represent 'works of art' and 'not intended for sale'?" and answered it in favor of the assessees and against the Revenue.