1997 (12) TMI 52 - HC - Wealth-tax

Summary

Issues:
1. Whether cups and trophies are exempt under the Wealth-tax Act?
2. Whether the provision of 'works of art' extends to cups and trophies under section 5(1)(xii) of the Wealth-tax Act?

Analysis:
The case involved the interpretation of the Wealth-tax Act, specifically regarding the exemption of cups and trophies as works of art under section 5(1)(xii) of the Act. The assessee claimed that trophies should be considered works of art and thus exempt from wealth tax. However, the Wealth-tax Officer rejected this claim, stating that trophies represented prize money received in kind and were not works of art. The Appellate Assistant Commissioner upheld this decision, emphasizing the intention to sell the articles. The matter was further appealed to the Income-tax Appellate Tribunal.

The Appellate Tribunal inspected samples of the trophies and cups and found engraved markings indicating the events in which they were won. The Tribunal concluded that the trophies did not qualify as works of art, denying the assessee's exemption claim. The Tribunal acknowledged that some trophies were converted into basic metal or sold, but this did not necessarily indicate an intention to sell. The Tribunal's decision was based on the absence of human skill evident in the trophies, as required for classification as works of art under the Act.

The court analyzed the definition of 'works of art' within the context of the Wealth-tax Act, emphasizing the need for human skill in the manufacturing process. Referring to legal sources, the court highlighted that not all manually manufactured articles qualify as works of art; there must be artistic innovation and human skill apparent in the product. As the Tribunal's conclusion was based on visual inspection and factual findings, the court upheld the decision that the assessee's cups and trophies did not meet the criteria of works of art under the Act. Consequently, the court ruled against the assessee on both issues, affirming that the cups and trophies were not exempt under section 5(1)(xii) of the Wealth-tax Act.

In conclusion, the court answered both questions in the affirmative against the assessee, upholding the Tribunal's decision. No costs were awarded in this case.