1996 (11) TMI 19 - HC - Wealth-tax

Summary

Issues:
1. Interpretation of the Wealth Tax Act, 1957 regarding the assessment of life interest in jewellery under section 21(1).
2. Determination of whether the right to wear jewellery on ceremonial occasions constitutes an assessable asset under the Wealth Tax Act, 1957.

Analysis:
1. The case involved an application under section 27(3) of the Wealth Tax Act, 1957, where the Revenue sought a direction to the Tribunal to refer questions of law to the High Court. The Tribunal had previously held that the orders of the WTO assessing the beneficiary's life interest in jewellery were incorrect under section 21(1) of the Act for the assessment years 1976-77 to 1978-79. The Tribunal also ruled that the right to wear jewellery on ceremonial occasions was not an assessable asset under the Act, even after a retrospective amendment by the Finance Act in 1971.

2. The WTO had assessed the right to wear jewellery on ceremonial occasions under section 21(1) of the Wealth Tax Act for the mentioned assessment years. However, the CWT(A) set aside this assessment, leading to an appeal by the Revenue before the Tribunal. The Tribunal, following a previous judgment, held that the right to wear jewellery could not be considered "property" for wealth tax purposes. The petitioner's application to refer questions of law was dismissed by the Tribunal, prompting the current petition.

3. The petitioner argued for a reference to the Full Bench, citing similar questions referred previously. The respondent contended that the issue was covered by a previous judgment and should be dismissed. The Court examined a related order and noted that a similar question had been declined in a previous case related to a trust deed executed by H.E.H. the Nizam. The Court reiterated the previous judgment's observation that the interest in jewellery was permissive and not a property, thus not constituting an asset under the Wealth Tax Act.

4. Ultimately, the Court found that no referable question of law arose in the current case based on previous judgments and observations. The Court dismissed the wealth tax case based on the interpretation of the Act and the previous decisions regarding the assessment of life interest in jewellery and the right to wear jewellery on ceremonial occasions.