1991 (2) TMI 26 - HC - Wealth-tax

Summary

Issues:
Interpretation of exemption under section 5(1)(xii) of the Wealth-tax Act, 1957 for jewellery as works of art.

Detailed Analysis:
The case involved a reference under section 27(1) of the Wealth-tax Act, 1957, for the assessment years 1977-78, 1978-79, and 1979-80, regarding the exemption of jewellery owned by the assessee under section 5(1)(xii) as works of art. The assessee claimed that the jewellery, consisting of ornaments made of gold, should be exempted as works of art. The Wealth-tax Officer, Appellate Assistant Commissioner, and Tribunal all denied the claim, leading to the reference to the High Court.

The contention on behalf of the assessee was that jewellery, being manufactured with professional skill and fine workmanship, should be considered a work of art eligible for exemption under section 5(1)(xii). The Revenue argued that ornaments made of gold and precious metals, even if considered works of art, were not eligible for exemption based on Explanation I to section 5(1)(viii).

The court considered the legislative history and amendments related to the exemption of jewellery under the Wealth-tax Act. It noted that while there was a previous provision for exemption up to a certain value, statutory amendments had progressively removed the exemption for jewellery from wealth tax, including an extended definition of "jewellery" under Explanation 1 to section 5(1)(viii) from the assessment year 1972-73.

The court highlighted that the intention of the Legislature was clear in not allowing any exemption or withdrawing exemption for jewellery. It emphasized that specific provisions existed for exemption in cases such as heirloom jewellery of a Ruler under section 5(1)(xiv), demonstrating that jewellery as such was not entitled to any exemption under the Act.

Ultimately, the court rejected the contention that jewellery could be considered a work of art for exemption under section 5(1)(xii), stating that even if a piece of jewellery could be deemed a work of art, it would not qualify for exemption as it was meant for personal use and susceptible to sale. The question in the reference was answered in the affirmative and in favor of the Revenue.

The judgment was delivered by Judges Shyamal Kumar Sen and Ajit Kumar Sengupta, concurring with the decision against the exemption of jewellery as works of art under section 5(1)(xii) of the Wealth-tax Act, 1957.