1987 (3) TMI 39 - HC - Wealth-tax

Summary

Issues Involved:
1. Definition of "jewellery" under Section 5(1)(viii) of the Wealth-tax Act, 1957.
2. Retrospective vs. prospective application of Explanation I to Section 5(1)(viii).

Detailed Analysis:

1. Definition of "Jewellery" under Section 5(1)(viii) of the Wealth-tax Act, 1957:
The primary issue was to determine what constitutes "jewellery" under Section 5(1)(viii) of the Wealth-tax Act, 1957. The assessee argued that her gold ornaments, not studded with precious or semi-precious stones, were exempt from wealth-tax. The Wealth-tax Officer disagreed, but the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal sided with the assessee. The court was tasked with interpreting whether gold ornaments without stones fell under the term "jewellery".

2. Retrospective vs. Prospective Application of Explanation I to Section 5(1)(viii):
The court examined whether Explanation I, which defines "jewellery" to include ornaments made of precious metals with or without stones, applied retrospectively from April 1, 1963, or prospectively from April 1, 1972. The Revenue argued for retrospective application, while the assessee contended for a prospective application.

Court's Findings:

On the Definition of "Jewellery":
The court analyzed various judicial decisions and dictionary definitions. The Oxford English Dictionary and New Webster's English Dictionary provided two potential meanings for "jewellery": one derived from "jewel" (suggesting the inclusion of precious stones) and another from "jeweller" (suggesting any ornament made by a jeweller, including those without stones).

On Retrospective vs. Prospective Application:
The court noted that the words "but not including jewellery" were inserted retrospectively from April 1, 1963, but Explanation I was added prospectively from April 1, 1972. The court disagreed with the Allahabad High Court's view that Explanation I was merely clarifying what was implicit from the beginning. Instead, it held that the Legislature intended the definition in Explanation I to apply only from April 1, 1972, as indicated by the contemporaneous exposition in the Central Board of Direct Taxes' circular.

Supporting Judgments:
- Gujarat High Court (CWT v. Jayantilal Amratlal): Held that ornaments studded with jewels were included in the definition of "jewellery" even before Explanation I.
- Calcutta High Court (CWT v. Aditya Vikram Birla): Found that "jewellery" in popular parlance implied the inclusion of stones, and thus, Explanation I extended the meaning prospectively.
- Punjab and Haryana High Court (Meera Jaiswal v. CWT): Agreed that gold ornaments without stones were not "jewellery" before April 1, 1972.
- Madhya Pradesh High Court (CWT v. Smt. Tarabai Kanakmal): Concluded that the word "jewellery" did not cover all ornaments and that Explanation I was intended to widen the meaning prospectively.
- Delhi High Court (CWT v. Smt. Savitri Devi): Contrarily, held that "jewellery" included gold ornaments based on the ordinary meaning.

Conclusion:
The court concluded that the word "jewellery" in Section 5(1)(viii) did not include gold ornaments without precious or semi-precious stones for the period prior to April 1, 1972. The question was answered in the negative, favoring the assessee, and no costs were ordered.

Summary:
The judgment clarified that for assessment years before April 1, 1972, gold ornaments not containing precious stones were not considered "jewellery" under Section 5(1)(viii) of the Wealth-tax Act, 1957. Explanation I to this section, which included such ornaments in the definition of "jewellery", applied only prospectively from April 1, 1972.