2018 (3) TMI 1364 - AT - Wealth-tax

Wealth tax assessment - whether loose pearls and stones are also includible in the definition of assets? - Held that - As per the definition of jewellery in the Wealth Tax Act jewellery includes precious stones and semi-precious stones including the loose items not embedded in jewellery. CIT(A) examined the definition of the gemstones in internet and held that loose pearls and stones are also includible in the definition of assets. AR submitted that the pearls are not stones but separate bifurcation of pearls and stones was not submitted. A.R did not place any decision to controvert the finding of the Ld.CIT(A). As per the definition available in internet precious stones are diamond ruby emeralds and rest of them are semi-precious stones which include variants from non-organic stones. CIT(A) has rightly upheld the addition made by the A.O and we do not see any reason to interfere in the order of the Ld. CIT(A). - Decided against assessee.

Summary

Issues:
Assessment of pearls and stones for Wealth Tax inclusion, Interpretation of definition of asset/jewellery/semi-precious stones, Levy of interest u/s Sec. 17a, 17b, and 17c of the Wealth Tax Act.

Assessment of Pearls and Stones for Wealth Tax Inclusion:
The appeal was filed against the CIT(A)'s order confirming the addition of pearls and stones to the net wealth for the assessment year 2006-07. The AO considered pearls and stones as covered under Sec. 2(ea) of the Wealth Tax Act, bringing them under the term "any other article" and subjecting them to wealth tax. The CIT(A) upheld this decision, stating that pearls and stones fall within the definition of asset/jewellery/semi-precious stones. The appellant argued that the valuation report only mentioned pearls and color stones, not semi-precious stones, but the CIT(A) found the loose pearls and stones to be includible based on the definition of gemstones available on the internet. The tribunal agreed with the CIT(A), emphasizing that the definition of jewellery in the Wealth Tax Act includes precious and semi-precious stones, even if not embedded in jewelry, and dismissed the appeal on these grounds.

Interpretation of Definition of Asset/Jewellery/Semi-Precious Stones:
The definition of "asset" for Wealth Tax purposes includes jewellery, bullion, and articles made of precious metals. The explanation clarifies that jewellery comprises ornaments made of precious metals, including precious or semi-precious stones, whether set in any article or not. The tribunal referred to internet literature stating that any gemstone other than diamond, ruby, emerald, or sapphire is considered a semi-precious gemstone. It was noted that semi-precious stones can include organic materials like pearls. The tribunal concluded that pearls and stones, even if not precious, fall under the definition of semi-precious stones and are liable for wealth tax, as per the Wealth Tax Act's provisions.

Levy of Interest u/s Sec. 17a, 17b, and 17c of the Wealth Tax Act:
The grounds related to the levy of interest under Sec. 17a, 17b, and 17c were dismissed by the tribunal, stating that these provisions are mandatory in nature. The appeal on these grounds was thus rejected, affirming the decision to levy interest under the specified sections. Consequently, the tribunal dismissed the appeal filed by the assessee, upholding the orders of the CIT(A) and the AO regarding the assessment of pearls and stones for wealth tax and the levy of interest under the Wealth Tax Act.