9911796707
TMI Blog1986 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... araja Yeshwantrao Holkar, the approval of the Central Board of Revenue to the recognition of certain articles of jewellery specified in that letter as heirloom jewellery for the purpose of clause (xiv) of sub-section (1) of section 5 of the Wealth-tax Act, 1957 (hereinafter referred to as " the Act "). On the death of H. H. Maharaja Yeshwantrao Holkar on December 5, 1961, the petitioner was recognised as his successor by the Government of India. By virtue of rule 4 of the Rules, recognition accorded by the Central Board of Revenue in respect of the aforesaid jewellery as heirloom which was available to H. H. Maharaja Yeshwantrao Holkar, also became available to the petitioner. The petitioner accordingly claimed in the assessment proceedings under the Act for the assessment years 1962-63 to 1971-72, exemption under section 5(1)(xiv) of the Act, in respect of the aforesaid heirloom jewellery. Some time in the year 1971, in order to pay the estate duty amounting to about Rs. 114 crores, the petitioner sold certain articles of heirloom jewellery. The petitioner has averred that information in that behalf was given by her to the Central Board of Direct Taxes and this fact has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules empowering the Central Board to withdraw the recognition in the event of sale or disposal of heirloom, was in excess of the rule-making power conferred on the Central Government by section 5(1)(xiv) of the Act, and that, in any event, the power to withdraw recognition retrospectively could not be conferred on the Central Board by the rules framed by the Central Government in exercise of powers conferred by section 5(1)(xiv) of the Act. It was further contended that rule 5(2) of the Rules, which provided for the manner in which the market value of the heirloom sold would have to be determined, was inconsistent with the provisions of the Act providing for determination of the value of any asset for the purposes of the Act and hence was ultra vires. It was also contended that the orders of assessment for the assessment years in question were passed on March 31, 1979, and the finality of those orders could not be disturbed except in accordance with the provisions of the Act and that there was no provision in law empowering the Wealth-tax Officer to raise a demand for wealth-tax simpliciter, without complying with the provisions of law and the principles of natural justice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, where no such recognition exists, which the Board may, subject to any rules that may be made by the Central Government in this behalf, recognise as his heirloom at the time of his first assessment to wealth-tax under this Act." Now, in exercise of the powers conferred by the aforesaid clause (xiv) of sub-section (1) of section 5 of the Act, the Central Government has made Rules subject to which the Central Board of Revenue may recognise certain jewellery of Rulers as their heirloom (jewellery) for purposes of exemption from wealth-tax under the said clause. Rule 2 of the Rules provides for an application for recognition of jewellery as heirloom and conditions of recognition are specified in rule 3. Rule 5 deals with withdrawal of recognition and sub-rule (2) of rule 5, which is material for the purpose of this petition, reads as under : " 5. (2) In the event of sale or disposal of the article subsequent to the date of recognition, the Central Board of Revenue shall withdraw the recognition, retrospectively with effect from the date when the recognition first became available to the Ruler and in such a case wealth-tax shall become payable by the Ruler or his successor, as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r withdrawal of that recognition. The contention advanced on behalf of the petitioner that no rule can be made under section 5(1)(xiv) for withdrawal of recognition cannot be upheld. In our opinion, the power to prescribe conditions subject to which any jewellery can be recognised by the Board as heirloom, carries with it, by necessary implication, the power to withdraw recognition. But in sub-rule (2) of rule 5, not only has provision been made for withdrawal of recognition, but provision has also been made providing for the period for which the liability to pay wealth-tax is incurred and the manner in which that liability would be determined for all the assessment years for which the jewellery was exempted on account of recognition. It is well settled that an authority vested with the power of making subordinate legislation has to act within the limits of its powers and cannot transgress the same. As already observed, in framing sub-rule (2) of rule (5) of the Rules, the Central Government has not only provided for withdrawal of recognition but has also provided for the determination of the liability to pay wealth-tax for a certain period in a certain manner. Moreover, the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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