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TMI Blog1979 (12) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ery was not liable to tax since the jewellery being for her personal use was exempt under s. 5(1)(viii) of the Act. The AAC, on appeals against those orders, following the decision of the Supreme Court in CWT v. Arundhati Balkrishna [1970] 77 ITR 505, accepted the assessee's contention and directed the exclusion of the aforesaid value of jewellery. By s. 32 of the Finance (No. 2) Act, 1971, s. 5(1)(viii) of the Act was amended with retrospective effect from April 1, 1963, and the words " but not including jewellery " were inserted as a result of which jewellery was taken out of the exempted category of wealth. The aforesaid amendment further inserted at the end of s. 5(1)(viii) two provisos and two Explanations giving an enlarged meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparent from the record and that the amending provision involved a debatable question. In our opinion, there is considerable substance in this submission. It would be seen that the amendment made in s. 5(1)(viii) by inserting the words " but not including jewellery " and thereby taking out the jewellery from the exempted category of wealth is to have retrospective effect from April 1, 1963. The provisos and Explanations added to this clause by the aforesaid amendment give an enlarged meaning to the word " jewellery " but these insertions were given prospective effect, i.e., they were to come into effect from April 1, 1972. Relying on the decision of the Bombay High Court in the case of J. M. Shah v. J. M Bhatia [1974] 94 ITR 519, the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord which the AAC could rectify and, secondly, that the question as to whether the Amending Act applies to assessments which were already completed was, in any event, debatable question. In regard to the first question it was almost conceded that the matter was concluded by the decision of the Supreme Court in the case of M. K. Venkatachalam v. Bombay Dyeing and Manufacturing Co. Ltd. [1958] 34 ITR 143 and no further argument was advanced. The second contention was pressed on behalf of the assessee and an attempt was made to distinguish the case of Bombay Dyeing Company and the High Court accepted the contention and held that the question as to whether a completed assessment was intended to be affected by the amendment in question was a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the light of the law as it stood on the day when the order was passed. That decision was overruled by the Supreme Court on appeal by special leave and it was held that as a result of the legal fiction brought about as a result of the retrospective operation given to the Amending Act, the subsequently inserted proviso must be read as forming part of s. 18A(5) of the principal Act as from 1st April, 1952, and, consequently, the order of the ITO dated October 9, 1952, was inconsistent with the provisions of the proviso and suffered from a mistake apparent from the record. The scope of s. 35 of the Act of 1922 was explained and it was observed (p. 150): " If a mistake of fact apparent from the record of the assessment order can be rectif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving recourse to that power the Agrl. ITO corrected the aforesaid assessments in accordance with the amended provisions. The assessee challenged that order by means of a writ petition under art. 226 of the Constitution in the High Court of Kerala. The High Court took the view that the Agrl. ITO could only have exercised the power of reassessment under s. 35 and not the power of rectification under s. 36. On appeal by special leave, the Supreme Court reversed that decision and, following the decision in Bombay Dyeing Company's case [1958] 34 ITR 143 (SC), held that the Agrl. ITO was empowered to make the rectification under s. 36 of the Act. It would thus be seen that the question of the applicability of an amending provision to completed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAC dated September 21, 1970, were inconsistent with these provisions and must be deemed to suffer from a mistake apparent from the record. The question whether Expln. 1 which was added to s. 5(1)(viii) by s. 32 of the Finance (No. 2) Act of 1971 could or could not be pressed into service while interpreting the word " jewellery " for the period prior to April 1, 1972, came up for consideration before this court in CWT v. His Highness Maharaja Vibhuti Narain Singh [1979] 117 ITR 246. The view taken was that the word " jewellery " as commonly understood included ornaments made of precious stones, and the Explanation only made explicit what was implicit in the provision from its inception. The decision of the Gujarat High Court in CWT v. Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X
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