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Petitioner: COMMISSIONER OF WEALTH TAX VS Respondent: SURESH MOHAN THAKUR
Court Name: Patna High Court Judge(s): B. P. Singh, K Vekataswa mi Title: COMMISSIONER OF WEALTH TAX vs SURESH MOHAN THAKUR Case No.: Tax Cases Nos.291 to 296 of 1981 Date of Judgment:1994-09-15 Reported As: 1995 PTD 1027 [211 I T R 811] Result: Questions answered
JUDGMENT
JUDGMENT ' B.P. SINGH, J.---In all these matters common questions of law have been referred to this Court for its opinion pursuant to a direction of this Court under section 27(3) of the Wealth Tax Act, 1957. The assessee in all the cases is the same, and the references relate to different assessment years, namely, assessm ent years 1966-67 to 1971-72. The questions of law referred to this Court for its opinion are the following:- "(1) Whether, on the facts and in the circumstances of the case, the jewellery included ornaments, according to the first proviso to clause (viii) of subsection (1) of section 5 of the Act, and the addition of Explanation was merely clarificatory? (2) Whether, on the facts and in the circumstances of the case, the order of the Income-tax Appellate Tribunal is perverse and not based on law?" ' The facts of the case are not in dispute. The assessee, a Hindu undivided family, owned movable and immovable properties including 144 Tolas of gold ornaments. It claimed before the Wealth Tax Officer that the value of the gold ornaments was exempt under section 5(1)(viii) of the Wealth Tax Act, and, therefore, should not be included in the net wealth of the assessee under the Wealth Tax Act. It was contended on their behalf that gold ornaments were exempt from wealth tax up to the assessm ent year 1971-72, because the Explanation to section 5(1)(viii) by which "jewellery" was defined to include ornaments made of gold, silver, platinum or any other precious metal, or any other alloy containing one or more such precious metal, whether or not containing any precious or semi-precious stones, and whether or not worked or sewn into any wearing apparel, came into effect from April 1, 1972, Consequently, gold ornaments could not be said to be "jewellery" in terms of
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section 5(1)(viii) of the Act, on the valuation date earlier than April 1, 1972. The valuation date in each of the relevant years is in the month of September. ' The Wealth Tax Officer negatived the claim of the assessee, but on appeal the Appellate Assistant Commissioner following the decision of the Orissa High Court in CWT v. Binapani Chakravorty (1978) 114 ITR 82, allowed the appeal and directed the Wealth Tax Officer to obtain a list of gold ornaments of the assessee to find out whether the gold ornaments had precious or semi-precious stones embedded on them, and include only such gold ornaments at their market price in the net wealth of the assessee, excluding the gold ornaments having no such precious or semi-precious stones embedded on them. ' The appeal preferred by the Revenue before the Tribunal failed. The Revenue asked for a reference to this Court under section 27(1) of the Act, but the same was rejected, as the Tribunal was of the opinion that the questions suggested by the Revenue were either questions of fact, or did not arise out of the order of the Tribunal. Thereafter, the Revenue moved this Court under section 27(3) of the Act, and as noticed earlier, this Court was pleased to direct the Tribunal to draw up a statement of case in each matter and refer two questions of law for the opinion of this Court, which have been reproduced earlier. ' Before its amendment by the Finance (No, 2) Act, 1971, section 5(10(viii) of the Wealth Tax Act, 1957, read as under:-- "(5) Subject to the provisions of subsection (1-A), wealth tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee... (viii) furniture, household utensils, wearing apparel, provisions and other articles intended for the personal or household use of the assessee." ' By the Finance (No,2) Act of 1971, after the existing clause (viii), the words "but not including jewellery" were added with retrospective effect from April 1, 1963, so that it read as under:-- "(viii) furniture, household utensils, wearing apparel, provisions and other articles intended for the personal or household use of the assessee, but not including jewellery." ' By the same Finance (No,2) Act, 1971 two provisos and two Explanations were also added which were made effective from April 1, 1972, i,e, prospectively, Explanation 1 deserves to be noticed. It provides:-- "Explanation 1.--- For the purposes of this clause and clause 'jewellery' includes,-- (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel." ' It is necessary to notice the background in which section 5 of the Wealth Tax Act was amended by the Finance (No,2) Act, 1971. In CWT v. Arundhati Balkrishna (1968) 70 ITR 203 (Guj.), the Court was considering the question whether the assessee was entitled to claim exemption in respect of jewellery or ornament irrespective of its valuation, if they were intended as articles for personal use of the assessee. The Revenue contended that an assessee would not be entitled to claim exemption for the jewellery and ornaments irrespective of their value under clause (viii) of section 5(1) on the ground that they are articles intended for personal use of the assessee, in view of the specific provision having been made in respect of jewellery belonging to the assessee under clause (xv) of section 5(1) as then existing, where an initial exemption of Rs,25,000 was provided. The High Court rejected the contention and held that jewellery and ornament, if they were intended for personal use of the assessee, were entitled to claim exemption irrespective of their valuation under clause (viii) of section 5(1) of the Act. The Court observed that the term "jewellery" was the
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collective description of jewellery as well as other ornaments of precious metal. Though the question did not arise in the manner it has arisen in the instant case in Arundhati Balkrishna (1968) 70 ITR 203, the Gujarat High Court did observe that the term "jewellery" included ornaments of precious metals. ' The decision of the Gujarat High Court was appealed against by the Commissioner of Wealth Tax, but the appeal preferred by the Commissioner was rejected and the judgment of the Gujarat High Court affirmed. The judgment of the Supreme Court is reported in CWT v. Arundhati Balkrishna (1970) 77 ITR 505. Dismissing the appeal, the Supreme Court held (at page 511):-- "Under section 5(1)(xv), as it stood at the relevant time, every assessee was entitled to deduct a sum of Rs,25,000 from out of the value of the jewellery in her possession whether the same was intended for her personal use or not but under section 5(1)(viii) the value of all the jewellery intended for the personal use of the assessee stands excluded in the commutation of the net wealth of an assessee." ' In view of the judgment of the Supreme Court, the Legislature intervened by enacting the Finance (No,2) Act of 1971. Section 5(1)(viii) was amended so as to exclude "jewellery" from the purview of exemption under clause (viii) of section 5(1). ' As noticed earlier by the Finance (No, 2) Act of 1971 though clause (viii) has been amended with retrospective effect from April 1, 1963, two provisos and two Explanations, including Explanation 1, were added with prospective effect from April 1, 1972. In view of the amendment brought about to section 5 of the Act, it has been contended on behalf of the assessee that the exclusive definition of "jewellery" as provided by Explanation 1 is applicable only to cases which are governed by the prospective operation of Explanation 1. The Legislature having enacted Explanation 1 to the Act prospectively, the same cannot be taken aid of for interpreting the term "jewellery" in clause (viii) of subsection (1) of section 5 of the Act. It is, therefore, contended that ornaments made of gold, silver or platinum without containing any precious or semi-precious stone are not jewellery within the meaning of that term in clause (viii) of section 5(1) of the Act. On the other hand, the Revenue contends that Explanation 1 has been added by way of abundant caution, and even without Explanation 1, giving to the term "jewellery" its ordinary meaning, it must be understood to mean not only ornaments studded with precious stones, but also ornaments made of gold, silver or other precious metal. ' In CWT v. Jayantilal Amratlal (1976) 102 ITR 105, a Division Bench of the Gujarat High Court considered a similar question of law referred to it for its opinion. It was urged before the Court that as the Legislature had thought fit to define the term "jewellery" by Explanation 1, which had been brought into effect from April 1, 1972, the Court cannot, for purposes of the assessment years 1963- 64 and 1964-65, consider the dictionary meaning of the term "jewellery" as including ornaments also and, therefore, in view of the fact that jewellery as defined by Explanation 1, now being excluded from the purview of the exemption under clause (viii) could not be included in the net wealth of the assessee for the purposes of the wealth tax. The submission was rejected by their Lordships of the Gujarat High Court observing that it did not stand to reason that the Legislature could have such intention of taking out the ornaments from the sweep of the meaning of the term "jewellery" and thereby continuing the benefit of exemption to the ornaments under clause (viii) of section 5(1). The obvious reasons were that the gold, silver or other ornaments set with the jewels could not have been, without any violence to the language, termed as articles other than jewellery. It drew support from the judgment of the same Court in Arundhati Balkrishna (1968) 70 ITR 203 (Guj.), wherein it was observed that the term "jewellery" was collective description of jewellery as well as other ornaments of precious metal. It was, therefore, held that the definition given by Explanation 1 added by the Finance (No,2) Act, 1971, in so far as it related to ornaments, could be only by way of greater caution, because Explanation 1 tries to include gold or silver or other metal
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ornaments set with precious stones as jewellery, which de hors the said definition, could not have been, undoubtedly, articles other than jewellery. It also rejected the submission urged on behalf of the assessee that by giving an inclusive definition to the term "jewellery" by Explanation 1 which had prospective operation, the Legislature tried to bring within the sweep of the term "jewellery" those article' s which could not have been included otherwise. Their Lordships, however, held that an interpretation clause which extends the meaning of the word does not take away its ordinary meaning. It, therefore, rejected the contention urged on behalf of the assessee that the inclusive definition given by the Legislature in Explanation 1 took away the primary and obvious meaning of the term "jewellery". It also considered the contention urged on behalf of the assessee that the Court was not entitled to take the aid of Explanation 1 for the purpose of interpreting clause (viii) of section 5(1), since it must be assumed that Explanation 1 did not exist in the statute book in that relevant assessm ent year, and at the relevant time, since it took effect from April 1, 1972, whereas clause (viii) of section 5(1) stood amended retrospectively with effect from April 1, 1963. The Court observed that it is well-established that a subsequent Act of Parliament does not afford any useful guide in the construction of the prior Act and the subsequent Act can be resorted to for purposes of construction of the prior Act only when both the Acts deal with the same subject and the part of the prior Act sought to be construed is equivocal and capable of different construction. The Court, therefore, concluded that Explanation 1 to section 5(10(viii) of the Act having come into force only with effect from April 1, 1972, could not be considered as on the statute book in the relevant assessm ent years and for all intents and purposes, it would be a reference to a later Act of Parliament. As the natural meaning of the term "jewellery" was clear and precise, there was no justification for considering Explanation 1 for construing the term "jewellery" for purposes of the relevant assessm ent Years. The word "include" though generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute, it was also susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to "mean and include", and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions. The Court summarised its opinion in the following words (at page 118):-- "Mr. Shah may be right that in a given context, the word 'include' might import that the enumeration is exhaustive. In the ultimate analyses, however, it is always the question of legislative intent and we are of the opinion that having regard to the obvious fact that gold, silver or platinum ornaments studded with jewels could not have been articles otherwise, than of jewellery, Parliament could have only by way of abundant caution thought fit to include the same articles in jewellery by Explanation 1, which has been made effective prospectively. The parliamentary exposition of the term 'jewellery' so as to include ornaments studded with jewels could not have been, in our opinion, for purposes of enlarging the term or the meaning for the first time, and, therefore, to make it applicable prospectively. The interpretation canvassed on behalf of the assessee would defeat the legislative intent of removing, with retrospective effect from April 1, 1963, the cover of exemption to jewellery by excluding it from articles intended for personal use of an assessee, because, on that interpretation advanced by Mr. Shah, the ornaments made of gold, etc. And studded with precious stones would be considered jewellery only from April 1, 1972. The result would be patently absurd, inasmuch as the articles admittedly of jewellery can be included in the net wealth of an assessee only from April 1, 1972. We cannot accept any such interpretation which would lead to such absurd result when the intention of Parliament in excluding the jewellery from the purview of exemption under section 5(1)(viii) with effect from April 1, 1963, is manifestly clear in the Finance (No,2) Act, 1971. As stated by us, it is only by way of greater caution that the ornaments of gold, etc. Have been also
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included alongwith the other articles such as furniture, apparel, etc. Studded or sewn with jewels which could not have been obviously termed as jewellery but for the inclusive definition given in Explanation 1 and to that extent the said Explanation is prospective. In that view of the matter, therefore, the last contention of Mr. Shah that this definition is exhaustive should be rejected. Mr. Shah, therefore, ultimately urged that when two reasonably possible interpretations are open, the Court should prefer one which would be favourable to the assessee. In our opinion, the question of preference does not arise as the interpretation canvassed on behalf of the assessee cannot be said to be a reasonable or possible interpretation." ' In an earlier decision in CWT v. Rajeshwar Parshad (1975) Tax LR 194, a Division Bench of the High Court of Punjab and Haryana took the same view. In that case, it was urged on behalf of the assessee that there was a difference between the ornaments and jewellery. The ornaments were normally of gold and the jewellery was embedded with precious stones. The contention was negatived by the Court in the following words (at page 196):- "It appears from the order of the Tribunal that they were of the view that there is a difference between the 'ornaments' and 'jewellery'. Both these expressions are not defined. Therefore, we have to fall back on the dictionary meaning. In Shorter Oxford English Dictionary `jewellery' means jewellers' work; gems or ornaments made or sold by the jewllers; jewels collectively, or as a form of adornment'. The word `jewel' means, according to this dictionary 'an article of value used for adornment usually of the person; a costly ornament especially one made of gold, silver, or precious stones'. In the same dictionary, the meaning of the word 'ornament' is stated to be 'any adjunct or accessory; equipment, furniture; tire, trapping anything used or serving to adorn; a decoration, embellishment..' It may be mentioned that these words are not terms of art and what has to be seen is what in fact are the articles or, in other words, whether the articles fall within the ambit of the word 'jewellery'. It is not disputed that these ornaments are of gold and are meant for wearing on the person of the assessee. Therefore, they would fall within the ambit of the phrase `jewellery'. No playing with words will take them out of the category. In- our opinion, the Tribunal fell in this error and that has led to a wrong decision of the matter'." ' The Allahabad High Court in CWT v. His Highness Maharaja Vibhuti Narain Singh (1979) 117 ITR 246, agreeing with the view of the Gujarat High Court answered the reference before it in favour of the Revenue. After noticing the judgment of the Supreme Court in Arundhati Balkrishna (1970) 77 ITR 505 and the amendments to the Act thereafter it observed (at page 248):-- "The Explanation made it quite clear that the term 'jewellery' was taken in its wider meaning. It included ornaments whether studded with precious jewels or not. It was, however, argued that the Explanation was prospectively added. It was not available for an assessment year prior to 1972. We are unable to agree. The phrase `but not including jewellery' was added with effect from April 1, 1963. The word 'jewellery' as commonly understood includes ornaments made of precious stones. In our opinion, the Explanation only made explicit what was implicit in the provision from its inception. This view finds support from the decision of the Gujarat High Court in CWT v. Jayantilal Amratlal (1976) 102 ITR 105. We are in respectful agreement with the Gujarat High Court." ' The Delhi High Court in CWT v. Smt. Savitri Devi (1983) 140 ITR 525 after careful consideration of the decisions on the point held (at page 530):-- "It would appear to us that the word 'jewellery' in common parlance especially in India would certainly include ornaments for personal adornment that are made from gold irrespective of whether they are studded with precious stones or not. When an Indian girl talks of her jewellery, she certainly means to include therein her gold bangles, chain, anklets, etc. Even though they are not studded with precious or semi-precious stones. The difference sought to be made out between the two appears to us to be artificial."
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' It agreed with the view of the Punjab and Haryana, Gujarat and Allahabad High Courts. It did not agree with the contrary view of the Orissa, Calcutta and Madhya Pradesh High Courts. After noticing the contrary view, their Lordships observed (at page 531):-- "We do not agree. We feel that the word 'jewellery' as set out in the dictionaries as above noticed and as understood in common parlance, certainly includes gold ornaments. Gold ornaments made for personal use are almost always a jeweller's job and cannot be made by just anyone. A jewel itself is a costly ornament especially one made of gold, silver or precious stones. Precious stones are not a necessary ingredient to make a piece of jewellery. Exquisite filigree gold and silver jewellery is made in Orissa and other parts of the country and can certainly not be made by any one other than an expert jeweller The Hindi word for jewellery `Gehena' would certainly include such jewellery within its ambit. It is unthinkable that a gold `Champakali' or a `Hanali' or a wedding ring is not jewellery just because it is not studded with stones. It would appear to us that there is nothing redundant or absurd in the Explanation being prospective. The terms of the Explanation cannot take away the ordinary meaning of the word `jewellery'. In any case, the Explanation does not deal with gold ornaments only but also elucidates, inter alia, that even if gold ornaments, etc., are sewn into any wearing apparel they would be jewellery; this is certainly an extended meaning of the word and not one as used in common parlance; similar is the position with regard to precious or semi-precious stones whether set in any furniture, utensil or other article or worked or sewn into any apparel or not. The artificially enlarged meaning as extended by the prospective definition provided for in Explanation 1 abovementioned also includes by way of abundant caution the natural meaning of the term. It has apparently been included so that the common parlance meaning should not escape attention." ' The Delhi High Court has reiterated its above view in two subsequent judgments in CWT v. Rukmani Devi (1983) 142 ITR 41 (Delhi) and CWT v. Ananti Devi (1987) 163 ITR 482 (Delhi). ' There are two decisions of the Orissa and Calcutta High Courts to the contrary, reported in the same volume of the "Income-tax Reports". The decision of the Orissa High Court is CWT v. Binapani Chakraborty (1978) 114 ITR 82 and that of the Calcutta High Court in CWT v. Aditya Vikram Birla (1978) 114 ITR 711. ' In Binapani Chakarborty's case (1978) 114 ITR 82, the Orissa High Court noticed the decision of the Supreme Court in Arundhati Balkrishna's case (1970) 77 ITR 505. It noticed the amendment of the Act which came after the aforesaid judgment of the Supreme Court. The discussion is contained in one paragraph of the judgment which is as follows (at page $4):-- "In view of the decision of the Supreme Court an in view of the clear provision that Explanation 1 has no retrospective effect, in our opinion, the Tribunal took the right view when it came to the conclusion that jewellery incorporated in clause (viii) shall have the meaning as given by the Supreme Court to the term and the legislative meaning given to the term by Explanation 1 shall operate from April 1, 1972. In that view of the matter, the deletion directed by the Tribunal of the value of the gold ornament from the taxable net wealth was justified." ' I find that difficult to agree with the view of the Orissa High Court. The Supreme Court in Arnudhati Balkrishna's case (1970) 77 ITR 505 did not consider the question whether "jewellery" included gold ornaments or whether that term included only ornaments embedded with jewels and precious stones. The question before the Supreme Court was entirely different and the judgment of the Supreme Court renders no assistance in giving meaning to the word "jewellery", in the context it has arisen in the instant cases. The decision of the Orissa High Court noticed Explanation 1, which was added with effect from April 1, 1972. The judgment proceeds on the basis that but for Explanation 1, the term "jewellery" would not have included ornaments made of gold, silver or any other precious metal which did not contain precious or semi-precious stones. It does not appear from the
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judgment that the question as to what "jewellery" means in ordinary parlance, was agitated before the Court." ' The Calcutta High Court in Aditya Vikram Birla's case (1978) 114 ITR 711 held that the dictionary meaning of "jewellery" was not so wide or clear as to bring in all valuable ornaments within its fold. On the contrary, in popular parlance "jewellery" connotes use of stones, precious, semi-precious or even imitation, in the ornament concerned. Proceeding on this basis, and not finding it safe to go only by the original and modern English meaning, their Lordships observed that what is to be kept in view is the widespread use of ornaments and jewellery in this country and the specific connotation of the various types of jewellery in use in the country and described in the various local languages. Proceeding on such basis their Lordships considered the amendment introduced by the Finance (No,2) Act, 1971, and came to the conclusion that by such…
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