1988 (9) TMI 41 - HC - Wealth-tax

Court rules in favor of assessee, granting full wealth-tax exemption under section 5(1)(xii)

The court ruled in favor of the assessee, affirming that the books owned by the senior advocate were fully exempt from wealth-tax under section 5(1)(xii) ... Books And Manuscripts, Exemptions, Wealth Tax Issues:Interpretation of exemption under section 5(1)(xii) of the Wealth-tax Act, 1957 for books owned by a senior advocate. Application of the principle of ejusdem generis in statutory interpretation. Determining if books used by a lawyer can be considered as 'tools and instruments' under section 5(1)(x).Analysis:The case involved a senior advocate who owned law books and claimed total exemption from wealth-tax under section 5(1)(xii) of the Wealth-tax Act, 1957. The Wealth-tax Officer allowed exemption only up to Rs. 20,000, considering the books as covered under a different clause. The Appellate Assistant Commissioner upheld this decision, citing the principle of ejusdem generis to limit the interpretation of 'books or manuscripts' in clause (xii). However, the Income-tax Appellate Tribunal disagreed, holding that the books were indeed covered by clause (xii) and should be fully exempt from wealth-tax. The Tribunal reasoned that the plain dictionary meaning of 'tools' and 'instruments' did not include books used by a lawyer, and even if both clauses (x) and (xii) applied, the more favorable clause (xii) should be adopted under fiscal interpretation rules.The court analyzed the provisions of section 5(1)(xii) in detail, emphasizing that the clause exempted any books or manuscripts owned by the assessee and not intended for sale. The legislative intent was to exempt books acquired for intellectual enrichment or professional use without imposing wealth-tax restrictions based on the subject matter. The court rejected the revenue's argument invoking ejusdem generis, stating that the rule should not be applied restrictively and that the words 'books and manuscripts' had broad, unqualified meanings.Regarding section 5(1)(x), the court determined that books used by lawyers could not be considered as 'tools and instruments' in the mechanical sense implied by the clause. Given the specific inclusion of books in clause (xii), the court held that clause (x) should be excluded based on the principle that 'special excludes the general.' Additionally, the court favored the interpretation most beneficial to the assessee in tax matters, further supporting the full exemption of the books under clause (xii).In conclusion, the court ruled in favor of the assessee, affirming the Tribunal's decision that the value of the books owned by the senior advocate was entirely exempt from wealth-tax under section 5(1)(xii) of the Wealth-tax Act, 1957, rejecting the limited exemption under section 5(1)(x). The assessee was awarded costs amounting to Rs. 200.