Retrospective exclusion of jewellery from wealth-tax exemption bars personal-use claims, and gift-tax period governs transfer exclusion.

Retrospective amendment to section 5(1)(viii) of the Wealth-tax Act excluded jewellery from exemption, so ornaments and jewellery held by the assessee, including jewellery gifted to spouse and child, could not qualify on the basis of personal or household use. The proviso to section 4(1)(a) was construed as operating by reference to the relevant gift-tax assessment years and the chargeability of the transfer to gift-tax, not as a broad exclusion for all earlier gifts. On that construction, only gifts within the specified period could be kept out of net wealth, and the claimed exclusions failed.

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Issues: (i) Whether ornaments and jewellery held by the assessee were exempt under section 5(1)(viii) of the Wealth-tax Act, 1957, and whether the same exemption could extend to jewellery gifted to spouse and child; (ii) whether the proviso to section 4(1)(a) of the Wealth-tax Act, 1957 was confined to gifts made in the assessment year 1964-65 and later, or applied to gifts made earlier as well.

Issue (i): Whether ornaments and jewellery held by the assessee were exempt under section 5(1)(viii) of the Wealth-tax Act, 1957, and whether the same exemption could extend to jewellery gifted to spouse and child.

Analysis: The retrospective amendment to section 5(1)(viii) inserted an express exclusion of jewellery from the category of assets eligible for exemption. Once jewellery was taken out of the exemption clause with effect from 1 April 1963, the question whether such articles were intended for personal or household use ceased to support exemption. The same consequence applied to the gifted jewellery as well, and the fiction under section 4(1)(a) could not revive an exemption that had been expressly denied by the amended provision.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the proviso to section 4(1)(a) of the Wealth-tax Act, 1957 was confined to gifts made in the assessment year 1964-65 and later, or applied to gifts made earlier as well.

Analysis: The language of the proviso was construed as referring to the chargeability or non-chargeability of the transfer to gift-tax during the specified assessment years, not merely to the assessment year under the Wealth-tax Act. The proviso was read as limiting the class of transfers that could be excluded from net wealth by reference to the gift-tax period, and the later amendment of 1971 only narrowed that period further by fixing an outer limit. On that construction, only gifts falling within the specified gift-tax assessment years could be excluded from net wealth.

Conclusion: The issue was decided in favour of the Revenue and against the assessee.

Final Conclusion: The references were answered wholly in favour of the Revenue, and the assessee was not entitled to the claimed wealth-tax exclusions.

Ratio Decidendi: Where a statutory exemption expressly excludes jewellery by retrospective amendment, the exemption cannot be claimed for jewellery on the basis of personal or household use; and a proviso governing exclusion of transferred assets from net wealth must be construed according to the assessment years and chargeability to gift-tax specified in that proviso.

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