Supreme Court: Jewellery exempt under Wealth-tax Act; High Court agrees.

The Supreme Court held that the value of jewellery was exempt under section 5(1)(viii) of the Wealth-tax Act until the Finance Act of 1971 retrospectively excluded jewellery from the exemption. The term "jewellery" was clarified to include ornaments made of precious metals, whether studded with stones or not. The High Court agreed with this interpretation, emphasizing that there was no material distinction between jewellery and ornaments based on the presence of precious stones. Consequently, the second question was answered in favor of the department, and no costs were awarded.

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Issues:
Interpretation of the term "jewellery" under section 5(1)(viii) of the Wealth-tax Act, 1957 for assessment years 1964-65 and 1965-66.

Analysis:
For the assessment years 1964-65 and 1965-66, the Wealth-tax Officer included the value of jewellery as assessable in the returns filed by the assessee in the status of HUF and individual separately. The Tribunal held that ornaments studded with jewels or gems would not be exempt, but ornaments not studded would be exempt from wealth-tax, remanding the matter for recomputation accordingly.

The Tribunal referred two questions for opinion: firstly, whether the Tribunal was legally correct in setting aside the Appellate Assistant Commissioner's order regarding exemption under section 5(1)(viii) as the point did not arise from the assessment order, and secondly, whether the word "jewellery" intended for personal use of the assessee under section 5(1)(viii) would exclude certain ornaments for the assessment years in question.

The Supreme Court's decision in CWT v. Arundhati Balkrishna held that the value of jewellery was exempt until the Finance Act of 1971 retrospectively amended the provision to exclude jewellery from the exemption. The Explanation added to the Act clarified that "jewellery" included ornaments made of precious metals, whether studded with stones or not. The High Court opined that the Explanation merely made explicit what was implicit in the provision from its inception.

The High Court distinguished cases from other jurisdictions where the term "jewellery" was interpreted differently, emphasizing that in the present case, there was no material distinction between jewellery and ornaments based on the presence of precious stones. The court found support in the decision of the Gujarat High Court and concurred with their interpretation.

Ultimately, the second question was answered in the negative, in favor of the department and against the assessee. As a result, the first question was left unanswered, and no order as to costs was made in the circumstances.

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