1995 (3) TMI 2 - SC - Wealth-tax

Precious Metal Ornaments Classified as 'Jewellery' Under Wealth-Tax Act, 1957; Broader Interpretation Adopted.

The SC allowed the appeals, ruling that ornaments made of precious metals, such as gold, are included in the definition of 'jewellery' under the ... Interpretation of the term 'jewellery' in section 5(1)(viii) of the Wealth-tax Act, 1957 prior to the introduction of Explanation 1 by the Finance (No. 2) Act of 1971 - Gold ornaments without precious or semi-precious stones embedded on them - Meaning of word 'jewellery' - HELD THAT:- Undoubtedly, the Explanation has been introduced by the Finance (No. 2) Act of 1971, partly to clarify this position. The Explanation provides an extensive definition of 'jewellery'. It includes ornaments made of gold, silver, platinum or any other precious metal whether or not containing any precious or semi-precious stones. It also covers, within the meaning of the term, such items which may or may not be sewn into any wearing apparel. It also includes precious and semi-precious stones whether or not set in any furniture, utensils or other article, or worked or sewn into any wearing apparel. The Explanation may have extended the meaning of 'jewellery' to cover, for example, precious stones by themselves or precious stones set in furniture or utensils. But in so far as it includes ornaments made of gold, silver, platinum or any other precious metal or alloy, it is merely clarificatory in nature. Merely because ornaments made of gold and silver are now expressly included in Explanation 1, it is not possible to hold that they were earlier excluded from the meaning of the term 'jewellery'. In the case of CWT v. Smt. Savitri Devi [1981 (12) TMI 24 - DELHI HIGH COURT], a Division Bench of the Delhi High Court held that the word 'jewellery' as set out in the dictionaries and as understood in common parlance, includes gold ornaments made for personal use. These are almost always a jeweller's job and cannot be made by anyone. The Delhi High Court has held that the Explanation cannot take away the ordinary meaning of the word 'jewellery'. The artificially enlarged meaning as given by the definition in Explanation 1 also includes by way of abundant caution the natural meaning of the term. Hence, jewellery, even before the coming into force of the Explanation 1, would include gold ornaments. We agree with the reasoning of the Delhi High Court. This view is reiterated in CWT v. Rukmani Devi [1982 (11) TMI 39 - DELHI HIGH COURT]. In our view, this is not, in any manner, conclusive of the question whether the term 'jewellery' includes ornaments made of precious metals such as gold or silver. The contrary decisions are, therefore, overruled. In the premises, the appeals are allowed with costs. Issues: Interpretation of the term 'jewellery' in the Wealth-tax Act, 1957 prior to the introduction of Explanation 1 by the Finance (No. 2) Act of 1971.Analysis:1. The appeals before the Supreme Court stemmed from a judgment by the High Court of Orissa regarding the interpretation of the term 'jewellery' in section 5(1)(viii) of the Wealth-tax Act, 1957, before the introduction of Explanation 1 by the Finance (No. 2) Act of 1971. The High Court concluded that gold ornaments without precious or semi-precious stones were not included in the definition of 'jewellery' under the Act. The Commissioner of Wealth-tax challenged this decision in the present appeals.2. The Supreme Court delved into the provisions of section 5(1)(viii) of the Wealth-tax Act, 1957, as it stood before the amendment by the Finance (No. 2) Act of 1971. The Court referred to a previous judgment regarding the interpretation of section 5(1)(viii) and highlighted the retrospective amendment brought about by the Finance (No. 2) Act of 1971, which excluded jewellery from the list of exempted assets.3. The Court focused on the period when the amended section 5(1)(viii) was in effect but before the introduction of Explanation 1. The key question revolved around whether only jewellery with precious or semi-precious stones was excluded from the exemption or if all ornaments made of precious metals, even without stones, were also excluded.4. The assessee argued that the term 'jewellery' should be interpreted to include ornaments made of precious metals, such as gold, even without precious stones, citing the absence of Explanation 1 during the relevant period. The Court analyzed the ordinary understanding of the term 'jewellery' and its broader connotation beyond just precious stones.5. The Court examined the definitions of 'jewellery' and 'jewel' from the New Shorter Oxford Dictionary to emphasize that jewellery encompasses articles made from gold, silver, or precious metals, irrespective of the presence of precious stones. The Court rejected the artificial distinction between ornaments with and without stones in defining jewellery.6. The Court highlighted that the introduction of Explanation 1 by the Finance (No. 2) Act of 1971 aimed to clarify the definition of jewellery but did not alter the ordinary understanding of the term. The Explanation expanded the scope of jewellery to include various items but did not exclude ornaments made of gold, silver, or other precious metals.7. The Court referenced previous judgments by different High Courts, including Delhi, Gujarat, Allahabad, and Madhya Pradesh, which supported the broader interpretation of jewellery to include gold ornaments. The Court disagreed with contrary views expressed by the Calcutta High Court and a different Bench of the Madhya Pradesh High Court, ultimately overruling them.8. In conclusion, the Supreme Court allowed the appeals, holding that ornaments made of precious metals, such as gold, were included in the definition of 'jewellery' under the Wealth-tax Act, 1957, even before the introduction of Explanation 1. The Court emphasized the common understanding and broader scope of the term 'jewellery' in its decision.