JUDGMENT
N.M. Kasliwai, J.
1. An identical question of law has been referred under Section 27(1) of the Wealth-tax Act, 1957, in all the above-mentioned reference applications and, as such, the same are disposed of by one single order. The Income-tax Appellate Tribunal, Jaipur Bench, has referred the following question of law for the opinion of this court:
“Whether the Tribunal was right in holding that by virtue of the Finance (No. 2) Act of 1971, the term ‘jewellery’ occurring in the words ‘but not including jewellery’ inserted retrospectively with effect from April 1, 1963, after the words ‘ articles intended for personal and household use of the assessee’ in Clause (viii) to Section 5(1) of the Wealth-tax Act, 1957, did not include ornaments made of gold, silver, platinum or any precious or semi-precious stone, and that such ornaments are includible in the term ‘jewellery’ after March, 1972. ”
2. In order to appreciate the controversy raised in these cases, it would be necessary to give a legislative history of the relevant provisions. The Wealth-tax Act, 1957 (hereinafter referred to as ” the Act “), came into operation from April 1, 1957. Under the aforesaid Act, net wealth exceeding particular limits belonging to an individual, Hindu undivided family or company became chargeable to wealth-tax. Section 5 of the Act provided exemptions in respect of certain assets. Sub-section (1), Clauses (viii) and (xv) of that section, which are relevant for the purpose of these cases, are reproduced as under :
“Clause (viii). furniture, household utensils, wearing apparel, provisions and other articles intended for the personal or household use of the assessee.”
Clause (xv). jewellery belonging to the assessee, subject to a maximum of twenty-five thousand rupees in value. ”
3. This Clause (xv) was subsequently deleted by the Finance Act, 1963. In CWT v. Arundhati Balkrishna [1970] 77 ITR 505, their Lordships of the Supreme Court, while considering the assessment for the years 1957-58 and 1958-59, held that jewellery is widely used as articles of personal use by the
ladies in this country especially by those belonging to the richer classes. That being so, jewellery intended for the personal use of the assessee comes within the scope of Section 5(1)(viii) of the Act. But the jewellery mentioned in Section 5(1)(xv) of the Act need not be articles intended for the personal use of the assessee. That provision deals with jewellery in general. The two provisions deal with different classes of jewellery. That is made further clear by Section 5(1)(xiii) which says that wealth-tax shall not be payable by an assessee in respect of any drawings, paintings, photographs, prints and other heirloom and not falling within Clause (xii) and not intended for sale but not including jewellery. It was further held that 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 computation of the net wealth of an ussessee.
4. After the above decision of the Supreme Court, the Finance (No. 2) Act, 1971, changed the position of law. Section 5 of the Act was amended to some extent and in Sub-section (1), Clause (viii), after the words “articles intended for the personal or household use of the assessee”, the words “but not including jewellery” were inserted, and it was further laid down that the above words shall be deemed to have been inserted with effect from April 1, 1963. In other words, this amendment was given retrospective operation and as such jewellery was not treated as articles intended for personal or household use of the assessee for enabling him to claim exemption from wealth-tax. However, Explanation 1 added to Clause (viii) reads as under :
” For the purpose of this clause and Clause (xiii), ‘jewellery’ includes-
(a) ornaments made of gold, silver, platinum or any other precious metals 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.”
5. At the same time, it was specifically enjoined that this Explanation would take effect from April 1, 1972. The Income-tax Appellate Tribunal, Jaipur Bench, in its order dated October 27/29, 1971, took the following view :
“After giving our utmost and prolonged consideration to the whole matter, we are of the opinion that the scheme of the amending Finance (No. 2) Act, 1971, clearly shows that the legislature has drawn a distinction between “jewellery” and “ornaments”. Whether it was for the purpose of (sic) canvassed by the appellants is difficult to say that when the legislature chose not to include ornaments within the meaning of the word “jewellery” retrospectively, it, in fact, meant accordingly. The only distinction that we can make out in the meaning of these two words and as sometimes commonly understood in India is that ‘jewellery’ has reference to those ornaments which have jewels or other precious or semiprecious stones embedded in them. In fact, the term ‘jewellery’ has its source from the word ‘jewel’. On the other hand, ‘ornaments ‘ can be of gold or silver or any precious metal or alloy. In case they are not embedded with jewels or stones, they would not be treated as ornaments simpliciter.
We, therefore, hold that as per this distinction, ornaments made of gold, silver, platinum or any precious metal or alloy which do not contain any precious or semi-precious stone would be exempt from wealth-tax under Section 5(1)(viii) up to March, 1972. Jewellery, however, would be liable to wealth-tax from April, 1963.”
6. The Tribunal, therefore, set aside the assessments and sent back the cases to the Wealth-tax Officer for revaluing jewellery after ascertaining each item whether the same was actually jewellery or not. The Additional Commissioner of Wealth-tax, Rajasthan, then moved reference applications under Section 27(1) of the Act and the Tribunal has referred the above-mentioned question of law for the opinion of this court.
7. It may be mentioned at this stage that two divergent sets of opinions have been given by the various High Courts in India. The Delhi, Allahabad and Gujarat High Courts have taken one view and according to these High Courts, the word “jewellery” as set out in the dictionaries and as understood in common parlance certainly includes gold ornaments. Gold ornaments made for personal use are almost always a dealer’s job and cannot be made by one. A jewel itself is a costly ornament especially made of gold or silver or precious stones. Precious stones are not necessary ingredients to make a basis of jewellery. It has been held, in these cases, that under the retrospective amendment to Section 5(1)(viii) of the Act, gold ornaments not studded with precious stones are not exempted from wealth tax. There is nothing redundant or absurd in Explanation I being retrospective. The terms of the Explanation cannot take away the ordinary meaning of the word “jewellery”. The artificially enlarged meaning as extended by the prospective definition provided in Explanation 1 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. It was thus held that gold ornaments not studded with precious stones were “jewellery” and were not exempt under Section 5(1)(viii) for the assessment years in question in those cases.
8. On the other hand, the Madhya Pradesh, Orissa, Calcutta and Punjab and Haryana High Courts have taken a totally divergent view and they have held that jewellery will not include gold ornaments not studded with precious or semi-precious stones within the meaning of Section 5(1)(viii), In the view taken by these High Courts, the reasoning has been given that the ordinary meaning of the word “jewellery” is not so wide as to cover all ornaments. The ordinary meaning of the word, as known now, will only embrace precious or semi-precious stones or gold and silver ornaments which contain precious or semi-precious stones. It is in this sense that the word “jewellery” as used in Clause (viii) has to be understood before April 1, 1972. They did not accept the contention that the inclusive definition contained in the Explanation which became effective from April 1, 1972, was added merely as a matter of abundant caution. In the view taken in these cases, it was held that it was clearly intended to give a wider meaning to the word “dealer” with effect from April 1, 1972. The very fact that the words “but not including jewellery” were retrospectively added with effect from April 1, 1963, and the Explanation was added with effect from April 1, 1972, by the same Finance Act under Section 5(1)(viii) gives out the clear intention of Parliament that the wider meaning of the word “jewellery”, as contained in the Explanation, was not to be applied in an assessment year prior to April 1, 1972. Arundhati Balkrishna’s case [1970] 77 ITR 505 (SC) decided by the Supreme Court was distinguished and it was held that the Supreme Court in the above case did not support the wide meaning of the word “jewellery”. The Supreme Court in that case was not concerned with the question as to the meaning of the word “jewellery”, although what the Supreme Court decided in that case was that “jewellery ” can also be an article of personal use.
9. The leading cases of the High Courts taking the earlier view are CWT v. Smt. SavitriDevi [1983] 140 ITR 525 (Delhi), CWT v. Jayantilal Amratlal [1976] 102 ITR 105 (Guj) and Sahu Gomnd Prasad v. WTO [1983] 139 ITR 825 (All). The leading cases taking the latter view are CWT v. Binapani Chakraborty [1978] 114 ITR 82 (Orissa), CWT v. Aditya Vikram Birla [1978] 114 ITR 711 (Cal), CWT v. Smt. Tarabai Kanakmal [1983] 140 ITR 374 (MP) [FB] and Smt. Meera Jaiswal v. CWT [1982] 136 ITR 548 (P&H). It may be mentioned at this stage that the Division Bench of the Punjab and Haryana
High Court in Smt. Meera Jaiswal’s case [1982] 126 ITR 548, has followed the view taken by the Calcutta High Court and has dissented from the view taken by the Allahabad and Gujarat High Courts, but there is no reference to an earlier case decided by the Punjab and Haryana High Court in CWT v. Rajeshwar Parshad [1975] Tax LR 194 in which a contrary view had been taken.
10. We have gone through the reasonings given in both sides of these cases decided by the various High Courts as mentioned above and we respectfully agree with the latter view taken by the Madhya Pradesh, Orissa, Calcutta and later decision of the Punjab and Haryana High Courts.
11. Apart from the reasoning given already in these cases, we would further like to add that in ordinary and common parlance, the word “ornaments” mean “jevrath” while the word “jewellery” denotes “jawaharath”. Thus, it is not correct to bring every ornament made of gold, silver, etc., to bring within the definition of “jewellery”. In order to bring an ornament within the term “jewellery”, it is necessary that it should be studded with some precious or semi-precious stone or stones and a gold ornament merely prepared by gold but having no precious or semiprecious stone studded in it, shall not come within the term “jewellery”. As a matter of fact, there is no controversy now in the above matter after April 1, 1972, as it has now been clearly enjoined that the Explanation 1 added to Clause (viii) shall take effect from April 1, 1972. However, prior to April 1, 1972, if such question arises, as has been done in these cases, we agree with the view taken by the Madhya Pradesh, Calcutta, Orissa and Punjab and Haryana High Courts.
12. In the result, the answer to the question referred to us is in favour of the assessees and against the Revenue and it is held that the Tribunal was right in holding that by virtue of the Finance (No. 2) Act of 1971, the term “jewellery” occurring in the words “but not including jewellery” inserted retrospectively with effect from April 1, 1963, after the words “articles intended for personal or household use of the assessee ” in Clause (viii) to Section 5(1) of the Act did not include ornaments made of gold, silver, platinum or any precious metal or alloy which did not contain any precious or semi-precious stone and that such ornaments can only be included in the term “jewellery” on or after April 1, 1972.
