Case: Commissioner Of Wealth Tax, Gujarat Atahmedabad Vs. Mrs. Arundhati Balkrishna

of Wealth Tax Calcutta, (1966) 59 ITR 230 (Cal) a Division Bench of the Calcutta High Court held that the right of a person to receive under a wakf an aliquot share of the net income of the wakf property is an asset within the meaning of the Wealth Tax Act, 1957 and the capital value of such a right is assessable to wealth tax. Therein the Court repelled the contention that the right in question was an annuity. This decision was approved by the Court in Civil Appeals Nos. 2129-2132 of 1968 decided on August 20, 1969 and the same is binding on us. A similar view was taken by another Bench of the Calcutta High Court in Commr. of Wealth Tax v. Mrs. Dorothy, Martin, (1968) 69 ITR 586 (Cal). In that case under the will of the assessees father the assesse was entitled to receive for her life the annual interest accruing upon her share in the residuary trust fund. The Wealth Tax Officer included the entire value of the said share in the assessable wealth of the assessee and subjected the same to tax under Section 16 (3) of the Wealth Tax Act, 1957. That order was confirmed by the Assistant Appellate Commissioner but the Tribunal in appeal excluded the same in the computation of the net wealth of the assesse. On a reference made to the High Court, it was held that on a construction of the various clauses in the will, the assesse was entitled to an aliquot share in the general income of the residuary trust fund and not a fixed sum payable periodically as "annuity" and, therefore, the value of her share was an asset to be included in computing his net wealth. These decisions in our view correctly lay down the legal position. In this view it is not necessary to consider whether the income receivable by the assessee under those deeds either wholly or in part is capable of being commuted into a lump sum grant.16. For the reasons mentioned above we agree with the High Court that payments to be made to the assessee under the three trust deeds cannot be considered as annuities and hence she is not entitled to the benefit of Section 2 (e) (iv).17. This takes us to the question whether the High Court was right in its view that the value of the assessees jewellery should not be taken into consideration in determining her net wealth. The Tribunal has taken the view and the High Court has agreed with that view that the jewellery in question is articles intended for the personal use of the assessee. As mentioned earlier those jewels were valued at Rs. 80,000/-; out of that amount Wealth Tax Officer deducted Rs. 25,000/- under Section 5 (1) (viii), the assessee claims that in view of Section 5 (1) (viii), the value of those jewels cannot be included in the computation of her net wealth. Section 5 (l) (viii) reads :"5. (l) Wealth-tax shall not be payable by the assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee -* * * * * *(viii) furniture, household utensils, wearing apparel, provisions and other articles intended for the personal or household use of the assessee."18. There is no dispute that the jewels in question were intended for the personal use of the assessee but it is said on behalf of the revenue that Section 5 (1) (viii) does not apply to jewels as those articles are specifically provided for under Section 5 (l) (xv).On the other hand it is urged an behalf of the assessee that Section 5 (l) (xv) deals with jewellery which are not intended for personal use of the assessee such as heirloom or ether jewellery which are retained as valuable assets or intended for the use of persons other than the assessee whereas Section 5 (1) (viii) takes in only such jewellery as are intended for personal use of the assessee. We think the contention advanced on behalf of the assessee is the correct one. It is well known that the jewellery is widely used as articles of personal use by the ladies in this country specially 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). But the jewellery mentioned in Section 5 (1) (xv) need not be articles intended for 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 assessee in respect of any drawings, paintings, photographs, prints and other heirloom not falling within Clause (xii) and not intended for sale but not including jewellery. If the contention that the jewellery is exclusively dealt by Section 5 (1) (xv) is correct then there was no occasion for the legislature to refer to jewellery in Section 5 (l) (xiii). From an analysis of the various provisions in Section 5, it appears to us that therein there are four provisions dealing with jewellery viz, (l) jewellery intended for personal use of the assessee - Section 5 (l) (viii); (2) jewellery that is heirloom - Section 5 (l) (xiii); (3) jewellery in the possession of any ruler - Section 5 (1) (xiv) and (4) jewellery in general - Section 5 (l) (xv). 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 assessee.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]15. On an analysis of the relevant clauses in three trust deeds, it is clear the assesse was given thereunder a share of the income arising from the funds settled on trust. Under those deeds she is not entitled to any fixed sum of money. Therefore it is not possible to hold that the payments that she is entitled to receive under those deeds are annuities. She has undoubtedly a life interest in those funds. In Ahmed G. H. Ariff v. Commr. of Wealth Tax Calcutta, (1966) 59 ITR 230 (Cal)   a Division Bench of the Calcutta High Court held that the right of a person to receive under a wakf an aliquot share of the net income of the wakf property is an asset within the meaning ofthe Wealth Tax Act, 1957 and the capital value of such a right is assessable to wealth tax. Therein the Court repelled the contention that the right in question was an annuity. This decision was approved by the Court in Civil Appeals Nos. 2129-2132 of 1968 decided on August 20, 1969 and the same is binding on us. A similar view was taken by another Bench of the Calcutta High Court in Commr. of Wealth Tax v. Mrs. Dorothy, Martin, (1968) 69 ITR 586 (Cal). In that case under the will of the assessees father the assesse was entitled to receive for her life the annual interest accruing upon her share in the residuary trust fund. The Wealth Tax Officer included the entire value of the said share in the assessable wealth of the assessee and subjected the same to tax under Section 16 (3) ofThere is no dispute that the jewels in question were intended for the personal use of the assessee but it is said on behalf of the revenue that Section 5 (1) (viii) does not apply to jewels as those articles are specifically provided for under Section 5 (l) (xv).On the other hand it is urged an behalf of the assessee that Section 5 (l) (xv) deals with jewellery which are not intended for personal use of the assessee such as heirloom or ether jewellery which are retained as valuable assets or intended for the use of persons other than the assessee whereas Section 5 (1) (viii) takes in only such jewellery as are intended for personal use of the assessee. We think the contention advanced on behalf of the assessee is the correct one. It is well known that the jewellery is widely used as articles of personal use by the ladies in this country specially 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). But the jewellery mentioned in Section 5 (1) (xv) need not be articles intended for 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 assessee in respect of any drawings, paintings, photographs, prints and other heirloom not falling within Clause (xii) and not intended for sale but not including jewellery. If the contention that the jewellery is exclusively dealt by Section 5 (1) (xv) is correct then there was no occasion for the legislature to refer to jewellery in Section 5 (l) (xiii). From an analysis of the various provisions in Section 5, it appears to us that therein there are four provisions dealing with jewellery viz, (l) jewellery intended for personal use of the assessee - Section 5 (l) (viii); (2) jewellery that is heirloom - Section 5 (l) (xiii); (3) jewellery in the possession of any ruler - Section 5 (1) (xiv) and (4) jewellery in general - Section 5 (l) (xv). 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 assessee.