Andhra HC (Pre-Telangana)
Commissioner Of Wealth-Tax vs Trustees Of H.E.H. The Nizam'S Wedding ... on 13 February, 1995
Equivalent citations: [1995]216ITR232(AP)
Author: Syed Shah Mohammad Quadri
Bench: S.S. Mohammed Quadri
JUDGMENT Syed Shah Mohammad Quadri, J.
1. In all these six cases, the same questions of law arise. The Revenue filed applications under section 27(3) of the Wealth-tax Act, 1957, to refer the following questions for opinion :
"1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the assessment orders of the Wealth-tax Officer passed for the assessment years 1976-77 to 1980-81 are bad in law for assessing the beneficiary's life interest in the jewellery under section 21(1) of the Wealth-tax Act, 1957 ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the right to wear the jewellery is not an asset so as to be assessed under section 21(1) of the Wealth-tax Act, 1957, in the hands of the trust representing the beneficiary, even after the retrospective amendment of section 5(1)(viii) of the Wealth-tax Act, 1957, by the Finance (No. 2) Act, 1971 ?"
2. Under the jewellery trust deeds executed by H. E. H. the Nizam on September 4, 1951, his two granddaughters were given a right to wear the jewellery on festivities or other ceremonial occasions. The right was to use the articles of jewellery or such of them as might be required on and for the purpose of, special, ceremonial or festive occasions. Thereafter, the jewellery would be taken charge of from the said beneficiaries by the trustees. Treating this right as a life interest, the beneficiaries were held taxable by the Wealth-tax Officer. The appellate authority confirmed the same. On appeal by the trustees, the Tribunal, following the judgment of a Division Bench of this court in R.C. No. 67 of 1969, dated November 5, 1971, held that the right to wear jewellery was not an asset within the meaning of section 2(e) of the Wealth-tax Act and, therefore, the same was not taxable under section 21(1) of the Act. Accordingly, the appeals were allowed by the Appellate Tribunal, for the same reason as the Tribunal declined to refer the questions of law for the opinion of the High Court. Hence, these wealth-tax cases are filed in this court.
3. Learned counsel for the Revenue contends that the right to wear the jewellery is a life interest and, therefore, the Tribunal erred in holding that no question of law arises. He further submits that the judgment of the High Court is distinguishable.
4. From the extract of the judgment of the High Court in R.C. No. 67 of 1969 dated November 5, 1971, quoted by the Tribunal, we may note the following observation made by Justice O. Chinnappa Reddy, as he then was, speaking for the Bench. The learned judge observed, "Her interest in the jewels is limited to being allowed to wear them if the trustees do not withdraw them from her. To our minds, the interest appears to be of a permissive nature and cannot be called property, however widely the expression may be interpreted. We, therefore, agree with the Tribunal that neither the interest of the Sahebzadi in the jewellery fund nor her interest in the shares fund is an asset within the meaning of the Wealth-tax Act." We are in entire agreement with the observation of the Bench. In view of the said observation, the point is squarely covered by a binding judgment of this court. Therefore, no referable question of law arises.
5. In the result, the wealth-tax cases are dismissed.