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PETITIONER: H. H. MAHARAJ RANA HEMANT SINGHJI, DHOLPUR

       Vs.

RESPONDENT: COMMISSlONER OF INCOME-TAX, RAJASTHAN

DATE OF JUDGMENT17/02/1976

BENCH: SINGH, JASWANT BENCH: SINGH, JASWANT GUPTA, A.C.

CITATION:  1976 AIR  662            1976 SCR  (3) 423  1976 SCC  (1) 996

ACT:     Income Tax Act (11 of 1922), s. 2(4A)(ii)-’Personal                     effects’, what are.

HEADNOTE:      Section 2(4A)  (ii), Income  Tax ’Act,  1922,  provides that ’personal  effects, that  is to  say, movable  property (including wearing  apparel, jewellery,  and Furniture) held for personal use by the assessee or any member of his family dependent on  him,’ shall  not be  included in  the ’capital assets’ of the assessee.      The context  in which the expression ’personal effects’ occurs and the enumeration of articles like wearing apparel, jewellery and  furniture, show  that only those articles are to be  included as personal effects which are intimately and commonly used by the assessee. The dictionary meaning of the expression is  also the  same. Therefore, ’personal effects’ mean those  items which are normally, commonly or ordinarily intended for personal use and not items which are capable of being intended for personal use. [425E-426F-427C-D]      Where the  assessee was in possession of a large number of gold  sovereigns, silver  rupee coins  and  silver  bars, which were  used at  the time  of the  puja  of  deities  on special religious  festivals or  rituals, they  could not be deemed to  be ’effects’  meant for  Personal use.  They  are capital assets  and not  personal effects and so, when sold, could not  be excluded  while computing  the  capital  gains liable to  capital gains  tax under  s. 12B, Income Tax Act, 1922. [427F]      G. S.  Poddar v. The Commissioner of Wealth Tax, Bombay City, II, I.L.R. [1965] Bom. 1062, approved. ^

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 779 of 1971      Appeal by  special leave.  from the  judgment and order dated the  2nd December, 1969 of the Rajasthan High Court in I.T.R. No. 5 of 1966.      S. T. Desai, Rameshwar Nath, for the appellant.

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    B. B. Ahuja and S. P. Nayar, for the respondent.      The Judgment of the Court was delivered by      JASWANT SINGH,  J.-This  appeal  by  special  leave  is directed against the judgment dated December 2,1 1969 of the High Court of Rajasthan.      Briefly stated  the facts  giving rise  to this  appeal are: Maharaja Shri Udebhan Singhji of Dholpur died issueless on October 22, 1954. On the day following his demise all the movable valuables  possessed by  him  were  taken  over  and sealed by the Government of Rajasthan because of the dispute regarding succession  to the  gaddi. On  December  13,  1956 Maharaja Shri  Hemant Singhji, the appellant herein, who was then a  minor, was  recognised by the Government of India as successor of  the former  Maharaja and t-he aforesaid assets which inter alia consisted of 4,825 gold sovereign, 7,90,440 old silver  rupee coins  and silver  bars weighing  2,54,174 totals were  released by the Rajasthan Government and handed over to Rajmata in her capacity 424 as the  adoptive mother  and guardian  of the  appellant  on March 24  1957.  During  the  financial  year  1957-58,  the aforesaid sovereigns, silver coins and silver bars were sold at the  suggestion of  the Government  of India  for  a  net consideration of  Rs. 20,78"257.  Overruling the contentions raised on  behalf of  the appellant  to the  effect that  as there was  no voluntary sale chargeable to capital gains tax under section  12B of  the  Indian  Income  Tax  Act,  1922, hereinafter-referred to  as ’the  Act’"  and  the  aforesaid items did not constitute ’capital assets’ as contemplated by section 2(4A)  of the Act but fell within the purview of the exception carved out by clause (ii) thereof and as such were to be excluded in computing the gains because they were held for personal  use by  the assessee  and the  members of  his family as  was evident from the fact that they were used for the  purpose  of  Maha  Lakshmi  Puja  and  other  religious festivals and rituals in the family, and taking into account the market  value of  the assets  as on January 1, 1954, the Income Tax  officer, Bharatpur,  worked out capital gains at Rs. 3,44"303.  Dissatisfied with  this order,  the appellant took  the  matter  in  appeal  to  the  Appellate  Assistant Commissioner but  remained unsuccessful. A further appeal to the Income Tax Appellate Tribunal was taken by the appellant but the same also proved abortive as the Tribunal was of the view that the expression "personal effects" meant such items of  movable  property  as  were  necessary  adjuncts  to  an individual’s own  personality and  the nature  of sale being voluntary or  otherwise was  irrelevant for  the purpose  of section 12B  in view  of the decision of this Court in James Anderson v.  Commissioner of Income Tax, Bombay City(1). The Tribunal, however, referred the following question of law at the instance of the appellant to the High Court of Rajasthan at Jodhpur under section 66(1) of the Act.           "Whether on  the facts and in the circumstances of      the case the assets sold were capital assets within the      meaning of  section 2(4A)  chargeable to  capital gains      tax under section 12B of the Income-tax Act, 1922."      By its  order dated  December 2,  1969" the  High Court answered the  question in  the affirmative  holding that  in order that  an article  should constitute a part of personal effects, it is necessary that the article must be associated with the  person of  the possessor  and that  the  aforesaid items consisting  of  gold  sovereigns,  silver  rupees  and silver bars could not be deemed to fall within the exception carved out by clause (ii) of section 2(4A) of the Act merely because  they  were  placed  before  Goddess  Lakshmi  while

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performing Puja. The appellant thereupon made an application to the  High Court of Rajasthan for a certificate of fitness which was refused. Thereafter, the appellant applied to this Court  far   special  leave   under  Article   136  of   the Constitution which was granted on May 6, 1971.      Appearing in  support of  the  appeal,  Mr.  Desai  has vehemently contended that the question as whether an item of movable property held for personal use is a part of personal effects of  an  assessee  should  be  determined  not  in  a commercial sense but according to the      (1) [1960] 39 I.T.R. 123, 131 425 Ordinary ideas,, habits, customs and notions of the class of society to  which the  assessee belongs  or according to the well established  habits,  customs  and  traditions  of  his family. He has in support of his contention referred us to a decision in Commissioner of Wealth-tax. Gujarat v. Arundhati Balkrishna(l). He  has  further  urged  that  in  construing section 2‘(4A)  of the Act it must be borne in mind that the Legislature intended  to lay  emphasis on  the nature of the use of  the  article  rather  than  on  the  person  of  the assessee.      Mr. B.  B. Ahuja  appearing for the Revenue has, on the other hand,  urged that  the  interpretation  sought  to  be placed on behalf of the assessee on the expression "personal effects" is  not correct  and while  determining whether the effects are personal it is essential to see whether they are meant for the personal use of the assessee.      We  have   given  our   earnest  consideration  to  the submissions, of  learned counsel  for  the  parties.  For  a proper decision of the point in question, it is necessary to refer to  section 2(4A)  of the  Act, the  relevant  portion whereof runs thus:           "2(4A). ’Capital asset’ means property of any kind      held by  an assessee" whether or not connected with his      business, profession or vocation, but does not include-           (i)  ................           (ii) personal effects,  that is  to  say,  movable                property    (including    wearing    apparel,                jewellery, and  furniture) held  for personal                use by  the assessee  or any  member  of  his                family dependent on him;"      The expression  "personal use" occurring in clause (ii) of the  above quoted  provision is very significant. A close scrutiny of  the context  an; which  the  expression  occurs shows that only those effects can legitimately be said to be personal which  pertain to  the assessse’s  person. In other words,, an  intimate connection  between the effects and the person of the assessee must be shown to exist to render them "personal effects".      The  enumeration  of  articles  like  wearing  apparel, Jewellery, and  furniture mentioned  by way of illustrations in the  above quoted  definition of  "personal effects" also shows that  the Legislature  intended only those articles to be included  in the  definition which  were  intimately  and commonly used by the assessee.      The  meaning   assigned  to  the  expression  "personal effects" ’m  various dictionaries also lends support to this view.  In   the  Unabridged  Edition  of  the  Random  House Dictionary  of  the  English  Language  at  page  1075,  the expression is given the following meaning:-           "Personal  effects,   privately   owned   articles      consisting chiefly  of clothing,  toilet items etc. for      intimate use by an individual".      (1) 77 I.T.R. 505.

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426      In Black’s Law Dictionary, Fourth Edition at Page 1301, the expression is assigned the following meaning:           "Personal  effects.   Articles   associated   with      person,  as  property  having  more  or  less  intimate      relation to person of possessor;"      In Cyclopedic  Law Dictionary,  Third Edition,  at page 832, the  expression "personal  effects’ without  qualifying words is  interpreted to  include  generally  such  tangible property as is worn or carried about the person.      In ’Words  and Phrases’  (Permanent Edition), Volume 32 at page  277 it  is stated that the words "personal effects" when used  without  qualification,  generally  include  such tangible property as is worn or carried about the person, or to designate articles associated with the person. At another place at  the  same  page,  it  is  stated  that  the  words "personal effects" are used to designate articles associated with person,  as  property  having  more  or  less  intimate relation to person of possessor or such tangible property as attends the person.      Bearing in  mind the  aforesaid meaning assigned to the expression in various dictionaries and cases the silver bars or bullion  can by no stretch of imagination be deemed to be "effects" meant  for personal  use. Even  the sovereigns and the silver  coins which are alleged to have been customarily brought out  of the  iron safes  and boxes  on  two  special occasions namely,  the Ashtmi Day of ’Sharadh Pakh’ for Maha Lakshmi Puja  and for  worship on  the  occasion  of  Diwali festival can  not also  be designated  as effects  meant for personal use.  They may  have been  used  for  puja  of  the deities as  a matter  of pride  or ornamentation  but it  is difficult to  understand how  such user can be characterised as personal  use. As  rightly observed  by  the  Income  Tax authorities if sanctity of puja were considered so essential by the asses see, the aforesaid articles would not have been delivered by this guardian to the Banks for sale.      The language  of section  5(1)(viii) of  the Wealth Tax Act, 1957  which is  pari materia with the definition of the expression "personal effects" as given in section 2(4A) (ii) of the  Act is  also  helpful  in  cons  truing  the  latter provision. That provision runs as follows:-           "5. (1)  Subject to  the provisions of sub-section      (1-A), wealth-tax  shall not  be payable by an 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  but  not      including jewellery;"      In S.  Poddar v. The Commissioner of Wealth Tax, Bombay City-II(1) where the assessee at the time of his appointment in the year      (I) I.L.R. [1965] Bom.1062. 427 1945 as  a Justice  of the Peace was presented with two gold caskets, a  gold tray,, two gold glasses, a gold cup, saucer and spoons, and photo frames as souvenirs by the dealers and brokers in cloth with whose business he was connected and he kept these  articles in a glass show case for display in his drawing  room   and  in   assessment  year  1959-60  claimed exemption in  respect of  these  articles  under  the  above quoted provision i.e. under section 5(1)(viii) of the Wealth Tax Act,  1957, it  was held  that merely  because the  gold

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caskets were kept in the show case did not make them part of the furniture  and the  rest of  the articles  could not  be considered to  be household  utensils as that expression did not  embrace  within  its  sweep  gold  articles  meant  for ornamental use  for special  occasions but  meant  household articles which  were normally,  ordinarily, and  commonly so used. It  was further  held in  this case  that the use as a decoration in  the drawing  room which is only calculated to give a  pride of  possession  is  not  contemplated  by  the exemption and that the personal use which is contemplated by the exemption  is the use of like nature as the use of other items mentioned  in the clause, namely, furniture, household utensils, wearing  apparel and  provisions. It  was  further held in that case that the expression "intended for personal or household use" did not mean capable of being intended for personal or  household use.  It meant normally, commonly, or ordinarily intended  for personal  or household use. This in our opinion  is the true concept of the expression "personal use".      It is  also significant  that no exemption on behalf of the assessee was claimed in respect of the aforesaid effects under the aforesaid provision of the Wealth-Tax Act.      The decision  of this  Court in  Commissioner of Wealth Tax, Gujarat v. Arundhati Balkrishna (supra) on which strong reliance has been placed by Mr. Desai is of no assistance to the appellant  as the point now sought to be agitated before us was never canvassed or considered in that case.      We are,  therefore" of  the considered  view  that  the aforesaid articles  were capital  assets  and  not  personal effects as contended on behalf of the assessee-appellant and as such could not be excluded while computing the gains.      For the  foregoing reasons, we do not find any merit in this appeal which is hereby dismissed with costs. V.P.S.                                     Appeal dismissed. 428