Gold contained Horse Chariot, used by Royal Family for Special Occasions are Exempted from Wealth Tax: Gujarat HC [Read Judgment]

In Shantadevi P. Gaekwad v. W.T.O, the division bench of the Gujarat High Court held that the gold contained Horse Chariot or Royal Buggy used by the members of royal family for ceremonial occasions are exempted under section 5 (1) (xii) of the Wealth Tax Act, 1957.

Assessee, an individual and a member of a Royal family in Vadodara, held a horse chariot popularly known as Baggi having gold contents. Assessee claimed that the said Baggi was a work of art and was, therefore, exempt from wealth tax under Section 5 (1) (xii) of the Wealth Tax Act. He claimed that she inherited the said article as a member of royal family and it was used by his father and grandfather on important ceremonial occasions. It contained gold panels on the sides of the seat for the royalty. According to the assessee, there was exquisite engraving and embossing on these gold panels, which contained figures of animals like elephants and horses. The Baggi was made specially for the use on ceremonial occasions with extensive art work on the gold panels and elsewhere also.

The Assessing Officer, however, held that the article in question was meant for personal or household use and would therefore fall within s. 5(1) of the Act and hence, no exemption available for such item.

However, the first appellate authority allowed the plea of the assessee bu holding that the same is exempted under Wealth Tax for two grounds, i.e, firstly, the article was a work of art and secondly, the use of gold was incidental. The said order was reversed by the Tribunal on departmental appeal wherein it was held that the Royal Buggy in question was not exempted under section 5 (1) (xii) of the Wealth Tax Act, 1957, because, it was covered under the first proviso to clause (viii) of sub-section (1) of Section 5 of the said Act.

Relying on the specific findings of the appellate authorities, the division bench comprising of Justice Akil Kureshi and Justice Biren Vaishnav observed that the Baggi presents the “work of art”. “Once it is so held, the article would fall under Clause (xii) of Sub-section (1) of Section 5. Merely because incidentally it may also fall in Clause (viii), by itself, would not destroy its very essence of an article of “work of art”. Being an exemption clause, the Court would apply the provision which furthers the intention of the legislation rather than frustrating it.”

Reversing the Tribunal order, the bench noted that “the element of such an article being one of personal use would be wholly incidental. In the present case itself, the assessee has been pointing out that the Baggi was not meant for ordinary or daily use. Though functional, it would be used on rare ceremonial occasions. That fact that it can be put to such a use was wholly incidental to the article being a ‘work of art’”.

Read the full text of the Judgment below.

taxscan-loader