Rumors about taxability of household jewellery negated by Government in press release dated 01-12-2016 saying that no new provision regarding chargeability of tax on jewellery have been introduced. Apprehension sought to be created that the jewellery with the household which is acquired out of disclosed sources or exempted income shall become taxable under the proposed amendment is totally unfounded and baseless.
Further press release has exhorted upon Instruction No.1916 dated 11-05-1994 of CBDT providing that during the search operations, no seizure of gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family shall be made.
Author’s Comments:
It has been held by by Karnatka High Court in Smt Pati Devi 240 ITR 727 that weight of Jewellery as per Instruction dated 11-05-1995 is considered reasonable looking to the social circumstances prevailing in the country.
It has been held by Rajasthan High Court in Satya Narain Patni [2014] 46 taxmann.com
440 (Rajasthan) where the authorized officers, in the first instance, did not seize the said jewellery as the same being within the tolerable limit or the limits prescribed by the Board , subsequent addition is also not justifiable on the part of the Assessing Officer.
Held by ITAT Mumbai in Harakchand N.Jain [1998] 101 TAXMAN 324 (MUM.) “………..we are conscious of the fact that in Indian society everyone receives gifts at the time of marriage and other occasions. Therefore, keeping in view the number of family members we are of the view that further rebate of 500 gms out of the entire jewellery may be treated as explained………..”
ITAT Hyderabad Tribunal in R. Umamaheswar [2015] 60 taxmann.com 400 (Hyderabad – Trib.), ITAT Jabalpur in Smt. Sulochna Devi Jaiswal [2003] 1 SOT 624 (JAB.), ITAT Kolkatta in Smt Jyoti Bose [2004] 3 SOT 525 (KOL.), Allahabad High Court in CIT v. Ghanshyam Das Johri [2014] 41 taxmann.com 295 (Allahabad), Gujrat High Court in Rattan Lal Vyapari Lal Jain 339 ITR 351, ITAT Mumbai in Narendra D Patel, Rajasthan High Court in Kailash Chand Sharma 198 CTR 201, Madhya Pradesh High Court in M.S. Aggrawal HUF 11 DTR 169 have upheld the same view.
Hence in spirit of above instruction read with above court judgments , addition up to limits of Rs. 500 grams per married , 250 gms. per unmarried lady and 100 gms per male member may not be sustainable, even if not explained and should be treated as explained.[As per Author’s Opinion]