1353. Pettifogging enquiries into details of articles covered under the proviso to clause (viii) of sub-section (1) are not to be made - Object of amendment made by Finance (No. 2) Act, 1971 explained
Circular No. 75 was issued by the Central Board of Direct Taxes on 22 January 1972. Its subject is 1353. Pettifogging enquiries into details of articles covered under the proviso to clause (viii) of sub-section (1) are not to be made - Object of amendment made by Finance (No. 2) Act, 1971 explained.
This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.
Restrains Assessing Officers from making pettifogging enquiries into articles caught by the proviso to section 5(1)(viii) of the Wealth-tax Act, as amended by section 32 of the Finance (No. 2) Act, 1971. That amendment cut down the exemption prospectively in two ways: furniture, utensils and other articles held for personal or household use are wholly outside the exemption if they are made of or contain gold, silver, platinum or any other precious metal or an alloy of such metals, whether by embedding, covering or otherwise; and motor cars and other mechanically propelled vehicles, aircraft and boats are exempt only up to an aggregate value of Rs. 25,000. The Board sets out the Finance Minister's reply in the Lok Sabha - that it is not the intention to enter into pettifogging enquiries into the details of such articles so as to embarrass or harass taxpayers, and that this would be secured by administrative instructions - and directs that these observations be impressed on all Assessing Officers when valuing such articles.
During the Budget debates for 1971-72 it was said that bringing in silver-plated cutlery, blades with a platinum coating and the like would cause unintended hardship by forcing disclosure of petty items; the Finance Minister answered that the extended meaning was needed to close a loophole but that administrative instructions would prevent harassment.
1353. Pettifogging enquiries into details of articles covered under the proviso to clause (viii) of sub-section (1) are not to be made - Object of amendment made by Finance (No. 2) Act, 1971 explained
1. Attention is invited to the provisions of section 5(1)(viii) as amended by section 32 of the Finance (No. 2) Act, 1971. Under This amendment the operation of the exemption in clause (viii) has been restricted prospectively in the following respects:
1. Furniture, utensils and other articles, which, though held for personal or household use of the assessee, are made of, or contain [whether by way of embedding, covering or otherwise], gold, silver, platinum or any other precious metal, or any alloy containing one or more of such precious metals, have been excluded altogether from the purview of the exemption.
2. Motor cars and other mechanically propelled vehicles, aircraft and boats will hereafter be exempt up to an aggregate value of Rs. 25,000 only.
2. During the course of the debates on the Budget for the year 1971-72 in the Lok Sabha, it was suggested that the inclusion of furniture, utensils or other articles which are made wholly or partly of, or contain (whether by way of embedding, covering or otherwise) gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals in the net wealth would result in unintended hardship inasmuch as taxpayers would be required to disclose the value of petty items like silver-plated cutlery, blades containing coating of platinum or other precious metals, etc. It was, accordingly, suggested that such furniture, utensils and other articles should continue to enjoy exemption from wealth-tax. In his reply to the debate, the Finance Minister had observed as follows:
"In giving an extended meaning to the term ‘jewellery’ and excluding furniture, utensils and other articles falling under the categories described above from the scope of the exemption, it is not the intention to enter into pettifogging enquiries into the details of such articles so as to cause embarrassment or harassment to taxpayers. This will be secured through suitable administrative instructions. Without the extended meaning of the term ‘jewellery’ and special provision excluding furniture, etc., which incorporate precious metals in their construction, it will leave a big loophole for tax evasion as wealthy persons could then convert their wealth into such assets which, in the ultimate analysis, do not add to the productive potential of the country."
3. The Board desires that it should be impressed upon all the Assessing Officers in your charge that, while valuing the articles as mentioned in the proviso to clause (viii) of sub-section (1) of section 5 of the Wealth-tax Act, the above observations of the Finance Minister are carefully borne in mind.
Circular : No 75 [F. No. 317/3/72-WT],dated 22-1-1972.
In old wealth-tax assessments where household articles containing precious metal were valued and added to net wealth.
Source: the Income Tax Department’s own published text — its page for this instrument.