Jaswant Singh, J. - (1.) This appeal by special leave is directed against the judgment dated December 2, 1969, of the High Court of Rajasthan.
(2.) 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 the aforesaid assets which inter alia consisted of 4825 gold sovereign, 790440 old silver rupee coins and silver bars weighing 254174 tolas were released by the Rajasthan Government and handed over to Rajmata in her capacity 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 Rupees 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 12-B 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 (4-A) of the Act but fell within the purview of the exception carved out by cl. (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 Rupees 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 12-B in view of the decision of this Court in James Anderson v. Commr. of Income-tax, Bombay City (1960) 39 ITR 123 at page No. 131 . 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 (4-A) chargeable to capital gains tax under Section 12-B of the Income Tax Act, 1922."
(3.) By its order dated Dec. 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 (4-A) of the Act merely because they were placed before Goddess Lakshmi while performing Puja. The appellant thereupon made an application to the High Court of Rajasthan for a certificate of fitness which was refused. Therefore, the appellant applied to this Court for special leave under Article 136 of the Constitution which was granted on May 6, 1971.;