SUJATA V. MANOHAR, J. - (1.) The assessee is the ex-Ruler of the erstwhile Holkar State. The assessee was assessed as an individual and the assessment year involved is 1972-73.
(2.) In 1949, the Ministry of States, New Delhi had accepted certain heirloom jewellery as private properties of His late Highness Maharaja Keshaw Rao Holkar of Indore. These included a "Sirpech" and a ceremonial belt. All the listed jewellery and gold in the Huzur Jawahirkhana at Indore in 1949 and used by the Ruler of Indore on ceremonial occasions as in the past, were exempt under the provisions of Section 5(1)(xiv) of the Wealth-Tax Act.
(3.) During the accounting year relating to the assessment year 1972-73, the assessee sold two items of heirloom jewellery for Rs. 13,80,001/-. The assessee claimed before the Tribunal that the heirloom jewellery constituted personal effects of the assessee within the meaning of Section 2 (14) of the Income-tax Act, 1961, and, therefore, the sale of this jewellery did not give rise to any taxable capital gains. This contention was negatived by the Tribunal. The Tribunal, however, framed the following question for reference before the High Court of Madhya Pradesh under Section 256 (1) of the Income-tax Act, 1961: "Whether on the facts and in the circumstances of the case, the heirloom jewellery constituted 'personal effects' within the meaning of Section 2(14) of the Income-tax Act, 1961, therefore, the sale thereof did not give rise to any taxable capital gains - ;