1981 (8) TMI 122 - AT - Wealth-tax

Tribunal affirms exemption for paintings sold in distress sale under Wealth Tax Act

The Tribunal upheld the AAC's decision, granting the assessee exemption under section 5(1)(xii) of the Wealth Tax Act, 1957 for paintings received from ... - Issues:1. Whether the assessee is entitled to exemption under section 5(1)(xii) of the Wealth Tax Act, 1957 for paintings received from the ruling family.2. Whether a single distress sale of paintings by the assessee implies an intention for sale, affecting the eligibility for exemption.Detailed Analysis:1. The appeals by the Revenue pertain to consecutive assessment years against the AAC's combined order. The assessee, belonging to the ruling family, received valuable paintings from the Kishangarh State. The assessee sold certain paintings to M/s. Lila Agencies & Exports and claimed exemption under sections 5(1)(viii) and 5(1)(xii) of the Wealth Tax Act, 1957. The WTO refused exemption, estimating the value of remaining paintings in the net wealth of the assessee. On appeal, the AAC accepted that the paintings were fully exempt under section 5(1)(xii). The main issue is whether the assessee is entitled to exemption for the paintings under section 5(1)(xii), which exempts works of art not intended for sale.2. The Revenue argues that the assessee must establish that the paintings are not intended for sale to claim exemption under section 5(1)(xii). The Revenue contends that the single distress sale of paintings by the assessee indicates an intention for sale. However, the assessee asserts that the sale was made in distress to pay taxes and does not signify a regular trading venture. The Tribunal agrees with the assessee's argument, emphasizing that a single distress sale does not establish an intention for sale. The Tribunal rejects the WTO's reasoning that other family members' sales imply the assessee's intention for sale, stating that the assessee's conduct is crucial in determining intent. Ultimately, the Tribunal upholds the AAC's decision, granting the assessee exemption under section 5(1)(xii) for the paintings, which are acknowledged as works of art.In conclusion, all the appeals by the Revenue are dismissed, affirming the assessee's entitlement to exemption under section 5(1)(xii) of the Wealth Tax Act, 1957 for the paintings received from the ruling family and sold in a single distress sale.