TaxTMI 
TaxTMI 
2013 (4) TMI 666
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....Officer treated the paintings sold by the assessee as capital asset and computed the capital gains arising from sale of such paintings. The Assessing Officer rejected the contention of the assessee that the paintings sold were personal effects and not capital assets . Accordingly, he brought an amount of Rs. 39,14,800/- to tax towards capital gains on sale of paintings and added the same to the returned income of Rs. 2,40,150/- 3. Aggrieved against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The first appellate authority found that the paintings are personal effects of the assessee and the sale of those personal effects would not attract the capital gains. He also foun....
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....t that the assessee was holding the paintings only for seven months after getting the same from his mother and therefore it can not be treated as personal effects of the assessee. Thus, he supported the order of the Assessing Officer. 6. Per contra, the learned counsel appearing for the assessee submitted that the paintings are only the personal effects and when the relevant assessment year is 2005-2006, the amendment brought in by the Finance Act 2007 with effect from 1.4.2008 excluding the paintings from the personal effects cannot be applied retrospectively. Even the objects and reasons to bring the amendment would also show that it was intended to apply from the assessment year 2008-2009 onwards. The learned counsel for the assessee ....
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....Consequently, it reads as follows: (14) "capital asset" means propert of any kind held by an assessee, whether or not connected with his business or profession, but does not include (i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession ; [(ii) personal effects that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes (a) jewellery; (b) archaeological collections; (c) drawings; (d) paintings; (e) sculptures; or (f) any work of art. ......... ........ ............ 11. As per the amended provision, the paintings were excluded from the purview ....
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.... (i) The relevant assessment year is 2005 -2006 and during such assessment year, the definition of capital asset found under Section 2(14) does not specifically exclude paintings from the purview of personal effects. (ii) the paintings were excluded from the purview of personal effects and consequently included as one of the capital asset under Section 2(14) only in pursuant to the amendment made under the Finance Act 2007 that too with effect from 1.4.2008. (iii) The above said amendment was not made with any retrospective effect. On the other hand, as could be seen from the memorandum explaining the provisions of the Finance Bill 2007 as also the notes and clauses of the Finance Bill 2007, as extracted by the Commissioner of Inco....
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....nd in favour of the assessee in this regard. (vi) In so far as the contention of the Revenue with regard to the period of holding of such personal effects is concerned, we have perused the order of the Assessing Officer and there is absolutely no finding to that effect as contended by the learned counsel for the Revenue. Therefore, a contention which was not raised and considered before the lower authorities, cannot be permitted to be raised first time before this court. (vii) No doubt, the Assessing Officer relied on the decision of the Apex Court reported in (1976) 103 ITR 61 (SC) (H.H.Maharaja Rana Hemant Singhji Vs. Commissioner of Income Tax) in support of his conclusion to hold that the paintings are not personal effects of the ....