TaxTMI 
TaxTMI 
2003 (5) TMI 519
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd. is a salaried employee. Besides, he has also income from house property, share income, dividend, etc. The appellant filed return for asst. yr. 1992-93 on 20th Nov., 1992 declaring total income of Rs. 2,79,440. In the statement of income attached to the return of income, assessee has claimed following receipts as not taxable : "(a) Remittances in Foreign Exchange (Immunities) Scheme, 1991, Rs. 10,08,843. (b) Receipts of Special Bearer Bonds, 1991, Rs. 1,20,000 (c) Receipt of 1/4th share from estate of his mother, Rs. 34,957 (d) On sale of Vintage motor car, Rs. 20,75,495. 5. In the course of assessment proceeding, the assessee appeared personally and his statement was recorded. In the course of proceeding, the AO noticed that assessee had purchased Ford Tourer 1931 model car from one Mr. Jesraj Singh of Delhi sometime in 1983 for a consideration of Rs. 20,000. Assessee contended before the AO that this car was treated as personal asset disclosed in wealth-tax return and claimed exemption as the price of the car was Rs. 20,000. The said car was sold during the year under consideration to one Mrs. Kamalaben Babubhai Patel for a total consid....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was no intention of keeping the car in running condition and therefore the car amounted to a capital asset and not a personal asset. The AO has drawn a strength on the decision of jurisdictional High Court in the case of Jayantilal A. Shah vs. K.N. Anantharam Aiyar, CIT & Ors. (1985) 46 CTR (Bom) 189: (1985) 156 ITR 448(Bom) where it has been held that "certain articles which are not in normally for daily use can be considered as personal effect so long as these are meant for personal use". In the present case the vehicle could be considered to be of personal use, if it was maintained from time to time and was kept in running condition. The assessee over a period of seven to eight years has not incurred any expenditure on maintenance of the vehicle or running of the car. Under the circumstances, the learned AO concluded : "Therefore the only conclusion can be that either the car was not kept in running condition or the expenditure was incurred by the company where the assessee was employed as a managing director. In either case, the asset will become capital in nature. Therefore, if it is held though not conceded that the purchase and sale was not an adventure in the nature of bus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cepted the plea of assessee that car was "personal asset" and has accordingly deleted the addition. The factors that have weighed most to CIT(A) in these decisions are : (1) that assessee has shown this car as a "personal effect" in the wealth-tax return and has claimed exemption as a personal effect. (2) That, no depreciation was claimed or allowed on this car. (3) No expenditure pertaining to this car was claimed from the taxable income of the assessee. 10. Therefore, learned CIT(A) has observed that the car was a personal asset outside the purview of s. 2(14) of IT Act. He has further observed that the term "capital asset" as defined by s. 2(14) does not include items held for personal use such as furniture, air-conditioner, refrigerators and motor cars, etc. He has further stated that car used for personal purposes on which depreciation is not charged in the previous year is not a capital asset. Accordingly, when such an asset is sold, the profit cannot be brought to income-tax. In respect of non-parking of the car at the residential premises of the assessee, an issue raised by the AO, learned CIT(A) has observed that parking of the car at his fami....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 242(SC). Learned counsel submitted that there was nothing to show that assessee had acquired a car in 1983 with a view to resale the same for profit. Learned counsel in support of his claim, that sale transaction was not an adventure in the nature of trade, placed reliance on further two decisions : Bhojilal H. Patel vs. CIT (1969) 74 ITR 692(Bom) and Ashok Kumar Jalan vs. CIT (1991) 187 ITR 316(Bom). It is further submitted that the seller Shri Jasraj Singh was in urgent need of funds. Therefore the assessee purchased the car to have the prized possession of the antique car for treating foreign guests in the course of employment as chairman of M/s Indo Nippon Chemical Ltd. 14. We have considered carefully the facts and the rival contentions. At the outset, it is to be clarified that though the AO has brought the surplus on the sale of the car to tax as adventure in nature of the trade or in the alternative as long-term capital gains, it is learned CIT(A) who has discussed the issue whether the subject car was a personal effect as mentioned in s. 2(14) and has examined the question, as to whether the car can be considered as "personal effect". He has not given attention to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sponsible for the realisation and the motive. There are cases in which the purpose of transaction of purchase and sale is clearly discernible. Motive is never irrelevant in any of these cases. What is desirable is that it should be realised clearly that it can be inferred from the surrounding circumstances in the absence of direct evidence of the seller's intention and even if necessary in the face of his own evidence. So, the issue is to be decided on consideration of all the relevant facts and circumstances involved in peculiar circumstances. In G. Venkataswamy Naidu & Co. vs. CIT (1959) 35 ITR 594(SC), the Supreme Court has prescribed certain tests, but has finally observed that none of the test is in itself conclusive. The Court must look at the cumulative effect of all the factors and arrive at a conclusion as to whether the transaction was an instance of investment or an adventure in the nature of trade. If we look at the present case in the light of above discussion, we find that the test laid down in Venkataswamy Naidu's case (supra) are not satisfied. In the present case, there is an isolated transaction and there is no repetition. The assessee is also not trader o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (supra) 18. We have considered the submissions made from both sides. At the outset, we must make it clear that in none of the cases relied by both the sides, the asset involved was an antique car. Therefore, it will be difficult to conclude that the issue before us is directly covered by any of the decision relied upon by either side. Under the circumstances, we have to deal with each of the case relied from both sides to see the facts and ratio laid down by these decisions. First we will take up the case laws relied by learned Departmental Representative. (1) H.H. Maharaja Rana Hemant Singhji vs. CIT (supra) : In this case Maharaja Shri Udebhan Singhji of Dholpur died issueless in 1954. Consequently, all the movable valuables possessed by him were taken over by the Government. On December, 1956, Maharaja Shri Hemant Singhji who was then a minor, was recognised by Government of India as successor of Maharaja and the assets were released by the Government to Rajmata in her capacity as the adoptive mother and guardian of the appellant. In the financial year 1957-58 the sovereigns, silver coins and silver bars which were inherited were sold. It was pleaded before the AO t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in various dictionaries also lends support to this view. In the unabridged edition of the Random House Dictionary of the English Language, at p. 1075, the expression is given the following meaning: "Personal effects, privately owned articles consisting chiefly of clothing, toilet items etc. for intimate use by an individual." In Black's Law Dictionary, Fourth Edn., at p. 1301, the expression is assigned the following meaning: "Personal effects, articles associated with person, as property having more or less intimate relation to person of possessor." In Cyclopaedic Law Dictionary, Third Edn., at p. 832, the expression "personal effects" without qualifying words is interpreted to include generally such tangible property as is worn or carried about the person. In "Words and Phrases" (Permanent Edition), Volume 32, at p. 277, it is stated that the words "personal effects" when used without qualification, generally include such tangible property as is worn or carried about the person, or to designate articles associated with the person. At another place at the same page, it is stated that the words "personal effects" are used to designa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g room which is only calculated to give a pride of possession is not contemplated by the exemption and that the personal use which is contemplated by the exemption is the use of like nature as the use of other items mentioned in the clause, namely, furniture, household utensils, wearing apparel and provisions. It was further held in that case that the expression "intended for personal or household use" did not mean capable of being intended for personal or household use. It meant normally, commonly or ordinarily intended for personal or household use. This, in our opinion, is the true concept of the expression "personal use". (2) CWT vs. Arti Goenka (supra)'In this case, the assessee is a lady, who filed WT return for asst. yr. 1967-68 to 1969-70. She has declared value of jewellery consisting of gold ornaments, jewellery and loose diamonds valuing Rs. 4,20,000, 4,60,000 and 5,06,800 respectively. The assessee claimed before WTO that the value of jewellery, gold ornaments and loose diamonds should not be taken into account in computing the net value as these were exempt under R s. 5(1)(viii) of WT Act which was not accepted by AO. However, on appeal AAC treated the ent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Representative has placed reliance : (1) CIT vs. H.H. Maharani Ushadevi (supra) : In this case, the assessee is the ex-ruler of the erstwhile Holkar State. The assessee was assessed as individual and the assessment year involved is 1972-73. In 1948 the Ministry of States, New Delhi accepted certain heirloom jewellery as private properties of his late Highness Maharaja Keshavrao Holkar of Indore. This included a "sirpech" and a ceremonial belt. All the listed jewellery and gold used by the ruler of Indore on ceremonial occasions as in the past were exempt under the provisions of s. 5(1)(xiv) of WT Act. In the accounting year relevant to asst. yr. 1972-73 assessee sold two items of heirloom jewellery for Rs. 13,80,001. It was claimed by the assessee that it constituted personal effect of the assessee within the meaning of s. 2(14) of the IT Act, 1961 and, therefore, the sale of these jewellery did not give rise to any taxable capital gains, the same was not accepted by the Tribunal. However, reference was made to High Court. Hon'ble High Court has held that heirloom jewellery is also meant for the personal use of the assessee. It is, however, not meant for daily use but ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce the year 1940 when he was a boy of 16/17 years old. Since 1940 till asst. yr. 1964-65, i.e., within 25 years only 3 sales to the three institutions were made. At that time it could not be said that there was any profit motive in his mind. The collection of the assessee were held in high esteen by various curators, authors and lovers of the art. There was mention of the assessee's painting in the bulletin of the Prince of Wales Museum of Western India, 1953-54 and Kanha Dade Prabandh of Padmanabha written by professor K.B. Vyas and published under the orders of the Government of Rajasthan. He was described as an enlightened connoisseur in the foreword to the catelogue of his miniature paintings published by the Lalit Kala Academy. Eminent people were attracted to see his paintings. His name was also suggested for the membership of the Regional Art Advisory Committee formed in Rajasthan. The assessee also loaned his paintings and art objects for exhibition in the year 1954 to G.G.S.J. Museum, Bikaner, and they were taken back in the year 1962. Exhibitions of his paintings were held by the Lalit Kala Academy at various places. He donated 8,000 manuscripts to the Government of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Here, we must mention that while deciding the case Hon'ble Tribunal has considered the affidavit filed by Shri Sardar Singh, elder brother of Late Maharaja Shri Sumer Singhji Sahib of Kishangarh who has deposed before the ITO that the paintings in question were being regularly used for decorating the room of the assessee as it was usual custom of the family. Finally the Hon'ble Tribunal held that there was no material on record to show that paintings were not commonly used by the assessee. Therefore, the paintings that were sold by the assessee during the year were articles of personal effect and, hence, sale of those articles will not attract the provisions of s. 45 of the Act. 20. On perusal of the facts and decisions given in the cases on which both the sides have placed reliance, we find that the decisions on which learned Authorised Representative has placed reliance are clearly distinguishable in the case of Maharani Ushadevi (supra) personal use was clearly established. The Hon'ble Court found that there was use of jewellery on ceremonial occasion at least. But, in the instant case, there is not an iota of evidence to show that the car was used even on ce....