2014 (4) TMI 271 - AT - Income Tax

Computation of capital gain - transfer of immovable property u/s 2(47) - value of furniture not considered as part of Cost of acquisition Nature of the capital expenses - personal effect u/s 2(14) Held that - The assessee sold the property in the form of two sale deeds for a total consideration of Rs.90 lakhs - there is no mention of fact about sale of furniture and fixture and other fittings as contained in the schedule of inventory - when the assessee purchased this property via four registered sale deeds, there is no mention of fact of having purchased furniture and fixture in the purchase deeds - the fact becomes clear that assessee did not sell the furniture items which is apparent from the registered sale deed. The only basis on which the assessee is claiming deduction of Rs.12 lakhs is on account of inventory of furniture purchased by a separate agreement - The description of items clearly indicates that the items consisted of removable woodwork - The sale deed executed by the assessee does not mention about the sale of these items - It is possible that assessee might have sold these items separately through a separate agreement as he had done at the time of purchase - the claim of the assessee to exclude the cost of acquisition of such furniture from sale consideration of house property is not justified the furniture and fixture are personal affects which has been specifically excluded from the definition of capital asset as contained in section 2(14) of the Act - once it is not a capital asset, its inclusion in the cost of acquisition is otherwise also not correct the order of the CIT(A) upheld Decided against Assessee.

Summary

Issues:
Non-deduction of Rs.12 lakhs from sale consideration for capital gains calculation.

Detailed Analysis:

Issue 1: Non-deduction of Rs.12 lakhs from sale consideration
The appeal was filed against the order of the Ld CIT(A) regarding the non-deduction of Rs.12 lakhs from the sale consideration for calculating capital gains. The assessee sold a residential floor in New Delhi purchased in 1997 and claimed Rs.12 lakhs as part of the cost of acquisition. The Assessing Officer did not agree with this claim, stating that the payment for furniture cannot be added to the cost of acquisition. The Ld CIT(A) upheld this decision, emphasizing that furniture and fixture are personal effects not covered under the definition of capital asset. The Ld AR argued that the payments were made for the house property only, supported by two separate agreements and inventory details. However, the sale deeds did not mention the sale of furniture, indicating that it was not part of the property sold. The tribunal noted that the furniture was not a capital asset and its inclusion in the cost of acquisition was incorrect. Therefore, the appeal was dismissed.

Conclusion:
The tribunal upheld the decision of the Ld CIT(A) regarding the non-deduction of Rs.12 lakhs from the sale consideration for calculating capital gains, emphasizing that furniture and fixture are not considered capital assets. The absence of mention of furniture sale in the deeds indicated that it was not part of the property sold, leading to the dismissal of the appeal.