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TMI Blog1986 (12) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajiv Gandhi and his family. 3. A further fact emphasised before us was that during the period April, 1979 to Jan., 1980, the assessee was an important member of a political party. This party was in the opposition an its leaders of whom the assessee was one, was making every effort to succeed in the general elections that were just round the corner. As a result of these efforts, this party came back to power following the general elections in Jan., 1980. 4. On2nd Jan., 1980, the following silver utensils were sold by the assessee to M/s Aggarwal Co., Fatehpuri,Delhifor Rs. 4,33,500 (i) 59 Thalis (ii) 59 Glasses (iii) 295 Katoris Total weight: 212.450 net weight: 85 kgs The sale amount was received by a bank draft dt. 14th Jan., 1980 and it was deposited in the savings Bank Account of the assessee (No.5702) with the Oriental Bank of Commerce Ltd., East Patel Nagar, New Delhi. 5. Before the ITO it was claimed that the above utensils were the personal effects of the assessee held for the personal use of himself or members of the family dependend upon him. Accordingly, it was claimed that these utensils fell outside the definition of 'capital asset' found in s. 2(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sewn into any wearing apparel; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn in to any wearing apparel.' 6. The ITO considered the above claim of the assessee. According to him, the claim had no substance. He therefore brought to capital gains tax the following amount- "Capital Gain (Long Term) Saleprice of utensils as declared Rs.4,33,500 Less: Cost of the silver utensils prevailing as on 1st Jan., 1964 adopted on the basis of rates given in Mehta's Ready Reckoner (121.450 kgm. X 250.75) 30,452, 4,03,048." In bringing to tax, the above sum of Rs.4,03,048, the ITO followed the instructions of the IAC, Range-IV-C issued under sec. 144B of the Act and recorded the following: (i) It was not possible to believe that the assessee had kept 50 Thalis, 59 Glassess and 295 Katoris for his use or the use of the members of his family, when only a few utensils would have been required for such actual use. The meaning of the term "personal effects" appearing in s. 2(14)(ii) had to be understood in the light of the decision of the Supreme Court in H.H. Maharaja Rana Hemant Singhiji vs. CIT 1976 CTR(SC) 188: (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or household use of the assessee according to the ordinary ideas, habits customs and notions of the class of the society to which he belongs or according to the well-established habits, customs and traditions of his family that the mere possibility of the articles being put to personal use would not be sufficient to treat them as intended for personal or household use. In that case, the assessee had claimed exemption under s. 5(1)(viii) in respect of the value of golden articles made in the form of utensils like cups, saucers, trays, etc. and it was found that the articles were kept in a show case in the drawing room of the assessee. The assessee had to produce some evidence even circumstantial to show that the silver thalis were used by the assessee. It could not be accepted that the assessee had been using about 60 thalis personally. The thalis used for guests cannot be personal effects. The assessee contested the addition of Rs. 4,01,048. 7. The CIT(A), while confirming the action of the ITO failed to pass a speaking order. He merely held that the assessment of the capital gain was fully justified for the reasons stated by the ITO. The assessee is hence in further appeal. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sils and claimed exemption from capital gains tax. The ITO rejected this claim, but it was allowed in first appeal, in respect of sale proceeds of 33.11 kgs. only i.e. the claim was rejected for the balance sale of 46.89 kgs. on the ground of absence of details of the silver utensils sold. The matter came up to the Tribunal. The learned Accountant Member noted that the necessary particulars were available in the Wealth Tax records of the prior years, even as regards the 46.89 kgs. of silver utensils. He found the utensils to be items like thalis, etc. normally used at the time of dinner or an auspicious or festive occasions not only for the use of the assessee's family but also to entertain guests and relatives. Accordingly, he upheld the claim of the assessee for the balance of 46.89 kgs. also. The ld. Judicial Member, on the other hand rejected the assessee's claim on the ground that the silver articles used by the assessee for entertainment of the guests could not be regarded as personal effects. He referred to the definition of `capital asset' found in the Act, which stipulated that personal effects should be for use by the assessee or by the members of the assessee's family de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Supreme Court. 16. The Supreme Court considered the meaning of the term "personal effects" defined in s. 2(4A). The relevant provision reads as follows: "2(4A) 'Capital Asset' means property of any kind held by an assessee, whether or not connected with his business, profession of vocation, but does not include: (ii) personal effects, that is to say, movable property (including wearing apparel, jewellery and furniture) held for personal use by the assessee or any member of his family dependent on him." The Supreme Court held the "personal effects" include such articles which were intimately and commonly used by the assessee. It observed in this regard as under: "Bearing in mind the aforesaid meaning assigned to the expression in various dictionaries and cases, the silver bars or bullion can by no stretch of imagination be deemed to be 'effects' meant for personal use. Even the soverigns and the silver coins which are alleged to have been customarily brought out of the iron safes and boxes as two special occasions, namely the Ashtami Day of Sharadh Paksh for Maha Lakshmi Puja and for worship on the occasions of Diwali festival cannot also be designated as effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asst. yr. 1975-76, the assessee sold certain silverutensils for Rs. 4,05,959. These utensils were utensils of the type which are used in the kitchen or on the dining table as found by the Tribunal, although one must confess the weight of the utensils is somewhat staggering." We have extracted the above only for noting that the quantum or the weight of the utensils sold cannot, by itself, lead to an inference adverse to the assessee. Jayantilal A. Shah vs. K.N. Anant Ram Aiyar, CIT Ors. (1985) 46 CTR (Bom) 189 : (1985) 156 ITR 448 (Bom). 18. In this case, the assessee owned certain silver utensils which were claimed to be his personal effects. These utensils consisted of 18 Thalis, 54 Katoris, 12 glasses and one Jug. The assessee claimed that these were meant for the personal use of himself and the members of his family. These were sold during the relevant previous year for Rs. 81,119. The question was, whether they could be described as personal effects within the meaning of s. 2(14) of the IT Act 1961. After referring to the decisions in Sita Devi N. Poddar and Hemant Singhji, as also to H.H. Maharani Usha Devi vs. CIT (1982) 133 ITR 43 (MP) the Court accepted the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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