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TMI Blog2013 (4) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... 14) only in pursuant to the amendment made under the Finance Act 2007 that too with effect from 1.4.2008, the above said amendment was not made with any retrospective effect. Thus when the amendment itself was brought in with prospective effect, the same cannot be applied retrospectively. Moreover, it being a taxing liability, the same cannot be applied retrospectively as held in Guffic Chem P. Ltd., Vs. Commissioner of Income Tax (2011 (3) TMI 6 - Supreme Court) - no merits in the appeal. Against revenue. - Tax Case (Appeal) No. 24 of 2010 - - - Dated:- 16-4-2013 - R. Banumathi And K. Ravichandrabaabu,JJ. For the Appellant : Mr. Arun Kurian Joseph, Standing Counsel For the Respondent : Mr. S. Sridhar JUDGMENT The Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal dismissed the appeal filed by the Revenue. Aggrieved against the said order of the Tribunal, the Revenue has filed the present appeal before this court by raising the following substantial question of law:- Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that the paintings would be personal effects and sale of the same would not attract the capital gains ? 5. Learned counsel appearing for the Revenue submitted that the Assessing Officer was right in making the addition by treating the paintings as capital asset. He also submitted that even though the amendment was brought in by the Finance Act 2007 to include the paintings also within the definition of capital asset, stil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the learned counsel appearing for either side. 8. In this tax case appeal, the only issue that arises for consideration is as to whether the paintings are to be treated as personal effects and the sale of the same would attract the capital gains or not ? 9. In order to consider the said issue, it is relevant to quote Section 2(14) of the Income Tax Act as it existed during the relevant assessment year as hereunder:- "2(14) "capital assetmeans property 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et which is not in the nature of personal effects liable to be treated as capital asset upto the assessment year 2007-2008 and the paintings etc., would fall within the meaning of capital assets to attract capital gains tax, only from the assessment year 2008-2009. Consequently, the first appellate authority held that the paintings of the appellant sold during the assessment year 2005-2006 cannot be brought under the definition of capital asset and accordingly, he allowed the appeal filed by the assessee. 12. The Tribunal also found that the paintings can be considered as capital asset only with effect from 1.4.2008 by virtue of the Finance Act 2007 and the relevant assessment year being 2005-2006, the paintings were not excluded under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2011) 232 ITR 602 (SC) (Guffic Chem P. Ltd., Vs. Commissioner of Income Tax). Therefore, the first appellate authority as well as the Tribunal have rightly deleted the addition made by the Assessing Officer. (v) In order to attract the capital gains, it should first fall within the definition of capital asset as contemplated under Section 2(14). However, the capital asset, as defined, does not include the personal effects which in turn excluded the paintings etc., after the amendment was brought in. To put it simply, the paintings are excluded from the purview of personal effects and included within the scope of capital asset only with effect from 1.4.2008. Therefore, the capital gains tax on the paintings are liable only with effect fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was rendered by taking into consideration of the relevant provisions under the Income Tax Act 1922, read with Section 2(4A). On the other hand, the present case involving the assessment year 2005-2006 deals with Section 2(14) of the Income Tax Act, 1961, which was amended under the Finance Act 2007, as discussed supra. Therefore, when Section 2(14) of the 1961 Act had only excluded jewellery from the purview of personal effects before amendment and further excluded the paintings and others after the amendment, it would only show that the facts and circumstances of that case before the Apex Court are totally different and distinguishable, apart from the fact that the same was rendered prior to the 1961 Act. Therefore, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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