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TMI Blog2018 (5) TMI 1817X X X X Extracts X X X X X X X X Extracts X X X X ..... on’ble Bombay High Court in the case of CIT vs. Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT] wherein it is held that for computing letable value, Municipal rateable value can be adopted by the AO. In view of the above, we direct the AO to compute the deemed rent as per Municipal rateable value and assess the income accordingly. This issue of assessee’s appeal is set aside to the file of the AO. - ITA No. 4320/Mum/2016 - - - Dated:- 11-5-2018 - SRI MAHAVIR SINGH, JM AND SRI NK PRADHAN, AM For The Assessee : Prakash Jotwani, AR For The Revenue : Ram Tiwari, DR ORDER PER MAHAVIR SINGH, JM: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-33, Mumbai [in short CIT(A)], in appeal No. CIT(A)-33-Rg.21/105/2014-15 dated 30.03.2016. The Assessment was framed by the Income Tax Officer, Ward 18(2)(3), Mumbai (in short ITO) for the A.Y. 2006-07 vide order dated 24.03.2014 under section 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO on account of sale of paintings which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not business receipts. The assessee explained that the entire sale proceeds of paintings, which was gifted by the late father Shri MF Husain and assessee is not in any business of sale of paintings. The assessee also produced sale receipts from the respective buyers to the extent of ₹ 50 lacs only. But the assessee could not produce evidence which shows that the paintings share sold by the assessee was received as gift from his late father Shri MF Husain other than a letter by assessee s sister Miss Raisa Husain. For the rest of the receipt of ₹ 50,59,465/-, the assessee claimed that the same is part of sale of paintings only but could not submit any details of confirmation of sale of paintings of the respective buyers. The assessee claimed that the paintings received from his late father as gift is a personal effect not exigible to income tax. As the assessee could not produce any document to prove that he has received the paintings as gift from his late father, the receipts out of paintings sold are treated as income from business or profession amounting to ₹ 50 lacs. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) confirmed the action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no details of such expenses are kept by the appellant treating the paintings as personal effects. Looking to the fact that neither the appellant has furnished details of any such expenses nor established incurring of any expenses during the course of sale of the paintings, no expenses is admissible under the Income Tax Act. Hence, the claim made by the AR of the appellant is rejected. 18. Therefore, the stand taken by the AO in taxing the proceeds from sale of paintings of ₹ 50,00,000/- under the head income from business or profession is justified and hence confirmed. Thus ground of appeal no. 1 is dismissed. Aggrieved, now assessee is in second appeal before Tribunal. 4. Before us, the learned Counsel for the assessee Shri Prakash Jotwani argued that the assessee is a son of world renowned painter late Shri MF Husain and is currently residing abroad. It was claimed that during the relevant assessment year the assessee had sold the paintings received from his father as gifts. He also earned interest on bonds and savings bank account. Further, the assessee also offered notional income from house property as deemed let out. The assessee claimed that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in Mumbai at the time when he had gifted the same to you. I accordingly, confirm that he did indeed gift these paintings to you in or over the years in the past and that I am aware that you sold them subsequently. 6. In view of the above, the learned Counsel for the assessee stated that once this gifted paintings were sold to various customers who have also confirmed (confirmation filed are enclosed in assessee s paper book pages 9 to 17), these paintings being personal effects are capital in nature. The learned Counsel for the assessee argued that the AO has not applied his mind in this regard and has not specifically disregarded the definition of capital asset under section 2(14) of the Act which does not specifically exclude paintings from the purview of personal effects and as such not liable to tax. The paintings were excluded from the purview of personal effects and consequently included as a capital asset under section 2(14) only in pursuant to the amendment made by the Finance Act, 2007 and that too with effect from 01-04-2008. The above amendment was not made with any retrospective effect. On the other hand, the amendment was intended to take effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... personal effects and as such not liable to tax. The paintings were excluded from the purview of personal effects and consequently included as a capital asset under section 2(14) only in pursuant to the amendment made by the Finance Act, 2007 and that too with effect from 01-04-2008. The above amendment was not made with any retrospective effect. On the other hand, the amendment was intended to take effect from 01.04.2008 and would accordingly apply in relation to the assessment year 2008-09 and for subsequent years. When the amendment itself was brought in with prospective effect, the same cannot be applied retrospectively. In order to attract the tax liability under the head capital gains , it should first fall within the definition of capital asset as contemplated under section 2(14) of the Act. The paintings are excluded from the purview of personal effects and included within the scope of capital asset only with effect from 01.04.2008. Therefore, the capital gains tax on the paintings are liable only with effect from 01.04.2008 in respect for the assessment year 2008-09 onwards and not in respect of earlier assessment years. Therefore, the paintings were the personal e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant was specifically requested to submit some documentary evidence to establish that these entries in the bank account represent sale proceeds of paintings of Late M. F. Husain, However, the AR explained his inability to submit any such details Under these circumstances it is concluded that the appellant has failed to establish the source and nature of the credit entries in his CITI Bank to extent of ₹ 5059465/- and hence the addition made by the AO treating it from unexplained source is confirmed. Hence, the ground of appeal No. 2 is dismissed. 11. Before us, the learned Counsel for the assessee only requested for setting aside the issue to the file of the AO for the reason that only because of the passage of time and because the assessee has to live abroad to be with his father that the assessee is not able to recall or get details of the purchasers. The assessee has even earlier stated that all such amounts were from the sale of paintings. The assessee has fortunately been able to recall some information and to get confirmation from some of the purchasers i.e. Mr. Manoj lsrani and Art Musings. All this corroborates his statements. Unfortunately, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher. 15. The assessee owns three flats i.e. one at Chennai which is treated as self occupied property by the AO, for which there is no dispute. The other two properties being flat at Queens court Worli and Dhun Apartment Worli Mumbai. The AO estimated the reasonable let out value of the house property after taking inspectors report. The report is on the basis of local enquiry conducted in the surroundings areas of the building situated and the going rent per square feet is ₹ 50.70 per square ft. per month. Based on inspectors report, the AO estimated the rent per month for each of flat at ₹ 75,000/- per month. Therefore, the AO worked out the ALV of the flat at Dhun cooperative society Worli Mumbai at ₹ 9 lacs and for other flat at queens court Worli Mumbai at ₹ 9 lacs. Aggrieved assessee preferred the appeal before CIT(A). 16. The CIT(A) confirmed the action of the AO by observing in Para 31 as under:- 31. In the instant case, the AO, by deputing inspector of Income-tax in that locality, has reached to the conclusion that the fair rent @ ₹ 9,00,000/- per annum for FY 2006-07 is justified. In the judgments cited above. Hon'ble cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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