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TMI Blog2013 (3) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... ets sold were capital assets within the meaning of section 2(14) chargeable to capital gain tax u/s. 45 of the I. T. Act, 1961. 2. For that on the facts in the circumstances of the case, the CIT(A) was not justified in deleting the addition made by the Assessing Officer treating the sale of paintings as transfer of capital asset chargeable to capital gain. Whereas the Cross Objection of the assessee is supportive of the order of CIT(A). Hence, needs no deliberations. 3. We have heard rival submissions and gone through facts and circumstances of the case. Brief facts leading to the above issue are that the AO made addition of ₹ 35,00,000/- on account of sale of paintings. During the course of assessment proceedings, the AO noted that the assessee has claimed exemption of ₹ 35,00,000/- on account of sale of M. F. Hussain s paintings as per Schedule E to the return of income. Assessee, before the AO produced xerox copies of painting, bills, correspondence dated 08.07.2006 with Art Gannery-88 , a copy of Bill dated 13.07.2006 raised in the name of Art Gallery as well as copies of debit voucher raised by Art Gallery-88. It was claimed before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the I.T.Act on account of sale of painting being the personal effect. In the assessment order as well as the remand report, the A.O has stated that the painting can not be treated as personal effect in the hands of appellant. However, he has not mentioned as to why the said painting could not be treated as appellant s personal effect. It is observed that an Amendment was brought in the Statute in Section 2(14)(ii) by the Finance Act, 2007 w.e.f 01-04-2008 in the definition of personal effects. The said amendment is applicable from A.Y 2008-09 wherein paintings were brought within the purview of Capital Asset and excluded from the definition of personal effects. Prior to the amendment the paintings were included and held as personal efffects. In the case of appellant, the painting under question was owned by the appellant s grand mother as personal effects for decoration of her house and the same was, later on, gifted by her to the appellant. Hence, I am of the opinion that it can not be said that the painting in the hands of the appellant was not a personal effect. Since paintings were included in the definition of Capital Assset from A.Y 2008-09 and hence the same can not tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the definition. However, this applies for and from the A.Y 2008-09 and not to the relevant assessment year under consideration, i.e. assessment year 2007-08. As per the definition of personal effects prior to amendment, that is to say, physical chattels hav ng some personal connection w th the assessee such as articles of personal or domestic use, clothings, furniture and so forth which would not include money or securities for money or in the actual context it can not extend to choses- in- action represented by Passbooks and promissory notes. In the instant case, the assessee had sold paintings and claimed the same in the nature of personal effects which were not covered within the defin tion of Capital Asset of 2(14)(ii) of the Act. The assessee stated that these paintings were held for personal use of himself and members of his family. The very fact that furniture is also included a personal effects would show that the articles need not have a intimate connection with the person of the assessee. All that is required is that the article should be meant for personal use of assessee in the ordinary course. In the instant case, revenue applied restrictive test not warranted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound no.2 and 3 are allowed. Aggrieved against the deletion revenue is now in appeal before us. 4. At the time of hearing before us, Ld. counsel for the assessee stated that the issue is squarely covered in favour of assessee and against the revenue by Coordinate bench decision in ITA No.1623/K/2010, Borendra Nath Mookerjee Vs. ITO, AY 2007-08 dated 22.07.2011 wherein entire issue is discussed at para 6 of the said order, which is as under: 6. From the above, we are of the view that the amendment brought by Finance Act, 2007 w.e.f. 1.4.2008, whereby definition of capital asset in section 2(14) sub-clause (ii) is amended and paintings are included in the definition. However, this will apply for and from assessment year 2008-09 and not to the relevant assessment year under consideration i.e. assessment year 2007-08. Now, as per the definition of personal effects prior to amendment, that is to say physical chattels having some personal connection with the assessee such as articles of personal or domestic use, clothings, furniture and so forth which would not include money or securities for money or in the actual context it cannot extend to choses-in-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme Court in the case of H. H. Maharaja Rana Hemant Singhji v CIT[1976] 103 ITR 61(SC). In that case, Hon ble Supreme Court was required to consider old silver rupee coins, gold sovereigns and silver bars which were used by the assessee on religious festivals. Hon ble Supreme Court observed that silver bars or bullion can, by no stretch of imagination, be deemed to be effects meant for personal use. In that case, Hon ble Supreme Court has in effect held that the expression intended for personal or household use meant normally, commonly or ordinarily intended for personal or household use. It would not be correct to hold that Hon ble Supreme Court has considered only those items as personal effects which have been intimately connected with the person of the assessee. The very fact that furniture is also included in personal effects would show that the articles need not have an intimate connection with the person of the assessee. All that is required is that the article should be meant for personal use of the assessee in the ordinary course. In the present case, revenue applied a restrictive test not warranted by section 2(14) of the Act. He held that because these artic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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