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TMI Blog1981 (2) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the sale thereof did not give rise to any taxable capital gains ?" The facts giving rise to this reference, as set out in the statement of the case, are as follows: The assessee is the ex-ruler of the erstwhile Holkar State. The assessee was assessed as an individual and the assessment year involved is for which the previous year ended on March 31, 1972. During the accounting year relating to the assessment year in question, the assessee sold two items of heirloom jewellery for Rs. 13,80,001. The assessee claimed that the heirloom jewellery was exempted from the provisions of the W.T. Act by the CBR and, therefore, the sale thereof did not give rise to any taxable capital gains. The ITO negatived the contention of the assessee and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d two items of the heirloom jewellery after taking permission of the Central Govt. The Tribunal has also found that the articles of jewellery in question were meant for use and were used on ceremonial occasions. However, the Tribunal came to the conclusion that these items of jewellery were meant to be used by a person, who at a particular point of time, acts as the Ruler of the State and, therefore, according to the Tribunal, these articles were for the use of the body corporate and could not be called as the " personal effects " of the Ruler. The Tribunal, therefore, held that the items of jewellery in question were not exempt under the provisions of s. 2(14) of the Act. The Tribunal placed reliance upon a decision of the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains shall be deemed to be the income of the previous year in which the transfer took place. The term " capital asset " has been defined by s. 2(14) of the Act. According to this definition, as it stood in the year of assessment, " capital asset " means property of any kind held by an assessee whether or not connected with his business or profession, but does not include ... 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. Thus, if the capital asset in question is not an asset of the assessee, it is difficult to appreciate how the profits or gains arising from the sale of such asset can be deemed to be h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency of the use of the property has necessarily to depend on the nature of the property. Merely because, in view of the nature of the property, which necessarily has to be used on ceremonial occasions, it cannot be said that the said property is not held by the assessee for personal use. The facts in H. H. Maharaja Rana Hemant Singhji's case [1976] 103 ITR 61 (SC) were entirely different. In that case, the assets involved were bullion, silver coins and silver bars and the case put forward by the assessee was that the silver coins and silver bars were used by the assessee for the worship of goddess " Lakshmi " and, therefore, were the personal effects of the assessee held by the assessee for his personal use and, therefore, cannot be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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