Borendra Nath Mookerjee, Kolkata v. ITO, Ward - 33(1), Kolkata, Kolkata

ITA 1623/KOL/2010 | 2007-2008
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 162323514 RSA 2010
Assessee PAN AENPM6462M
Bench Kolkata
Appeal Number ITA 1623/KOL/2010
Duration Of Justice 11 month(s) 5 day(s)
Appellant Borendra Nath Mookerjee, Kolkata
Respondent ITO, Ward - 33(1), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 22-07-2011
Date Of Final Hearing 04-07-2011
Next Hearing Date 04-07-2011
Assessment Year 2007-2008
Appeal Filed On 16-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . ! '# '# '# '# /AND ' $# ! ) [BEFORE HONBLE SHRI S. V. MEHROTRA AM & HONBLE S RI MAHAVIR SINGH JM] #% #% #% #% / I.T.A NO. 1623/KOL/2010 $&' '() $&' '() $&' '() $&' '()/ // / ASSESSMENT YEAR: 2007-08 BORENDRA NATH MOOKERJEE VS. INCOME-TAX OFFICER WD-33(1) KOLKATA (PAN-AENPM 6462 M) (+ /APPELLANT ) (-.+ / RESPONDENT ) FOR THE APPELLANT: SHRI SUBASH AGARWAL FOR THE RESPONDENT: SHRI S. K. ROY / / ORDER PER MAHAVIR SINGH JM ( ' $# ' $# ' $# ' $# ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-XX KOLKATA IN APPEAL NO.341/CIT(A)-XX/WD-33(1)/09-10/KOL DATED 09.06.201 0. ASSESSMENT WAS FRAMED BY ITO- WARD-33(1) KOLKATA U/S. 143(3) OF THE INCOME TAX A CT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DA TED 31.12.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER TREATING SAL E OF PAINTINGS AS CAPITAL ASSET CHARGEABLE TO CAPITAL GAINS. FOR THIS ASSESSEE HAS RAISED FOLLOW ING TWO GROUNDS: 1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.62 52 50 0/- MADE BY THE A.O. TREATING THE SALE OF PAINTINGS AS TRANSFER OF CAPITAL ASSET CHARGEABL E TO CAPITAL GAIN. 2) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) ERRED IN NOT CONSIDERING THAT THE LD. A.O. MADE THE ADDITION MEN TIONED IN GROUND NO.1 BY MAKING A WRONG INTERPRETATION OF SECTION 2(14) AND SECTION 4 7(IX). 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE RE CEIVED A SUM OF RS.62 52 500/- ON ACCOUNT OF SALE PROCEEDS FROM SALE OF OLD PAINTINGS WHICH WERE INHERITED BY ASSESSEE. THE ASSESSING OFFICER REQUIRED THE ASSESSEE AS TO WHY SAME SHALL NOT BE CONSIDERED AS LONG TERM CAPITAL GAIN CHARGEABLE TO TAX. ASSESSING OFFICER FINALLY TREAT ED THE SALE PROCEEDS OF PAINTINGS AS CAPITAL ASSET TRANSFERRED AS CHARGEABLE TO LONG TERM CAPITA L GAIN AND ACCORDINGLY HE CHARGED. 2 ITA 1623/K/2010 BORENDRA NATH MOOKERJEE A.Y.07-08 AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER BY GIVING FOLLOWING FINDING IN PA RA 7 AS UNDER: 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I AM I NCLINED TO AGREE WITH THE A.O. THAT ANY TRANSFER OF PAINTING TO A PERSON OTHER THAN THO SE SPECIFIED IN SECTION 47(IX) HAS TO BE REGARDED AS TRANSFER OF A CAPITAL ASSET CHARGEAB LE TO CAPITAL GAINS WITHIN THE MEANING OF SECTION 45. MOREOVER PAINTING WAS NEVE R SPECIFICALLY EXCLUDED FROM THE DEFINITION OF PERSONAL EFFECTS AS CONTAINED IN CL AUSE (II) OF SECTION 2(14); AND THE EXCLUSION OF PAINTINGS FROM THE DEFINITION OF PERS ONAL EFFECTS BY THE FINANCE ACT 2007 WITH EFFECT FROM 01-04-2008 WAS ONLY CLARIFICATORY IN NATURE. THE LEGISLATURE INTENDED ONLY THOSE ARTICLES TO BE INCLUDED IN THE DEFINITIO N OF PERSONAL EFFECTS WHICH WERE INTIMATELY AND COMMONLY USED BY THE ASSESSEE; AND AN INTIMATE CONNECTION BETWEEN THE EFFECTS AND THE PERSON OF THE ASSESSEE MUST BE SHOWN TO EXIST TO RENDER THEM PERSONAL EFFECTS. BUT THE PAINTINGS UNDER CONSID ERATION CANNOT BE REGARDED AS INTIMATELY AND COMMONLY USED BY THE APPELLANT; AND NO INTIMATE CONNECTION BETWEEN THEM AND THE PERSON OF THE APPELLANT HAS BEEN SHOWN TO EXIST. AND SO IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF H.H. MAHARAJA RANA HEMANT SINGHJI VS CIT (1976) 103 ITR 61 (SUPRA) T HE PAINTINGS CANNOT BE REGARDED AS PERSONAL EFFECTS OF THE APPELLANT. THE VERY FACT THAT THE PAINTINGS WERE SOLD FOR TOTAL CONSIDERATION OF RS.62 52 500/- DEARLY SHOWS THAT T HEY ARE VERY EXPENSIVE DECORATIVE PIECES AND ARE ONLY MEANT TO FAN THE PRIDE AND SELF -IMPORTANCE OF THE APPELLANT. APPLYING THE JUDICIAL PRINCIPLES AS EMERGING FROM T HE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT SHREE KUMARI MUDRA VS CIT (1997) 228 ITR 548 (CAL) THE PAINTINGS CANNOT BE TERMED AS PERSONAL EFFECTS OF THE APPELLANT. IN VIEW OF THE ABOVE I AM OF THE OPINION THAT THE AO HAS RIGHTLY CONSIDERED THE SALE OF PAINTINGS AS TRANSFER OF CAPITAL ASSET CHARGEABLE TO CAPITAL GAI N. THE ACTION OF THE AO IS SUSTAINED. GROUND NO. 2 & 3 ARE DISMISSED. AGGRIEVED NOW ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE DEFINITION OF CAPITAL ASSET AS PER SECTION 2(14) OF THE ACT WHEREBY AMENDMENT WAS MADE IN THIS SECTION BY FINANCE ACT 2007 W.E.F. 1.4.2008 SUBSTITUTING SUB-CLAUSE (II) WHICH READS AS UNDER: (II) PERSONAL EFFECTS 43 THAT IS TO SAY MOVABLE PROPERTY (INCLUDING WEARI NG APPAREL AND FURNITURE) HELD FOR PERSONAL USE 43 BY THE ASSESSEE OR ANY MEMBER OF HIS FAMILY DEPEND ENT ON HIM BUT EXCLUDES (A) JEWELLERY; (B) ARCHAEOLOGICAL COLLECTIONS; (C) DRAWINGS; (D) PAINTINGS; (E) SCULPTURES; OR (F) ANY WORK OF ART. ACCORDINGLY HE STATED THAT THE SALE OF PAINTINGS I S NOW BROUGHT INTO THE AMBIT OF CAPITAL ASSET BUT W.E.F. 1.4.2008 I.E. FOR AND FROM ASSESSMENT YE AR 2008-09 AND THE RELEVANT ASSESSMENT YEAR INVOLVED IN ASSESSEES CASE IS 2007-08. ON THE OTH ER HAND LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 3 ITA 1623/K/2010 BORENDRA NATH MOOKERJEE A.Y.07-08 5. WE FIND THAT UNDISPUTED FACTS ARE THAT THE ASSES SEE SOLD OUT OLD PAINTINGS INHERITED BY HIM AND RECEIVED SALE CONSIDERATION OF RS.62 52 500 /-. WHETHER PAINTINGS FALL UNDER PERSONAL EFFECT AS DEFINED IN SECTION 2(14) OF THE ACT PRIOR TO AMENDMENT BY THE FINANCE ACT 2007 WHEREBY CLAUSE (II) READS AS UNDER: (II) PERSONAL EFFECTS THAT IS TO SAY MOVABLE PRO PERTY (INCLUDING WEARING APPAREL AND FURNITURE BUT EXCLUDING JEWELLERY) HELD FOR PERSO NAL USE BY THE ASSESSEE OR ANY MEMBER OF HIS FAMILY DEPENDENT ON HIM. WE FIND THAT THE LOWER AUTHORITIES HAVE RELIED ON T HE PROVISIONS OF SECTION 47 OF THE ACT PARTICULARLY CLAUSE (IX) WHEREBY ACCORDING TO LOWE R AUTHORITIES IT IS INTENDED TO TREAT PAINTINGS AS CAPITAL ASSET THE RELEVANT CLAUSE (IX) OF SECTI ON 47 READS AS UNDER: [( IX ) ANY TRANSFER OF A CAPITAL ASSET BEING ANY WORK O F ART ARCHAEOLOGICAL SCIENTIFIC OR ART COLLECTION BOOK MANUSCRIPT DRAWING PAINTING PH OTOGRAPH OR PRINT TO THE GOVERNMENT OR A UNIVERSITY OR THE NATIONAL MUSEUM NATIONAL ART GAL LERY NATIONAL ARCHIVES OR ANY SUCH OTHER PUBLIC MUSEUM OR INSTITUTION AS MAY BE NOTIFI ED 24 BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE TO BE OF NATIONAL IMPORTANCE OR TO BE OF RENOWN THROUGHOUT ANY STATE OR STATES. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE UNIVERSITY MEAN S A UNIVERSITY ESTABLISHED OR INCORPORATED BY OR UNDER A CENTRAL STATE OR PRO VINCIAL ACT AND INCLUDES AN INSTITUTION DECLARED UNDER SECTION 3 OF THE UNIVERSITY GRANTS C OMMISSION ACT 1956 (3 OF 1956) TO BE A UNIVERSITY FOR THE PURPOSES OF THAT ACT;] WE FIND THAT LOWER AUTHORITIES MAINLY STRESSED ON C LAUSE (IX) OF SECTION 47 OF THE ACT AND HELD THAT THE PAINTINGS WERE TO BE TREATED AS CAPITAL AS SET AND IF TRANSFER OF PAINTING WAS NOT TO BE TREATED AS TRANSFER OF CAPITAL ASSET CHARGEABLE TO CAPITAL GAINS WITHIN THE MEANING OF SECTION 45 OF THE ACT THEN THE PROVISO OF SECTION 47(IX) OF TH E ACT WILL BE REDUNDANT. THE LOWER AUTHORITIES HAS DRAWN INFERENCE THAT ANY TRANSFER O F PAINTINGS TO A PERSON NOT SPECIFIED IN CLAUSE (IX) OF SECTION 47 OF THE ACT HAS TO BE REGARDED A S TRANSFER OF CAPITAL ASSET CHARGEABLE TO CAPITAL GAINS. THE LOWER AUTHORITIES RELIED ON THE DECISIO N OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF SMT. SHREE KUMARI MUDRA VS. CIT (1997) 228 ITR 5 48 (KOL) WHEREIN IT WAS HELD AS UNDER: FROM THE ABOVE AUTHORITIES WE FIND THAT ITEMS TO BE CLASSIFIED AS PERSONAL EFFECTS WOULD HAVE TO BE CONSIDERED IN THE FOLLOWING LIGHT. SOME DEGREE OF CONNECTION BETWEEN THE PERSON OF THE ASSESSEE AND THE ITEMS IS NECESSA RY. THE ASSESSEE NEED NOT NECESSARILY BE ABLE TO WEAR THE ITEM ON HIS OR HER PERSON. HOUS EHOLD ITEMS AND UTENSILS CAN ALSO BE PERSONAL EFFECTS ALTHOUGH VERY EXPENSIVE DECORATIVE PIECES MIGHT NOT BE CLASSIFIED AS SUCH. A DISTINCTION IS TO BE BORNE IN MIND AS BETWE EN PERSONAL EFFECTS AND ASSETS INTENDED FOR USE IN BUSINESS OR PROFESSION. IT IS O N AN ASSESSMENT OF THESE AND OTHER ATTENDANT RELEVANT FACTORS THAT A DECISION HAS TO B E REACHED WHETHER THE ITEMS WHICH WERE SOLD WERE PERSONAL EFFECTS WITHIN THE MEANING OF SECTION 2 CLAUSE (14) OR NOT. WE DO NOT HAVE THE BENEFIT OF THE TRIBUNALS DECISI ON ON WHETHER THE SILVER UTENSILS WERE CONSIDERED BY THE TRIBUNAL TO BE PERSONAL EFFECTS O R NOT IT NOT HAVING BEEN FIRST PERSUADED THAT THE ITEMS SOLD WERE SILVER UTENSILS AS CLAIMED. SINCE IT SHUT OUT RELEVANT MATERIAL ON THE PROOF OF THE UTENSILS TO BE SUCH I T CREATED A SELF-IMPOSED BAR IN NOT PROPERLY CONSIDERING WHETHER THE SILVER UTENSILS WE RE PERSONAL EFFECTS OR NOT. 4 ITA 1623/K/2010 BORENDRA NATH MOOKERJEE A.Y.07-08 WE MIGHT MENTION THAT WHETHER THESE ITEMS WERE PERS ONAL EFFECTS OR NOT WERE MATTERS OF DISCUSSION BEFORE THE LOWER AUTHORITIES AND THE ASS ESSEE DID NOT GET A FAVOURABLE RESULT. THE TRIBUNAL FOUND THAT JUSTIFIED. IN GIVING OUR OPINION ON THIS ASPECT OF THE MATTER WE FIRST NOTE THAT THE PLATES GLASSES ETC. WERE NONE OF THEM OUTSIZED. FOR EXAMPLE 11 G LASSES 6 PLATES AND FOUR BOWLS IN ALL WEIGHED 11 KG. THE GLASSES BOWLS ETC. ARE NOT O N ANY REASONABLE VIEW OF THE MATTER ITEMS OF DRAWING ROOM DECORATION OR SUCH VALUABLE I TEMS AS TO FAN ONLY THE PRIDE AND SELF-IMPORTANCE OF THE ASSESSEE. THE ITEMS WERE NOT ALSO SO VALUABLE AS TO BECOME A CAPITAL ASSET OR A SAVING OR INVESTMENT TO BE SOLD IN THE TIME OF BUSINESS NEED ; THESE WERE NOT EVEN MATTERS OF ARGUMENT BEFORE US BUT W E CONSIDER THESE AS THESE THROW LIGHT ON THE INNATE NATURE OF THE ITEMS WHICH ARE C LAIMED TO BE PERSONAL EFFECTS. WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF HIS HIGHNESS MAHARAJA RANA HEMANT SINGHJI V S. CIT (1976) 103 ITR 61 (SC) WHEREIN IT HAS BEEN HELD AS UNDER : THE EXPRESSION ' PERSONAL USE ' OCCURRING IN CLAUS E (II) OF THE ABOVE QUOTED PROVISION IS VERY SIGNIFICANT. A CLOSE SCRUTINY OF THE CONTEX T IN WHICH THE EXPRESSION OCCURS SHOWS THAT ONLY THOSEEFFECTS CAN LEGITIMATELY BE SAID TO BE PERSONAL WHICH PERTAIN TO THE ASSESSEE'S PERSON. IN OTHER WORDS AN INTIMATE CONN ECTION BETWEEN THE EFFECTS AND THE PERSON OF THE ASSESSEE MUST BE SHOWN TO EXIST TO RE NDER THEM 'PERSONAL EFFECTS '. THE ENUMERATION OF ARTICLES LIKE WEARING APPAREL JEWEL LERY AND FURNITURE MENTIONED BY WAY OF ILLUSTRATIONS IN THE ABOVE-QUOTED DEFINITION OF 'PERSONAL EFFECTS' ALSO SHOWS THAT THE LEGISLATURE INTENDED ONLY THOSE ARTICLES TO BE INCL UDED IN THE DEFINITION WHICH WERE INTIMATELY AND COMMONLY USED BY THE ASSESSEE. THE MEANING ASSIGNED TO THE EXPRESSION 'PERSONAL E FFECTS' IN VARIOUS DICTIONARIES ALSO LENDS SUPPORT TO THIS VIEW. IN TH E UNABRIDGED EDITION OF THE RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE AT PAGE 1 075 THE EXPRESSION IS GIVEN THE FOLLOWING MEANING: 'PERSONAL EFFECTS PRIVATELY OWNED ARTICLES CONSIST ING CHIEFLY OF CLOTHING TOILET ITEMS ETC. FOR INTIMATE USE BY AN INDIVIDUAL.' IN BLACK'S LAW DICTIONARY FOURTH EDITION AT PAGE 1301 THE EXPRESSION IS ASSIGNED THE FOLLOWING MEANING : ' PERSONAL EFFECTS ARTICLES ASSOCIATED WITH PERSON AS PROPERTY HAVING MORE OR LESS INTIMATE RELATION TO PERSON OF POSSESSOR. ' IN CYCLOPAEDIC LAW DICTIONARY THIRD EDITION AT PA GE 832 THE EXPRESSION ' PERSONAL EFFECTS ' WITHOUT QUALIFYING WORDS IS INTERPRETED T O INCLUDE GENERALLY SUCH TANGIBLE PROPERTY AS IS WORN OR CARRIED ABOUT THE PERSON. IN ' WORDS AND PHRASES ' (PERMANENT EDITION) VOLUM E 32 AT PAGE 277 IT IS STATED THAT THE WORDS ' PERSONAL EFFECTS ' WHEN USED WITHOUT QU ALIFICATION GENERALLY INCLUDE SUCH TANGIBLE PROPERTY AS IS WORN OR CARRIED ABOUT THE PERSON OR TO DESIGNATE ARTICLES ASSOCIATED WITH THE PERSON. AT ANOTHER PLACE AT TH E SAME PAGE IT IS STATED THAT THE WORDS ' PERSONAL EFFECTS ' ARE USED TO DESIGNATE A RTICLES ASSOCIATED WITH PERSON AS PROPERTY HAVING MORE OR LESS INTIMATE RELATION TO PERSON OF POSSESSOR OR SUCH TANGIBLE PROPERTY AS ATTENDS THE PERSON. 5 ITA 1623/K/2010 BORENDRA NATH MOOKERJEE A.Y.07-08 BEARING IN MIND THE AFORESAID MEANING ASSIGNED TO T HE 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. EV EN THE SOVEREIGNS AND THE SILVER COINS WHICH ARE ALLEGED TO HAVE BEEN CUSTOMARILY BR OUGHT OUT OF THE IRON SAFES AND BOXES ON TWO SPECIAL OCCASIONS NAMELY THE ASHTAM I DAY OF ' SHARADH PAKSH ' FOR MAHA LAKSHMI PUJA AND FOR WORSHIP ON THE OCCASION OF DIWALI FESTIVAL CANNOT ALSO BE DESIGNATED AS EFFECTS MEANT FOR PERSONAL USE. THEY MAY HAVE BEEN USED FOR PUJA OF THE DEITIES AS A MATTER OF PRIDE OR ORNAMENTATION BUT I T IS DIFFICULT TO UNDERSTAND HOW SUCH USER CAN BE CHARACTERISED AS PERSONAL USE. AS RIGHT LY OBSERVED BY THE INCOME-TAX AUTHORITIES IF SANCTITY OF PUJA WERE CONSIDERED SO ESSENTIAL BY THE ASSESSEE THE AFORESAID ARTICLES WOULD NOT HAVE BEEN DELIVERED BY HIS GUARD IAN TO THE BANKS FOR SALE. 6. FROM THE ABOVE WE ARE OF THE VIEW THAT THE AMEN DMENT BROUGHT BY FINANCE ACT 2007 W.E.F. 1.4.2008 WHEREBY DEFINITION OF CAPITAL ASSE T IN SECTION 2(14) SUB-CLAUSE (II) IS AMENDED AND PAINTINGS ARE INCLUDED IN THE DEFINITION. HOWE VER THIS WILL APPLY FOR AND FROM ASSESSMENT YEAR 2008-09 AND NOT TO THE RELEVANT ASSESSMENT YEA R UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2007-08. NOW AS PER THE DEFINITION OF PERSONAL E FFECTS PRIOR TO AMENDMENT THAT IS TO SAY PHYSICAL CHATTELS HAVING SOME PERSONAL CONNECTION W ITH 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-ACTION REPRESENTED BY PASS BOOKS AND PROMISSORY NOTES. IN THE UNABRIDGED EDIT ION OF THE RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE AT PAGE 1075 THE EXPRESSION PER SONAL EFFECTS MEANS PRIVATELY OWNED ARTICLES CONSISTING CHIEFLY OF CLOTHING TOILET ITE MS ETC. FOR INTIMATE USE BY AN INDIVIDUAL. ACCORDING TO BLACKS LAW DICTIONARY 5 TH EDITION PAGE 1029 THE EXPRESSION MEANS ARTICLES ASSOCIATED WITH PERSON AS PROPERTY HAVING MORE OR LESS INTIMATE RELATION TO PERSON OF POSSESSOR. IN CYCLOPAEDIC LAW DICTIONARY THIRD E DITION AT PAGE 832 THE EXPRESSION PERSONAL EFFECTS WITHOUT QUALIFYING WORDS IS INTE RPRETED TO INCLUDE GENERALLY SUCH TANGIBLE PROPERTY AS IS WORN OR CARRIED ABOUT THE PERSON. TH US SILVER BARS SOVEREIGNS BULLION AND SILVER COINS CAN BY NO STRETCH OF IMAGINATION BE DEEMED TO BE EFFECTS MEANT FOR PERSONAL USE. THE FACTS IN THE PRESENT CASE ARE THAT THE ASSESSEE HAS SOLD OLD PAINTINGS AND CLAIMED THE SAME IN THE NATURE OF PERSONAL EFFECTS AND ARE NOT COVERED WITH IN THE DEFINITION OF CAPITAL ASSET OF SECTION 2(14)(II) OF THE ACT. CAN THESE PAINTINGS BE CONS IDERED AS PERSONAL EFFECTS OF THE ASSESSEE? IF SO ARE THEY EXCLUDED FROM THE DEFINITION OF 'CAPIT AL ASSET' UNDER SECTION 2(14) OF THE ACT WHICH MEANS ' PROPERTY OF ANY KIND HELD BY AN ASSES SEE ...... BUT DOES NOT INCLUDE (I)... ; (II) PERSONAL EFFECTS THAT IS TO SAY MOVABLE PROPERTY (INCLUDING WEARING APPAREL AND FURNITURE BUT EXCLUDING JEWELLERY) HELD FOR PERSONAL USE BY THE A SSESSEE OR ANY MEMBER OF HIS FAMILY DEPENDENT ON HIM; '. THE ASSESSEE STATED THAT THES E PAINTINGS WERE HELD BY HIM FOR PERSONAL USE OF HIMSELF AND MEMBERS OF HIS FAMILY DEPENDENT ON H IM. THESE PAINTINGS WERE AS SUCH REQUIRED FOR THEIR PERSONAL USE AND THE USE OF MEMBERS OF HI S FAMILY AS WELL. WE FIND THAT HONBLE 6 ITA 1623/K/2010 BORENDRA NATH MOOKERJEE A.Y.07-08 BOMBAY HIGH COURT IN THE CASE OF CIT V. SITADEVI N. PODDAR [1984] 148 ITR 506(BOM) CONSIDERED A SIMILAR QUESTION IN A SOMEWHAT DIFFERE NT CONTEXT. IN THAT CASE THE ASSESSEE HAD SOLD CERTAIN SILVER UTENSILS. THE COURT HELD THAT S UCH UTENSILS WERE PERSONAL EFFECTS BECAUSE THEY WERE ORDINARILY INTENDED FOR PERSONAL OR HOUSEHOLD USE. IN THE CASE OF H. H. MAHARANI USHA DEVI V. CIT [1982] 133 ITR 43 (MP) JEWELLERY WHICH WAS MEANT FOR USE BY THE ASSESSEE ON CEREMONIAL OCCASIONS WAS CONSIDERED AS 'PERSONAL EF FECTS' OF THE ASSESSEE. THE REVENUE HOWEVER PLACED EMPHASIS ON THE OBSERVATIONS MADE B Y HONBLE SUPREME COURT IN THE CASE OF H. H. MAHARAJA RANA HEMANT SINGHJI V CIT[1976] 103 ITR 61(SC). IN THAT CASE HONBLE SUPREME COURT WAS REQUIRED TO CONSIDER OLD SILVER R UPEE COINS GOLD SOVEREIGNS AND SILVER BARS WHICH WERE USED BY THE ASSESSEE ON RELIGIOUS FESTIV ALS. HONBLE SUPREME COURT OBSERVED THAT SILVER BARS OR BULLION CAN BY NO STRETCH OF IMAGIN ATION BE DEEMED TO BE 'EFFECTS' MEANT FOR PERSONAL USE. IN THAT CASE HONBLE SUPREME COURT H AS IN EFFECT HELD THAT THE EXPRESSION 'INTENDED FOR PERSONAL OR HOUSEHOLD USE MEANT NORMA LLY COMMONLY OR ORDINARILY INTENDED FOR PERSONAL OR HOUSEHOLD USE. IT WOULD NOT BE CORRECT TO HOLD THAT HONBLE SUPREME COURT HAS CONSIDERED ONLY THOSE ITEMS AS PERSONAL EFFECTS WHI CH HAVE BEEN INTIMATELY CONNECTED WITH THE PERSON OF THE ASSESSEE. THE VERY FACT THAT FURNITUR E IS ALSO INCLUDED IN PERSONAL EFFECTS WOULD SHOW THAT THE ARTICLES NEED NOT HAVE AN INTIMATE CO NNECTION WITH THE PERSON OF THE ASSESSEE. ALL THAT IS REQUIRED IS THAT THE ARTICLE SHOULD BE MEAN T FOR PERSONAL USE OF THE ASSESSEE IN THE ORDINARY COURSE. IN THE PRESENT CASE REVENUE APPLI ED A RESTRICTIVE TEST NOT WARRANTED BY SECTION 2(14) OF THE ACT. HE HELD THAT BECAUSE THESE ARTICL ES WERE NOT NORMALLY IN DAILY USE THEY COULD NOT BE CONSIDERED AS PERSONAL EFFECTS. THIS APPEARS TO BE AN INCORRECT TEST BECAUSE ALL PERSONAL EFFECTS NEED NOT BE USED DAILY. SO LONG AS THEY ARE MEANT FOR PERSONAL USE THEY WILL HAVE TO BE CONSIDERED AS PERSONAL EFFECTS. IN VIEW OF THE ABOV E DISCUSSION WE ARE OF THE VIEW THAT THE SALE OF OLD PAINTINGS INHERITED BY ASSESSEE DOES NOT F ALL IN THE MISCHIEF OF SECTION 2(14)(II) OF THE ACT I.E. IN THE DEFINITION OF CAPITAL ASSET AND DOE S NOT ATTRACT CAPITAL GAINS TAX PRIOR TO AMENDMENT BROUGHT BY FINANCE ACT 2007 W.E.F. 1.4.2 008. ACCORDINGLY THIS APPEAL OF THE ASSESSEE IS ALLOWED. 6. THE SECOND ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER O N DEEMED RENT FROM HOUSE PROPERTY WHICH IS NOT IN SELF OCCUPATION. FOR THIS THE ASSESSEE H AS RAISED THE FOLLOWING GROUND NO.3: 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1 26 00 0/- MADE BY THE A.O. ON ACCOUNT OF DEEMED INCOME FROM HOUSE PROPERTY ON THE BASIS OF T HE REPORT OF THE DEPARTMENTAL INSPECTOR. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CONCURRENT FINDING OF THE LOWER AU THORITIES IS THAT ASSESSEE OFFERED HIS HOUSE 7 ITA 1623/K/2010 BORENDRA NATH MOOKERJEE A.Y.07-08 PROPERTY AT 7 HARINGTON ROAD KOLKATA TO BE TREATE D AS HIS RESIDENTIAL HOUSE AND WHEREAS ANOTHER HOUSE PROPERTY I.E. RESIDENTIAL HOUSE AT 10 GURUSADAY ROAD KOLKATA WAS TREATED AS VACANT AND NO INCOME WAS OFFERED FROM THIS RESIDENT IAL HOUSE I.E. NEWLY PURCHASED HOUSE. THE ASSESSING OFFICER DEPUTED HIS INSPECTOR TO ASCERTAI N ANNUAL VALUE OF THE HOUSE PROPERTY WHO REPORTED AFTER VERIFICATION IN THE LOCALITY THAT TH IS PROPERTY MAY FETCH A RENT OF RS.15 000/- TO RS.20 000/- PER MONTH. ON THE BASIS OF THE SAME AS SESSING OFFICER ESTIMATED THE ANNUAL VALUE OF THE PROPERTY AT RS.1.80 LACS AND ASSESSED INCOME FROM HOUSE PROPERTY AT RS.1.26 LACS AS PER THE PROVISIONS OF SECTION 23(4) OF THE ACT. CIT(A) ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER. 8. WE FIND THAT EVEN BEFORE US THE LD. COUNSEL FOR THE ASSESSEE FAIRLY AGREED THAT THE ESTIMATION MADE IS HIGHER AND HE HAS NOT CONTESTED THAT THE DEEMED ANNUAL VALUE IS NOT TO BE ADOPTED FOR RENTAL PURPOSES. ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES AND WE CONFIRM THE SAME. THIS ISSUE OF THE ASSESSEES APPEAL IS DISMISSED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 10. ORDER PRONOUNCED IN OPEN COURT ON 22.7.2011. SD/- SD/- . . ! ' '' ' $# $# $# $# ! (S. V. MEHROTRA (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED 22ND JULY 2011 '12 $&34 $5' JD.(SR.P.S.) / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . + / APPELLANT SHRI BORENDRA NATH MOOKERJEE 7 HARRIN GTON STREET KOLKATA-700 071 2 -.+ / RESPONDENT ITO WARD-33(1) KOLKATA 3 . $/& ( )/ THE CIT(A) KOLKATA 4. $/& / CIT KOLKATA 5 . '$? -$& / DR KOLKATA BENCHES KOLKATA .7 -$/ TRUE COPY /&@/ BY ORDER #4 /ASSTT. REGISTRAR .