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2019 (9) TMI 309 - AT - Income TaxCorrect head of income - receipt from the sale of paintings - income from business and profession or capital gain - HELD THAT:- Analysis of facts emerging from record does not suggest that the assessee has indulged in any organized or regular activity of purchase and sale of paintings. There is nothing on record to suggest that except the aforesaid assessment years, the assessee had engaged himself in the activity of purchase and sale of paintings in any other past or subsequent years. At least, no such fact has either been brought on record by the Departmental Authorities or brought to our notice by the Departmental Authorities. Therefore, in the absence of any material brought on record to demonstrate that the assessee is carrying on the business of purchase and sale of painting in an organized manner, it cannot be said that the sale of painting is a business activity or is an adventure in the nature of trade. That being the case, the conclusion drawn by the Departmental Authorities holding that the income from sale of painting is to be treated as business income, in our view, is unsustainable. As a natural corollary such income has to be treated as capital receipt. Having held so, now it is necessary to deal with assessee’s contention that in assessment year 2007–08, such income is not taxable as it will come within the purview of ‘personal effect’ as defined under section 2(14) In view of the aforesaid, we hold that the gain derived from sale of painting in the assessment year 2007–08 is not taxable as it is personal effect as defined under section 2(14) of the Act. However, insofar as assessment year 2008–09 is concerned, paintings have been specifically excluded from being treated as personal effect, therefore, the gain derived from sale of painting has to be assessed as long term capital gain. Undisclosed income on account of sale of shares of Matrix India Entertainment Consultant Pvt. Ltd. (MIECPL) - whether Commissioner (Appeals) had not given any opportunity of being heard to the assessee in complete violation of section 251(2) ? - HELD THAT:- We are of the view that learned Commissioner (Appeals) while enhancing the income of the assessee for the assessment year 2007–08 has not complied with the mandatory provision of section 251(2) of the Act. The aforesaid factual position has not been disputed by the learned Departmental Representative. In view of the aforesaid, we restore the issue to learned Commissioner (Appeals) for fresh adjudication after providing reasonable opportunity of being heard the to assessee. These grounds are allowed for statistical purposes.
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