Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2019 (9) TMI 309

..... ssessee 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 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... . It is relevant to observe, assessment in both these assessment years were originally completed under section 143(3) of the Income-tax Act, 1961 (for short "the Act"). Subsequently, in pursuance to a search and seizure operation conducted under section 132 of the Act in case of the assessee on 24th January 2011, proceedings under section 153A of the Act was initiated for both the assessment years. In response to the notice issued under section 153A of the Act, the assessee filed a revised return of income for the assessment year 2007-08, declaring total income of ₹ 1,66,00,130. Whereas, in respect of assessment year 2008-09, the assessee again declared the same income as was declared in the original return of income. During the assessment proceedings, the Assessing Officer noticed that in the year under consideration, the assessee purchased and sold many paintings and derived profit of ₹ 20,14,335. However, the assessee had not offered it as income. Similarly, in the assessment year 2008-09 also, the assessee had not offered receipts from sale of paintings as income by treating the same as capital receipt from sale of personal effect. Similarly, in the assess .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... f the Tribunal, Kolkata Bench, in ACIT v/s Suresh Sethi, ITA no.763/Kol./2012, dated 15th March 2013. 5. The learned Departmental Representative strongly relying upon the observations of the Assessing Officer and learned Commissioner (Appeals) submitted, the assessee s claim cannot be accepted due to contradictory statements made by him before the Departmental Authorities. He submitted, to justify sale of paintings though the assessee had stated that due to constraint of space in house he has sold paintings, however, it has been found by the Departmental Authorities and the assessee has also purchased new paintings during the year. Therefore, had it been a case of constraint of space, the assessee would not have purchased the paintings. He submitted, factual analysis made by the Assessing Officer and learned Commissioner (Appeals) also reveal that the assessee has undertaken frequent purchase and sale of paintings. Therefore, activity of the assessee is akin to adventure in the nature of trade. The learned Departmental Representative submitted, for these reasons also, the assessee has himself shown part of profit derived from sale of painting as business income in the assessment ye .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... tal 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. 7. 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) of the Act. Notably, while dealing with an identical issue in case of Suresh Seth (supra), the Co-ordinate Bench has held that painting is to be treated as personal effect as per section 2(14) of the Act. No contrary decision in this regard has been brought to our notice by the learned Departmental Representative. 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 amounting to ₹ 3.50 lakh has to be assessed as long term capital gain. Acco .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... e consideration of shares of MIECPL for the assessment year 2007-08 should be computed at ₹ 3,174 per share resulting in total sale consideration at ₹ 76,17,600. Since, the assessee had disclosed sale consideration of ₹ 24,97,000 in the return of income filed for the assessment year 2007-08, he directed that the balance amount of ₹ 51,20,600, should be added to the income of the assessee in the assessment year 2007-08. Learned Authorised Representative submitted, while enhancing the income of the assessee for the assessment year 2007-08, that too, in the appeal proceeding for the assessment year 2008-09, learned Commissioner (Appeals) had not given any opportunity of being heard to the assessee in complete violation of section 251(2) of the Act. Thus, he submitted, enhancement of income by learned Commissioner (Appeals) cannot be sustained. 12. The learned Departmental Representative submitted, the issue may be restored back to learned Commissioner (Appeals) for deciding afresh after due opportunity of being heard to the assessee. 13. Having considered rival submissions and perused material on record, we are of the view that learned Commissioner (Appeals) wh .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||