TMI Blog1987 (8) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... m interest, dividends and shares from three partnership firms, besides income from property. For the assessment year 1964-65, he filed return showing an income of Rs. 23,416 from these sources. He gave note in the return that the receipt of Rs. 3 lakhs from the sale of paintings was not liable to tax as it was neither a business profit nor a capital gain. The Income-tax Officer called upon him to show cause as to why the profit on the sale of paintings be not added to his income. In reply, he contended that he was not a dealer in old paintings, the collections had been made as a hobby and not for business considerations, the sales were effected not with the motive of making profit but to serve the national interest of the country, the articles were his personal effects, and, therefore, they were not a capital asset for the purpose of assessment as capital gains. The Income-tax Officer rejected his contentions and observed that the magnitude of the purchases, the recurrence of the transactions, the transactions having been made outside the books and the profit motive having been evidenced from these transactions, clearly suggested that the hobby had grown into a trade and accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee in purchasing these articles was in the nature of business and not as a hobby. He lastly contended that, initially, it was a hobby but, later on, it grew into a concern in the nature of trade. In reply, learned counsel for the asseseee contended thus. The assessee, late Shri Moti Chand Khajanchi, was pursuing the hobby of collecting paintings and other art objects since 1940 when he was a minor. His collections were held in high esteem by various authors, curators and lovers of art. The bulletin of the Prince of Wales Museum of Western India, 1953-54 and Kanha Dade Prabandh of Padmanabha written by Shri K. B. Vyas and published under the orders of the Government of Rajasthan have references to his paintings. He has been described as an enlightened connoisseur in the foreword to the catalogue of his miniature paintings published by the Lalit Kala Academy. His name was suggested for the membership of the Regional Art Advisory Committee formed by the Government of Rajasthan. He loaned his paintings and art objects for exhibition in the year 1954 to G. G. S. J. Museum, Bikaner, under the caption of Khajanchi Art Gallery and were taken back in the year 1962. Exhibitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment would not be treated as business receipt by its letter dated July 18, 1959. The assessee never had any intention to trade in the paintings and curios. They were purchased for entertaining himself and as a hobby. His statements were recorded from time to time by various Income-tax Officers and every time he disclosed the said facts. The burden lay upon the Department to establish that the disputed sale amounted to an adventure in the nature of trade and the Department has failed to discharge its initial burden. It is clearly stated in paras. No. 24, 25 and 26 of the statement of the case as under: "From the facts and the material available on record, it is clear that the assessee has collected old paintings, curios, etc., since the year 1940 when he was a boy of 16-17 years old. Since 1940, till the assessment year under consideration, only 3 sales to the three institutions, namely, Vidyapeeth, Sangaria (Sri Ganganagar) in 1949-50 for Rs. 4,000, to National Museum, New Delhi, for RE. 3 lakhs in 1963, and to Bharat Kala Bhavan, Varanasi, in 1964 for Rs. 34,000 were made. At that time, it could not be said that there was any profit motive in his mind. In the absence of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the wealth-tax assessment for the years 1960-61 and 1961-62. The Commercial Tax Officer, Survey Investigation, jodhpur, also issued notice to show cause as to why he be not registered and the said sales be not taxed. No action was taken after he filed his reply. On the great persuasion of Shri Rai Krishan Dass, Member, Art Purchase Committee, National Museum, New Delhi, the assessee sold the said paintings to the National Museum, New Delhi, for Rs. 3 lakhs. The assessee requested the Ministry of Scientific Research and Cultural Affairs that they should first move the Finance Ministry and find out if there would be any income-tax on the sales proposed to be made to the National Museum. He was informed by the Ministry of Scientific Research and Cultural Affairs that if he was not a dealer in the articles, the transaction would not amount to an adventure in the nature of trade and the amount paid by the Government would not be treated as business receipts. Under these circumstances, the assessee sold the paintings for Rs. 3 lakhs to the National Museum, New Delhi, in the interest of the nation." It is further mentioned in the statement of the case that the Tribunal recorded the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the High Court given in a reference under section 66 of the Act, are not constituted courts of appeal against the order of the Tribunal. These courts only exercise advisory jurisdiction in such references. The High Court in a reference under section 66 of the Act can, however, go into the question as to whether the conclusion of the Tribunal on a question of fact is based upon relevant evidence ...... The fact that the High Court on appreciation of evidence would have arrived at a conclusion of fact different from that of the Tribunal did not warrant interference with the finding of the Tribunal'. " As such it is not permissible for the court in its reference jurisdiction to reappreciate the evidence and interfere with the Tribunal's findings of facts. Para. No. 27 of the statement of the case starts as under: "For the reasons stated above, we refer for the opinion of the Hon'ble High Court, the following question of law." No reason has been mentioned in any of the earlier paragraphs of the statement of the case. The Tribunal has correctly applied the law laid down in G. Venkataswami Naidu Co, v. CIT [1959] 35 ITR 594 (SC), Bhogilal H. Patel v. CIT [1969] 74 ITR 692 (Bom) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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