COMMISSIONER OF INCOME TAX Vs. KURUVILLA ABRAHAM

JUDGEMENT

(1.) The Revenue is on appeal as against the order of the Income Tax Appellate Tribunal in respect of the assessment year 2005-2006.

(2.) The respondent assessee filed the return of income for the relevant assessment year admitting a total income of Rs. 2,40,150/-. When the assessment was taken up for scrutiny, the Assessing Officer treated the paintings sold by the assessee as capital asset and computed the capital gains arising from sale of such paintings. The Assessing Officer rejected the contention of the assessee that the paintings sold were personal effects and not capital assets . Accordingly, he brought an amount of Rs. 39,14,800/- to tax towards capital gains on sale of paintings and added the same to the returned income of Rs. 2,40,150/-

(3.) Aggrieved against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The first appellate authority found that the paintings are personal effects of the assessee and the sale of those personal effects would not attract the capital gains. He also found that under Section 2(14) of the Income Tax Act the paintings were included in the definition of capital asset only with effect from the assessment year 2008-2009. Therefore, the Commissioner of Income Tax (Appeals) deleted the addition made by the Assessing Officer.