The assessee, a minor, having been recognised by the Government as successor\u00a0\u00a0\u00a0\u00a0 of the former Maharaja, certain assets consisting of gold sovereigns, silver coins\u00a0 and silver bars were released by the Govt. and handed over to Rajmata being the adoptive mother and guardian of the assessee. During the financial year 1957-58, the aforesaid sovereigns, silver coins and silver bars were sold at the suggestion\u00a0\u00a0\u00a0\u00a0 of the Government. The assessee contended that there was no voluntary sale chargeable to capital gains tax under section 12B of the 1922 Act and the aforesaid items did not constitute \u201ccapital assets\u201d\u00a0 as contemplated by section 2(4A)\u00a0 of the 1922Act but fell within the purview of the exception carved out by clause<\/p>\n
(ii) thereof and as such were to be excluded in computing the gains because they were held for personal use by the assessee and the\u00a0 members of his\u00a0 family as was evident from the fact that they were used for the purpose of Maha Lakshmi puja <\/em>and other religious festivals and rituals in the family. The ITO overruled\u00a0\u00a0\u00a0 the assessee\u2019s contention and taking into account the market value of the assets worked out capital gains. The appeal before the AAC remained unsuccessful. On second appeal, the Tribunal dismissed the appeal holding that the expression \u201cpersonal effects\u201d meant such items of movable property as were necessary adjuncts to an individual\u2019s own personality and the nature of sale being voluntary or otherwise was irrelevant for the purpose of section 12B of the 1922 Act. On reference, the High Court held that in order that an article should constitute a\u00a0\u00a0\u00a0\u00a0 part of personal effects, it is necessary that the article must be associated with the person of the possessor and that the aforesaid items consisting of gold sovereigns, silver rupees and silver bars could not be deemed to fall within the exception carved out by clause (ii) of section 2(4A) of the 1922 Act merely because they\u00a0\u00a0 wereplaced before Goddess Lakshmi while performing puja<\/em>.<\/p>\n Assessee preferred further appeal to the Supreme Court.<\/p>\n \u00a0<\/p>\n Whether an item of movable property consisting of gold sovereigns, silver rupees and silver bars held for personal use i.e they were placed before Goddess Lakshmi while performing puja <\/em>is a part of personal effects of an assessee and fall within\u00a0 the exception carvedout by clause (ii) of section 2(4A) of the Act?.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n The expression \u201cpersonal use\u201d occurring in section 2(4A)(ii) of the 1922 Act is\u00a0\u00a0 very significant. A close scrutiny of the context in which the expression occurs showed that only those effects can legitimately be said to be personal which pertain to the assessee\u2019s person. In other words, an intimate connection between the effects and the person of the assessee must be shown to exist to render them \u201cpersonal effects\u201d.<\/p>\n The enumeration of articles like wearing apparel, jewellery, and furniture mentioned by way of illustrations in the above-quoted definition of \u201cpersonal effects\u201d also showed that the legislature intended only those articles to be included in the definition which were intimately and commonly used by the assessee.<\/p>\n The meaning assigned to the expression \u201cpersonal effects\u201d in various dictionaries also lends support to this view.<\/p>\n The silver bars or bullion could by no stretch of imagination be deemed to be \u201ceffects\u201d meant for personal use. Even the sovereigns and the silver coins which were alleged to have been customarily brought out of the iron safes and boxes\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 on two special occasions, namely, the Ashtami Day of \u201cSharadh Paksh\u201d for Maha Lakshmi Puja <\/em>and for worship on the occasion of Diwali festival could not also\u00a0\u00a0\u00a0\u00a0\u00a0 be designated as effects meant for personal use. They might have been used for\u00a0 puja <\/em>of the deities as a matter of pride or ornamentation but it was difficult to understand how such user could be characterised as personal use. The court noted that if sanctity of puja <\/em>were considered so essential by the assessee, the aforesaid articles would not have been delivered by his guardian to the banks for sale.<\/p>\n The court also noted that no exemption on behalf of the assessee was claimed in respect of the aforesaid effects under the provision of the Wealth-tax Act.<\/p>\n \u00a0<\/p>\n The aforesaid articles were capital assets and not personal effects and as such could not be excluded while computing the gains. The appeal of assessee was dismissed. (AY. 1957-58) (CA No. 779 of 1971 dt. 17-2-1976)<\/p>\n Editorial: <\/em><\/strong>Ratio of above judgment is followed in, Jayantilal A. Shah v. K. N Ananthrama Aiyar v. CIT (1985) 156 ITR 448 (Bom) (HC); Faiz Murtaza Ali v.\u00a0 CIT (2014) 360 ITR 200 (Delhi)(HC)<\/em><\/strong><\/p>\n \u00a0<\/em><\/strong><\/p>\n \u201cLive simply so that others may simply live.\u201d<\/em><\/p>\n – Mahatma Gandhi<\/p>\n","protected":false},"excerpt":{"rendered":" 45: Capital asset- Personal effects – Capital gains- Sovereigns and silver coins which were customarily used for puja purposes and other ritual purposes could not be designated as effects meant for personal use [ S.2(14) , Indian Income-Tax Act, 1922 , S. 2(4A), 12B] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-13343","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3td","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13343","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=13343"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13343\/revisions"}],"predecessor-version":[{"id":13344,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13343\/revisions\/13344"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=13343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=13343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=13343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Issue<\/h3>\n
View<\/h3>\n
Held<\/h3>\n