Narendra I. Bhuva Vs ACIT (Bombay High Court)
Conclusion: Sale proceeds of vintage car was taxable unless assessee proved that the car was used as a personal asset. Tribunal had rightly reversed the order passed by CIT (A), which had applied irrelevant considerations of wealth tax returns and non-claiming of depreciation in respect of the car by assessee.
Held: Assessee had purchased a vintage car namely “Ford Tourer” 1931 Model from one Mr. Jesraj Singh of Delhi sometime in the year 1983 for a consideration of Rs.20,000/-. The said car was sold for a consideration of Rs.21,00,000/-. He apprised AO that the car was shown as a personal asset in Wealth-tax and same was an exempt asset. However, AO added the sum of Rs.20,80,000/- as income to assessee on account of sale of motor car as business income. Assessee thereupon filed an appeal. CIT (A) held that vintage cars were not generally used frequently as maintenance costs of these cars were very high. The car was shown as personal asset in wealth tax returns. CIT (A) set aside the deletion of sum of Rs.20,80,000/- under the head ‘profits from sale of car’. Revenue preferred an Appeal before Tribunal. Tribunal reversed the finding of CIT (A) and held that the vintage car was not used by assessee as personal effect. The order passed by CIT (A) was set aside by Tribunal and appeal preferred by Revenue was allowed. Assessee submitted that Tribunal had not disputed or controverted any of the basic facts or arguments of Assessee that the car was being accepted as personal asset by department itself and the maintenance expenses were debited to the capital account as part of personal withdrawals. It was held that assessee failed to adduce evidence to prove that the car was used personally by him. There were several indicators showing that car was never used by assessee for personal use, such as (i) assessee using company’s car for commute (ii) car not being used even occasionally by assessee (iii) vintage car not being parked at assessee’s residence (iv) assessee’s inability to prove that he spent any amount on its maintenance for keeping the same in running condition and (v) a salaried employee purchasing a vintage car as pride of possession. No attempt was made to indicate that the finding of Tribunal that Assessee failed to produce evidence to prove personal use of the car was perverse. Therefore, Tribunal had rightly reversed the order passed by CIT (A), which had applied irrelevant considerations of wealth tax returns and non-claiming of depreciation in respect of the car by assessee.
