Law:

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Section 2(14) of the Income-tax Act, 1961 - Capital gains - Capital assets - Assessment year 2002-03 - Where assessee claimed that certain items sold by him were personal effects and though this aspect was considered by Tribunal in appeal, it did not decide whether section 2(14) was applicable to such items, matter was to be remanded to Tribunal [Matter remanded] The assessee had sold various household items, paintings, carpets, collector items, furniture items, etc., owned by his grandfather, father, uncle and aunt. The claimed that these were personal effects and, hence, were not capital assets within meaning of section 2(14). The Assessing Officer was of the view that the aforesaid items could not be treated as personal effects and were in fact capital assets within the meaning of section 2(14), therefore, refused to grant any exemption on the sale proceeds thereof from tax and included this amount for the purpose of tax. The Commissioner (Appeals) held that the items sold were articles meant for personal use and were, therefore, personal effects. On appeal, the order of the Tribunal was only on the second aspect, namely, the genuineness of the items sold and the money realized. Since the order of the Tribunal was silent on the first issue, namely, whether the items sold were personal effects entitled to exemption under section 2(14), the revenue moved an application under section 254(2) alleging that this aspect was not decided though it was raised. The Tribunal dismissed this application. Held that the aspect as to whether the articles sold were to be treated as personal effects or capital assets was specifically considered by the Assessing Officer. The Commissioner (Appeals) also discussed this issue though he treated the same as personal effects. Under these circumstances, one of the issues was whether the articles claimed to be sold by the assessee were capital assets or not as per section 2(14). Even otherwise, the nature of the articles which were sold as extracted above was taken on record by the Tribunal. The question was only of the applicability of section 2(14 ) in respect of these articles. No factual aspects were involved and it was a question…

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