Vintage Car Not Personal Effect Without Proof of Use | HC

Case Details: Narendra I. Bhuva v. Assistant Commissioner of Income-tax - [2025] 177 taxmann.com 540 (Bombay) 

Judiciary and Counsel Details

• Alok Aradhe, CJ.
• Sandeep V. Marne, J.
• Vipul Joshi & Prashant Ghumare for the Appellant
• Prakash C. Chhotaray, Adv. & Ms Sangita Choure for the Respondent

Facts of the Case

The assessee was a salaried employee. He had income from house property, share income, and dividends. The assessee filed his return of income by declaring a total income of Rs. 2.79 lakhs.

During the assessment proceedings, the Assessing Officer (AO) noticed that the assessee had purchased a vintage car for Rs. 20,000 and sold it for Rs. 21 lakhs. The assessee contended that the car was shown as a personal asset and was therefore exempt. However, AO added the entire amount of Rs. 20.80 lakhs to the assessee’s income as business income on account of the sale of the motor car.

On appeal, the CIT(A) reversed the order of the AO and held the car for personal use. However, the Tribunal reversed the order of CIT(A). The matter then reached the Bombay High Court.

High Court Held

The High Court held that section 2(14) provides that capital assets do not include personal effects, i.e., movable property, including wearing apparel and furniture, but excluding jewellery held for personal use by the assessee or any other member of his family dependent on him. Thus, the personal effects must be for personal use to be excluded from the definition of the term ‘capital assets’.

For treating a movable property as personal effects, an intimate connection between the effects and the person of the assessee must be shown. The capability of a car for personal use would not ipso facto lead to the automatic presumption that every car would be excluded from the capital assets of the assessee as personal effects.

Thus, before reaching a conclusion regarding personal effects, evidence related to personal use is necessary. In the instant case, the assessee failed to provide any evidence regarding the vintage car being put to personal use. There are several indicators showing that the car was never used by the assessee for personal use, such as:

• • Assessee using the company’s car for commute
  • Car not being used even occasionally by the assessee
  • The vintage car was not being parked at the assessee’s residence
  • Assessee’s inability to prove that he spent any amount on its maintenance for
  • keeping the same in running condition
  • A salaried employee is purchasing a vintage car as a matter of pride.

Therefore, what needed to be proved in this case was that the car was used as a personal asset by the assessee. It was therefore incumbent upon the assessee to lead evidence to show that he actually used the car personally. It is an admitted position that the assessee failed to adduce evidence to prove that the car was used personally by him. Therefore, the gain arising on the sale of the vintage car was liable to be taxed under the head ‘Capital Gains’.

List of Cases Reviewed

• CIT v. Smt. Sitadevi N. Poddar [1984] 17 Taxman 345 (Bombay)
• Jayantilal A. Shah v. K.N. Anantharama Aiyar, CIT [1985] 23 Taxman 14/156 ITR 448 (Bombay)
• CIT v. Benarashilal Kataruka[1991] 54 Taxman 300/185 ITR 493 (Calcutta)
•  Smt. Shree Kumari Mundra v. CIT [2000] 112 Taxman 253 (Calcutta)
• Himatlal C. Valia v. CIT [2001] 114 Taxman 269/248 ITR 262 (Gujarat)
• Faiz Murtaza Ali v. CIT [2013] 31 taxmann.com 232/214 Taxman 30/360 ITR 200 (Delhi)
• G.S. Poddar v. Commissioner of Wealth-tax [1965] 57 ITR 207 (Bombay)
• Commissioner of Wealth-tax v. Smt. Arti Goenka [1980] 3 Taxman 253/121 ITR 632 (Madras)
• Poonawalla Estate Stud & Agricultural Farm v. CIT [2025] 176 taxmann.com 308 (Bombay) [Para 13] Distinguished

List of Cases Referred to

• CIT v. Smt. Sitadevi N. Poddar [1984] 17 Taxman 345 (Bombay) (para 5)
•  Jayantilal A. Shah v. K.N. Anantharama Aiyar, CIT [1985] 23 Taxman 14/156 ITR 448 (Bombay) (para 5)
• CIT v. Benarashilal Kataruka [1991] 54 Taxman 300/185 ITR 493 (Calcutta) (para 5)
• Smt. Shree Kumari Mundra v. CIT [2000] 112 Taxman 253 (Calcutta) (para 5)
•  CIT v. H.H. Maharani Usha Devi [1998] 98 Taxman 309/231 ITR 793 (SC) (para 5)
•  Faiz Murtaza Ali v. CIT [2013] 31 taxmann.com 232/214 Taxman 30/360 ITR 200 (Delhi) (para 5)
• G.S. Poddar v. Commissioner of Wealth-tax [1965] 57 ITR 207 (Bombay) (para 5)
•  Commissioner of Wealth-tax v. Smt. Arti Goenka [1980] 3 Taxman 253/121 ITR 632 (Madras) (para 5)
•  Poonawalla Estate Stud & Agricultural Farm v. CIT [2025] 176 taxmann.com 308 (Bombay) (para 5)
• H.H. Maharaja Rana Hemant Singhji v. CIT [1976] 103 ITR 61 (SC) (para 6)