RAJKUMARI AGARWAL,JAIPUR vs. ACIT CEN CIR-2, JAIPUR

ITA 312/JPR/2026Status: DisposedITAT Jaipur28 September 2026AY 2023-249 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the motor car sold by the assessee was a personal effect and not a capital asset within the meaning of Section 2(14) of the Act. The definition of capital asset excludes personal effects, defined as movable property held for personal use, excluding specific items like jewellery. The Supreme Court's interpretation in H.H. Maharaja Rana Hemant Singhji v. CIT [1976] was cited, emphasizing that personal effects are those "intimately and commonly used" by the assessee. The assessee's own conduct, including disallowing car expenses as personal and not claiming depreciation, established the car's character as a personal effect. The Tribunal found that reflecting the car in the balance sheet as a fixed asset did not alter its character as a personal effect, as accounting treatment cannot override admitted user. The reliance on Santosh Structural & Alloys Ltd. and Share Aids (P.) Ltd. was deemed misplaced as those cases concerned depreciable business assets and not the anterior question of whether an asset is a capital asset or a personal effect. Consequently, the transfer of the car did not give rise to any capital gain or loss, and the disallowance of Rs 20,67,120 was confirmed. Ground No. 1 was dismissed.

What were the facts?

The assessee, Rajkumari Agarwal, filed her return of income for Assessment Year 2023-24 on 31.07.2023, declaring a total income of Rs 4,49,75,500. A search under section 132 of the Income Tax Act, 1961, led to jurisdiction being assigned to the Assessing Officer (AO). The AO completed the assessment under section 143(3) on 29.03.2025, determining a total income of Rs 4,70,42,620. This increase was due to the disallowance of Rs 20,67,120 claimed by the assessee as a long-term capital loss on the sale of a Mercedes car. The AO noted that no depreciation was claimed on the car, and the assessee had suo motu disallowed car loan interest and repair expenses as personal. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed this disallowance.

What were the issues?

1. Whether, in the facts and circumstances, the learned CIT(A) erred in confirming the addition of Rs 20,67,120 by disallowing the long-term capital loss on the sale of a car, which turns on the interpretation of Section 2(14) of the Income Tax Act, 1961. Assessee's Contentions: - The car was a capital asset as it was reflected in the balance sheet under fixed assets. - No depreciation or expenditure was claimed on the car, indicating it was held as a capital asset, not exploited in business. - Where no depreciation is claimed, the loss on sale should be treated as long-term capital loss. - Relied on CIT v. Santosh Structural & Alloys Ltd. [2012] and Share Aids (P.) Ltd. v. ITO [2021]. Revenue's Contentions: - The assessee's conduct, by disallowing car-related expenditure as personal and not claiming depreciation, treated the car as a personal asset. - A motor car held for personal use falls under the exclusion of personal effects under Section 2(14), thus no capital loss can arise.

Which sections of the Income-tax Act were involved?

Section 2(14),Section 132,Section 127,Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, JAIPUR

Before: Shri Kuldip Singh & Shri Prakash

PER : PRAKASH, ACCOUNTANT MEMBER:-

1.

This appeal by the Assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), Jaipur-4 [hereinafter referred to as “the learned CIT(A)”] dated 10.02.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), arising out of the assessment order dated 29.03.2025 passed by the Assessing Officer (hereinafter referred to as “the AO”) under section 143(3) of the Act for the assessment year 2023-24. Rajkumari Agarwal

2.

The grounds of appeal raised by the Assessee before us in the memorandum of appeal in Form No. 36 read as under:

1.

In the facts and in the circumstances

The order continues below.

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