Delivery of possession and associated documentation signifies a sale under the Income Tax Act, despite claims of retained ownership, underlining the necessity for procedural adherence in asset transfer.

ORDER :

C.SARAVANAN, J.

In this Writ Petition, the petitioner has challenged the Order dated 07.03.2024 passed under Section 250 of the Income Tax Act, 1961 , whereby the appeal filed against the impugned Assessment Order dated 29.12.2021 passed under Section 143 (3) read with Section 153C of the by the 3rd respondent has been dismissed by the 2nd respondent.

2. Earlier, the 3^rd respondent had passed an Assessment Order dated 29.12.2021 for the Assessment Year 2018-2019, whereby the total taxable income of the petitioner was computed at Rs.37,48,915 for the Assessment Year 2018-2019.

3. While passing the impugned Assessment Order dated 29.12.2021, the 3^rd respondent concluded that there has been a sale of Rolls Royce Car bearing Registration No. DL-3C-AY-4199 and that petitioner had received a sum of Rs.2,44,00,000 as sale consideration on 29.09.2017. Further, it has been held that since the car was purchased on 14.03.2015 for a sum of Rs.1,45,00,000/- and sold for a sum of Rs.2,44,00,000/- on 29.09.2017, it was held to be a short-term capital asset.

4. Relevant portion of the impugned Assessment Order dated 29.12.2021 is extracted hereunder:-

“8. ... As seen from the information and evidences, the assessee had handed over the vehicle with signed documents on 29/09/2017 and the money was received by the assessee's authorized person on 29/09/2017. The assessee had been waiting till 23/10/2017 to file a complaint to the police and the complaint was made only on 21/11/2017. The incidence of complaining to the police had happened long after the search conducted by the Income-tax Department on 12/10/2017. This leads to a presumption that filing a complaint to the police is an afterthought. Considering all the above facts, it is concluded that there has been a sale and the assessee has received the consideration of Rs.2,44,00,000/- towards the sale of Rolls Royce car sold by the assessee. The assessee had purchased the car on 14/03/2015 for Rs.1,45,00,000/- and has sold the same on 29/09/2017 for Rs.2,44,00,000/-. Since it has been sold within a period of three years, the same is Short Term Capital Asset.

9. The assessee's representative submitted that there had not been any sale of the said car. He also submitted that the car was under personal use only and is not used for business. Therefore, if the department does not accept the explanations offered by the assessee, the movable asset being the car for personal use is not a capital asset as provided in section 2(14) of the Income-tax Act and that there will not arise any capital gain on the same. The assessee's contention is accepted.”

5. The 3^rd respondent rejected the explanation offered by the petitioner that the car being a movable asset used for personal use was not a capital asset as defined in Section 2 (14) of the Income Tax Act, 1961 and does not attract the capital gains tax at the hands of the Petitioner.

6. The specific case of the petitioner is that petitioner wanted to dispose the aforesaid Rolls Royce Car and that a broker by name Karthikeyan, who is one of the directors of Sree Annapoorna Sree Gowrishankar Hotels Private Limited in Coimbatore, acting as a selling agent, approached the petitioner that one Sekar, belonging to LULU Group Cochin intended to by the car and therefore, the car was to be sold for a sum of Rs.80,00,000/-.

7. The further case of the petitioner is that since there was a wedding in the family of LULU Group of Directors and the car was required for the aforesaid function as well, in a bona fid