Gift of Car

• Movable (or) Immovable Assets / Property – The income tax Act clearly defines the list of immovable and prescribed movable properties for the purpose of Gift tax. If you receive a gift (movable or immovable) from a relative then no tax will be levied. However, if you receive a gift (movable or immovable) from non-relative then up to Rs 50,000 (stamp duty value of the immovable property or Fair market value of movable property) is tax-exempted.
  1. Bullion – Gold bars, Silver bars etc.,
  2. Sculptures or any work of Art
  3. Drawings / Paintings
  4. Archaeological collections
  5. Jewellary (precious metals, ornaments, precious stones, etc.,)
  6. Shares & other financial securities
  7. Land or building or both (immovable)
     
     None of the above – Any other assets which is not listed in the above list will not be charged to tax. For example : If you receive car as a gift from a relative or non-relative, there will not be any tax on it as ‘car’ is not listed in the prescribed list of movable properties as per the IT Act.

Originally posted by : Madhavi Pandit
	We are debating over an issue raised 5 years ago. Today the position is that The following will be taxed as income from other sources in the hands of the receiver (unless it is gifted by a relative) U/s 56 (2)(vii)(c) any property, other than immovable property,— (i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property; (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration :

I agree here with CA Madhvi Pandit:

1. Is there any judgement in support of :: "A Motor CAR is not a movable assets?"

2. Is there any justification in support of the list as defined above (section 56 2 vii) is all inclusive and just not exhaustive?

3. What if Assessing officer makes additions and assesses CAR as a movable asset, with his argument as follows:

1.  " Section 22 I.P.C. defines 'movable property'. The definition is not exhaustive. According to the section the words 'movable property' are intended to include corporeal property of every descriptttttttttttion, except land and things attached to the earth or permanently fastened to anything which is attached to the earth. The definition is of the expression ,movable property' and not of 'property' and can apply to all corporeal property except property excluded from the definition. It is thus clear that the word 'property' is used in the Code in a much wider sense than the expression movable property'. It is not therefore necessary to consider in detail what type of property will be included in the various sections of the Indian Penal Code." Apex court :: in  R. K. Dalmia vs Delhi Administration on 5 April, 1962 (Equivalent citations: 1962 AIR 1821, 1963 SCR (1) 253)) and many more.

2. Even Section 3 (36) of the General Clauses Act defines movable property as:

'Movable property shall mean property of every descripttion, except immovable property."

3..Section 2 (9) of the Registration Act, 1908 defines property as:

'Moveable property' includes standing timber, growing crops and grass, fruit upon and juice in trees, and property of every other descriptttion, except immovable property." 

4. Wealth Tax Act:

The assets which fall under the definition of assets as per section 2(ea) and shall be included in the wealth of a person.    

ASSETS:

1.      House

2.      Motor Car

3.      Jewellery, Bullion, etc.,

4.      Yachts, boats and aircrafts,

5.      Urban Land,

6.      Cash in Hand,
 

5. Finally, why we take depreciation of CAR under IT act @ 15%, Motor car is covered in item No. (2) in heading III, in table Part A, as Tangible Assets. Can there be different views of same item for different sections under same act?

6. Can we knock the door of Courts, with the argument that the draftsman purposefully left other assets like car in the section 56 (2) (vii), and hence not an asset for gift?

Mind well, the judgement in such cases is given based on NATURAL JUSTICE.

Property whether Immovable or Movable as defined by IT Act is an exhaustive definition and it does not include Car. Thus Car does not come under taxable Gifts as per IT act. Thats why , Employers ,like today news gift Cars to 100 of employees. It wont be taxable in the hand of Employees and If at all any taxation will be attracted it will be as perquisite in case it is being provided by employer

Hey gift of car is not taxable. Since it is not covered in the explanation to the definition of property in 56(2)(x)