Tax on sale of personal cars

Tax queries 2411 views 5 replies

Prejith

Pursuing CA

92 Points Joined November 2009

The sale of personal movable assets of an assessee is not taxable (Section 2(14)). So i guess car used for personal purposes won't be considered as a capital asset as per The Income Tax Act.

If it is, then what would happen if an assessee sells a vintage car which he is been using for his personal purposes. Vintage car's are price less and the sale of it can fetch him huge profits.

In the above case,

1. Is vintage car a capital asset ?

2. If it is not, what happens to the gain arising from such a transaction?

Kindly clarify

Regards

Replies (5)

Guest

dear friend

it is immeterial whether the car is an wintage car or of any other nature.if it is used by the assesee for his personal use then this transaction will not attract capital gain bcoz it is not an capital asset the transaction will be tax free

Aditya Khaitan

Manager Accounts & Tax

40 Points Joined January 2009

Since ANY CAR OR MOVABLE ASSETS FOR PERSONAL USE (except jwellery)is not a capital asset.... its sale is not taxable

ViveK

312 Points Joined April 2008

in my opinion vintage car will be included in the definition

since vintage cars can be sold at millions of rupees(more or less) so why not they will be included in the definition?

and there are also museums for vintage cars so it will be included in "work of art"

ViveK

312 Points Joined April 2008

https://www.rediff.com/money/2004/apr/30tax1.htm

here is the link

Guest

dear friend sorry for posting a wrong reply earlier but i think mr. vivek is right

Revenue must investigate factum of personal use - Irrespective of the claim put forward by the assessee that he is having articles for personal use, the revenue has to investigate whether the articles are required for the personal use of the assessee as claimed by the assessee or whether the articles are in excess of the requirement of the personal use of the assessee so that they will fall within the definition of capital assets in section 2(14) - R. Ramanathan Chettiar v. CIT [1985] 152 ITR 493 (Mad.).