Cost of Furniture & Fittings are personal effects & not includible in cost of acquisition of house

In the case of Shri Sachin­der Mohan Mehta v. ACIT (Del­hi High Court), Appeal No. ITA 655/2014, Judg­ment deliv­ered on Decem­ber 03, 2014 Del­hi high court held that Cost of Fur­ni­ture & Fit­tings are per­son­al effects & not includi­ble in cost of acqui­si­tion of house.

Assessee earned cap­i­tal gain on sale of res­i­den­tial house prop­er­ty. At the time of com­put­ing cap­i­tal gain, assessee claimed deduc­tion of amount spent on items like wood­en tem­ple, crock­ery, fans, light fit­tings, etc., at the time of pur­chase of prop­er­ty by treat­ing the same as cost of acqui­si­tion of the house prop­er­ty. The Assess­ing Offi­cer (AO) reject­ed assessee’s claim by hold­ing that the afore­said items were per­son­al effects which were not cov­ered under the head ‘cap­i­tal asset’ as per the pro­vi­sions of sec­tion 2(14). The CIT(A) as well as the Tri­bunal upheld the find­ing of AO. Aggriev­ed by the order of Tri­bunal, assessee filed the instant appeal before the High Court.

The Del­hi High Court held that the AO was right in reject­ing assessee’s claim by record­ing fac­tu­al find­ing that there was no men­tion in the sale deeds about pur­chase of the fur­ni­ture and fix­tures by way of a sep­a­rate agree­ment and the pur­port­ed pur­chase was only effect­ed by way of a bill.

Fur­ther, the amount paid for items like wood­en tem­ple, crock­ery, fans, light fit­tings, etc., were ‘per­son­al effects’ which were exclud­ed from the def­i­n­i­tion of cap­i­tal asset under sec­tion 2(14). Thus, amount paid on such items could not be con­sid­ered as cost of acqui­si­tion of house property.

So, the appel­late author­i­ties were right in dis­al­low­ing the impugned claim of assessee for the pur­pose of com­pu­ta­tion of the cap­i­tal gains.

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