02 September 2010
What is the tax liability on the resale value i can earn from selling my car. I had got the car in inheritance on my fathers death and also there was no claims of depreciation by my father or by me in any books of accounts. Thanks in advance.
02 September 2010
Sec. 45(1) of the Income Tax Act,1961 provides for the charging of profit or gain arising from the transfer of capital asset during the previous year. Sec.2(14) of the Act, provides that the expression capital asset means property of any kind held by an assessee whether or not connected with his business or profession. As per Sec. 2(14) (ii) , personal effects are not capital asset., if the following conditions are satisfied 1. It should be movable property including wearing apparel & furniture. 2. I should be held for personal use by the assessee or any member of his family dependent on him. 3. It should not be jewellery, archaeological collections, drawing , paintings , sculptures, or any work of art.
Personal effets include car, cycle, scooter, motor cycle owned and used by the taxpayer - Re. TormeyV Tormey, Fortlage Ross V. Fortlage, Liverton V. Liverton.
Thus, motor car intended for personal use will have to be treated as a personal effects for purpose of sec. 2(14) and the surplus arising on its sale cannot be subjected to capital gains tax.
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