Question And Answer
Subject: whether sale of furniture is liable to capital gains tax ?
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Querist: jagdish
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Date: May 1, 2021
Query asked by jagdish

A House property is sold for a consolidated value of Rs.1 Crore along with furniture. Value for the purpose of stamp duty of the house property is 95 lakhs & furniture for Rs.5 Lakhs was mentioned separately in the agreement. What will be the treatment of Rs.1 Crore receipt for computing Capital gain on house property sale? Value of furniture being personal asset whether liable to tax or not?

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We presume that the stamp Authorities have accepted the value of House property at Rs 95 lakhs shown in the agreement . Furniture is a personal effects as per the definitions u/s Section 2(14)(ii) of the Income -tax Act , 1961 . If the assessee is able to demonstrate that the furniture sold was used for personal purposes there will not be any capital gains tax on consideration of Rs 5 lakhs received which will be exempt . However the assesseee may have to explain the year of purchase and also source of investment on furniture . The assessee is liable to pay capital gains only on the sale of house property subject to indexation and other allowable deductions .

Note : In H.H.Maharaja Rana Hemant Singji v .CIT (1976) 103 ITR 6 (SC) held that the articles must be commonly used by assessee. In Jayant A Shah v. K.N. Ananthram Aiyar (1985) 156 ITR 448 (Bom)(HC) held that all personal effects need not be used daily . In CIT v. H.H.Maharani Usha Devi (1998) 231 ITR 793 /98 taxman 309(SC) use of personal effects only on ceremonial occasion is also sufficient to hold that it is personal effects.
Dr. K. Shivaram Sr Advocate



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