The Bombay High Court has held that the sale proceeds from a vintage Ford Tourer (1931 model) are liable to be taxed under the head “capital gains” and not exempt as personal effects.
The bench of Justice Alok Aradhe and Justice Sandeep V. Marne, while dismissing the appeal filed by the legal heirs of the assessee, ruled that no evidence was produced to prove that the vintage car was ever used as a personal asset.
The case stemmed from an assessment for AY 1992–93. Bhuva, then a salaried employee with Indu Nishan Oxo-Chemical Industries Ltd., had declared an income of Rs. 2.79 lakh. During scrutiny, the Assessing Officer (AO) discovered that he had purchased a vintage Ford Tourer in 1983 for Rs. 20,000 and sold it in 1992 for a whopping Rs. 21 lakh. The AO treated the gain of Rs. 20.8 lakh as taxable income.
Bhuva claimed that the car was a personal effect, shown as an exempt asset in his wealth tax returns, and therefore outside the ambit of capital gains tax.
CIT (Appeals) accepted Bhuva’s contention, holding that vintage cars are generally not used frequently and treating it as a personal asset.
The ITAT reversed CIT(A)’s decision, ruling that the car was not shown to be in personal use, and restored the AO’s order taxing the gain.
The issue raised was whether the Vintage car is a personal effect u/s 2(14)? If not, whether capital gain is applicable?
The bench noted that under Section 2(14) of the Income Tax Act, “personal effects” must be movable property held for personal use. Referring to the Supreme Court’s interpretation in H.H. Maharaja Rana Hemant Singhji v. CIT (1976), the Court emphasized that an “intimate connection between the asset and the person” must be shown.
In this case, the Court observed several factors indicating lack of personal use the car was never parked at the assessee’s residence. No expenditure on repairs or maintenance was shown. The assessee regularly used his company’s car for commuting. No evidence was produced of even occasional use, such as participation in rallies. The assessee admitted purchasing the car as a “pride of possession,” which did not qualify as “personal use.”
Concluding that “capability of personal use is not sufficient; actual personal use must be proved,” the Court upheld the ITAT order. The substantial question of law—whether the vintage car qualified as a personal effect exempt from capital gains—was answered against the assessee.
Case Details
Case Title: Narendra I. Bhuva versus Assistant Commissioner of Income Tax
Case No.: INCOME TAX APPEAL NO.681 OF 2003
Date: 14 AUGUST 2025
Counsel For Appellant: Vipul Joshi
Counsel For Respondent: Prakash C. Chhotaray
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Amit Sharma is the Content Editor at JurisHour. He has been writing about the Indian legal market. He has covered tax & company litigation stories from the Supreme Court, High Courts and Various Tribunals. Amit graduated from MLSU Law College with B.A.LL.B. and also holds an LL.M. from MLSU, Udaipur, Rajasthan. An Advocate in Taxation, and practised in Tribunals as well as Rajasthan High Court and pursued Masters in Constitutional Law. He started out small with little resources but a big plan to take tax legal education to the remotest locations across India and eventually to the world. His vision is to make tax related legal developments accessible to the masses.
