India, Aug. 22 -- The Bombay High Court had recently directed the Income Tax Department to charge the sale of a vintage car, Ford Tourer, with capital gains tax that was bought for Rs.20,000 in 1983 and sold for Rs.21 lakh in 1994. The person who had sold the car claimed that the car was for his personal use and appealed to the high court seeking relief from the capital gains tax charged on the sale. Stating that he couldn't prove the personal utility of the vintage car, the court concluded that the purchase was for 'pride of possession' and upheld the application of the tax.

The incident dates back to 1993, when a salaried person, Narendra Bhuva, filed returns on his income for the year 1992-93, declaring a total income of Rs.2,79,440. ...