Q.Mr. Dutta owns a painting inherited from his grandfather, kept at home purely for personal enjoyment, and an old wooden dining table used by his family for years. He sells the painting at a profit. State, with reasons, whether the painting is a Capital Asset, and contrast this with the position of the dining table.

The 'personal effects' exclusion under Section 2(14) has its own specific carve-out for a small list of items.

Section 2(14) excludes personal effects from being capital assets, but specifically denies this exclusion to jewellery, archaeological collections, drawings, paintings, sculptures, and any work of art.

Section 2(14) excludes 'personal effects' — movable property, including wearing apparel and furniture, held for the personal use of the assessee or a dependent family member — from the definition of Capital Asset. However, the section specifically CARVES OUT of this exclusion: jewellery, archaeological collections, drawings, paintings, sculptures, and any work of art. These items remain Capital Assets even though they are held purely for personal use or display, precisely because the law treats them as having an investment character distinct from ordinary household articles.

Applying this to Mr. Dutta: the painting falls squarely within the carved-out category (a 'work of art'/'painting') and therefore REMAINS a Capital Asset despite being held only for personal enjoyment — any profit on its sale is potentially chargeable as Capital Gains. The wooden dining table, by contrast, is ordinary furniture held for personal/family use, exactly the kind of item the 'personal effects' exclusion is meant to cover, and is therefore NOT a Capital Asset — any gain (unlikely in practice for used furniture) on its disposal would not attract Capital Gains tax.

A common error is treating 'held for personal use, therefore exempt' as a blanket rule — the exclusion from Capital Asset status is available for personal effects in GENERAL, but the Act specifically denies it to jewellery, archaeological collections, drawings, paintings, sculptures, and works of art; these named items are always Capital Assets regardless of personal use.