By Ashok Dhere, Jagdish D. Shah, Chartered Accountants
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New Page 9
23 C. S. Gosalia v. ITO
ITAT ‘A’ Bench, Mumbai
Before N. V. Vasudevan (JM) and
V. K. Gupta (AM)
ITA No. 1373/Mum./2006
A.Y. 2002-03. Decided on : 30-7-2008
Counsel for revenue/assessee : Ajay C. Gosalia/
S. Srivastava
S. 14 of the Income-tax Act, 1961 — Heads of income — Deep
discount bonds held as investment — Taxability of gains earned on redemption
thereof — Held that income arising therefrom is taxable as capital gains and not
as income from other sources.
Per V. K. Gupta :
Facts :
The assessee had purchased 64 deep discount bonds between
February 1999 and April 1999 through Bombay Stock Exchange for a total cost of
Rs.4.9 lacs. The same were held by the assessee as investment and he had not
offered to tax any income thereon in the year of holding. The said bonds were
redeemed by IDBI on 31-3-2002, resulting into gain of Rs.2.78 lacs. The said
gain was offered to tax by the assessee as long-term capital gain.
According to the AO, the income was liable to be taxed as
‘Income from other sources’ as per the Board Circular dated 15-2-2002. The
asssessee’s contention that the Circular relied on by the AO was applicable to
bonds issued after 15-2-2002 and his case was covered by the earlier Circular
dated 12-3-1996 was rejected. On appeal, the CIT(A) confirmed the action of the
AO.
Held :
The Tribunal agreed with the assessee and held that the
subsequent Circular issued by the Board was not retrospective in nature and the
case of the assessee was covered by the earlier Circular of the Board viz.,
the Circular dated 12-3-1996. It also took note of the fact that the
assessee was holding the bonds as investment. Accordingly, the assessee’s appeal
was allowed.
