Sh. Sunil Kumar Singhal, Agra V. Dy.C.I.T.-4(1), Agra

ITA 142/AGR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62840 (ITAT-AGRA)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KM ANURADHA
• Assessee Lawyers: MANUJ SHARMA
• Keywords: Capital asset; Gift; Salary income; Cost of acquisition; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 139/AGRA/2012 ASSTT. YEAR : 2008-09 SHRI SHIV KUMAR AGARWAL, VS. D.C.I.T., 4(1), 16/332, KALIBARI ROAD, AGRA. SHEETLA GALI, AGRA. (PAN : AAKPA 8391 E) ITA NO. 140/AGRA/2012 ASSTT. YEAR : 2008-09 SHRI SANJAY KUMAR SINGHAL, VS. D.C.I.T., 4(1), 16/332, KALIBARI ROAD, AGRA. SHEETLA GALI, AGRA. (PAN : ABNPS 7243 R) ITA NO. 141/AGRA/2012 ASSTT. YEAR : 2008-09 SMT. URMILA SINGHAL, VS. D.C.I.T., 4(1), 16/332, KALIBARI ROAD, AGRA. SHEETLA GALI, AGRA. (PAN : ABNPS 7245 K) ITA NO. 142/AGRA/2012 ASSTT. YEAR : 2008-09 SHRI SUNIL KUMAR SINGHAL, VS. D.C.I.T., 4(1), 16/332, KALIBARI ROAD, AGRA. SHEETLA GALI, AGRA. (PAN : ABNPS 7242 Q) (APPELLANT) (RESPONDENT) ITA NO. 139 TO 142/AGRA/2012 2 APPELLANT BY : SHRI MANUJ SHARMA, ADVOCATE RESPONDENT BY : KM. ANURADHA, JR. D.R. DATE OF HEARING : 10.09.2012 DATE OF PRONOUNCEMENT OF ORDER : 14.09.2012 ORDER PER BHAVNESH SAINI, J.M.: ALL THE APPEALS ABOVE BY DIFFERENT ASSESSSEES ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(A)-II, AGRA DATED 23.02.2012 FOR THE ASSESSMENT YEAR 2008-09. SINCE THE ISSUE INVOLVED IN ALL THE APPEALS IS SAME , THEREFORE, ALL WERE HEARD TOGETHER AND WE DISPOSE OF THE SAME THROUGH THIS CO MMON / CONSOLIDATED ORDER. BOTH THE PARTIES MAINLY ARGUED IN THE CASE OF ASSES SEE, SHRI SHIV KUMAR AGARWAL AND HAVE STATED THAT THE ISSUE IS SAME IN OTHER APP EALS. THEREFORE, FOR THE PURPOSE OF DISPOSAL OF ALL THE APPEALS, WE TAKE THE FACTS F ROM THE CASE OF SHRI SHIV KUMAR AGARWAL. ITA NO. 139/AGRA/2012(SH. SHIV KUMAR AGARWAL): 2. THE ASSESSEE FILED PRESENT APPEAL ON THE FOLLOWI NG GROUNDS : 1. THAT THE AUTHORITIES BELOW HAVE ERRED ON FACTS AND IN LAW WHILE MAKING OF THE ASSESSMENT OF THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN, AS AGAINST SHORT TERM CAPITAL GA IN SHOWN BY THE ASSESSEE ON THE SALE OF GOLD ACQUIRED ON THE REDEMP TION OF GOLD BOND, SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT I S LIABLE TO BE ACCEPTED AND ADDITION MADE ON THIS SCORE IS LIABLE TO BE DELETED. 2. THAT, THE AUTHORITIES BELOW HAVE ERRED ON FACTS AND IN LAW WHILE MAKING THE ASSESSMENT OF THE INCOME, ON THE S ALE OF GOLD AS LONG ITA NO. 139 TO 142/AGRA/2012 3 TERM CAPITAL GAIN AS AGAINST SHORT TERM CAPITAL GAI N SHOWN BY THE' ASSESSEE. THE COST AND DATE OF ACQUISITION OF THE G OLD FOR THE PURPOSE OF COMPUTING OF THE CAPITAL GAIN IS TO BE TAKEN I.E . THE DATE ON WHICH THE GOLD HAS BEEN RECEIVED TO ASSESSEE ON THE REDEM PTION OF THE GOLD BOND WHICH IS ALSO CLARIFIED IN THE CIRCULAR ISSUED BY THE CBDT AND ALSO HELD BY THE VARIOUS HON'BLE HIGH COURTS. THE C OST AND DATE OF ACQUISITION OF GOLD TAKEN BY THE AO I.E. DAY ON WHI CH IT WAS DEPOSITED WITH GOLD BOND SCHEME HAS WRONGLY BEEN TAKEN, INCOM E DISCLOSED BY THE ASSESSEE ON THE SALE OF GOLD IS LIABLE TO BE AS SESSED UNDER THE HEAD SHORT TERM CAPITAL GAIN. 3. THAT THE AUTHORITIES BELOW HAVE ERRED ON FACTS A ND IN LAW WHILE NOT FOLLOWING OF THE CIRCULAR ISSUED BY THE C BDT, DATED 14.3.1985 NO. 415 AND ALSO IGNORING OF THE DECISION OF HON'BLE HIGH COURT OF CALCUTTA, THE CIRCULAR ISSUED BY THE CBDT IS BINDING UPON ALL THE SUBORDINATE AUTHORITIES TO THE CENTRAL BOARD OF DIRECT TAXES UNDER SECTION 119 OF INCOME TAX ACT. AFTER TAKING I NTO CONSIDERATION THE CIRCULAR ISSUED BY THE CBDT, DATE AND ACQUISITI ON COST OF GOLD IS TO BE TAKEN I.E. DATE AND VALUE OF THE GOLD, ON THE DAY OF REDEMPTION OF THE GOLD BOND WHEN THE SAME WAS RECEIVED TO ASSESSE E, THE SHORT TERM CAPITAL GAIN AS SHOWN BY THE ASSESSEE ON THE SALE O F GOLD IS LIABLE TO BE ACCEPTED. 4. THAT THE APPELLATE ORDER PASSED BY THE COMMISSI ONER OF INCOME TAX(APPEALS)-II, AGRA DATED 23.2.2012 IS BAD IN LAW. 3. THE ASSESSEE HAS EARNED INCOME FROM SALARY, OTHE R SOURCES AND INCOME FROM CAPITAL GAINS. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, IT WAS FOUND THAT THE ASSESSEE HAD DEPOSITED GOLD OF 1.044 KG. ON 27.11.1 999 IN GOLD DEPOSIT SCHEME 1999. THEREAFTER, HE REDEEMED THE CERTIFICATE OF GO LD ON 22.11.2006 AND FINALLY SOLD THE GOLD ON 07.11.2007 AT AN AMOUNT OF RS.10,6 3,000/-. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS TREATED THE DATE OF MATURI TY, I.E., 22.11.2006 AS THE DATE OF ITA NO. 139 TO 142/AGRA/2012 4 ACQUISITION AND 07.11.2007 AS THE DATE OF SALE AND FINALLY TREATED THE INCOME ARISING OUT FROM THIS SALE AS SHORT TERM CAPITAL GAINS. THE RE IS NO DIFFERENCE OF OPINION WITH REGARD TO DATE OF SALE, HOWEVER, THE AO ASKED THE A SSESSEE AS TO WHY THE INCOME SHOULD NOT BE TREATED AS LONG-TERM CAPITAL GAINS BE CAUSE THE DATE OF ACQUISITION SHOULD BE THE DATE ON WHICH THE ASSESSEE HAD DEPOSI TED THE GOLD IN GOLD DEPOSIT SCHEME, 1999 ON 22.11.1999 AND THE ASSESSEE HAD BEE N ENJOYING TAX FREE INTEREST SINCE THEN. THE ASSESSEE SUBMITTED BEFORE THE AO TH AT THE SHORT-TERM CAPITAL GAIN HAS ARISEN ON THE SALE OF ABOVE GOLD BEING THE GOLD WHICH WAS IN POSSESSION OF THE ASSESSEE IN THE YEAR 1999 WAS TRANSFERRED IN THE GO LD BONDS IMMEDIATELY AFTER THE DEPOSIT OF THE SAME UNDER THE GOLD BOND SCHEME. THU S, THE NATURE OF CAPITAL ASSET, WHICH WAS IN POSSESSION OF THE ASSESSEE IN THE SHAP E OF GOLD STOOD CHANGED, I.E., FROM GOLD TO GOLD BONDS. FURTHER, AT THE TIME OF RE DEMPTION, THE CAPITAL ASSET WHICH WAS IN THE SHAPE OF BOND CERTIFICATES IN POSSESSION OF THE ASSESSEE WAS FURTHER CHANGED INTO THE GOLD. THUS, THE GOLD, WHICH WAS RE CEIVED BY THE ASSESSEE ON REDEMPTION WAS A NEW CAPITAL ASSET CAME TO BE IN PO SSESSION OF THE ASSESSEE ON REDEMPTION OF GOLD BOND CERTIFICATE, THEREFORE, THE VALUE/ACQUISITION COST OF THE GOLD IS TO BE TAKEN AS VALUE OF GOLD ON THE DATE OF REDEMPTION OF THE CERTIFICATE WHEN A NEW CAPITAL ASSET HAS COME INTO EXISTENCE IN POSSESSION OF THE ASSESSEE. OLD GOLD, WHICH WAS IN POSSESSION OF THE ASSESSEE EARLI ER, LOST ITS IDENTITY WITH THE SAME WAS CONVERTED INTO BOND. THE BOND CANNOT BE TREATED AS GOLD NOR GOLD CAN BE ITA NO. 139 TO 142/AGRA/2012 5 TREATED AS BOND. THE BOND CANNOT BE SOLD IN THE MAR KET AT THE RATE OF GOLD AND BOTH GOLD AND BONDS ARE OF DIFFERENT IDENTITY. THE ASSES SEE, THEREFORE, RIGHTLY TREATED THE SAME AS SHORT-TERM CAPITAL GAINS ON SALE OF GOLD, W HICH WAS RECEIVED BY THE ASSESSEE ON REDEMPTION FROM GOLD BOND. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. DEBMALYA SUR, 207 ITR 996. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF T HE ASSESSEE BECAUSE THE ASSESSEE REMAINED OWNER OF THE GOLD FOR THE PERIOD GOLD WAS DEPOSITED IN GOLD DEPOSIT SCHEME AND THE CERTIFICATES WERE TRANSFERAB LE AT THE OPTION OF THE OWNER AND FURTHER THE ASSESSEE ENJOYED TAX FREE INTEREST. HOW EVER, THE JUDGMENT RELIED UPON BY THE ASSESSEE PERTAINS TO NATIONAL DEFENCE BOND S CHEME. THE AO FURTHER NOTED THAT THE GOLD CERTIFICATES CAN BE LIQUIDATED BEFORE ITS MATURITY. THE RATE OF GOLD TO BE RECEIVED AT THE TIME OF MATURITY WAS NOT DETERMI NED, BUT THE PREVAILING MARKET RATE OF GOLD WOULD BE RECEIVED WHENEVER THE CERTIFI CATE IS ENCASHED. THE SCHEME RELATES TO CUSTODY OF THE GOLD AND PREMIUM IS PAID TO THE SUBSCRIBER TO COMPENSATE THEM FOR THE CHANGES. THE AO, THEREFORE, DID NOT AC CEPT THE CONTENTION OF THE ASSESSEE AND TREATED THE DATE OF ACQUISITION OF GOL D AS ON 27.11.1999 AND COMPUTED THE LONG-TERM CAPITAL GAINS. ON APPEAL, THE ASSESSE E REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND ALSO RELIED UPON THE BOARDS CIRCULAR NO. 415 DATED 14.03.1985 AND THE SAME DECISION. HOWEVER, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. ITA NO. 139 TO 142/AGRA/2012 6 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE COST AND D ATE OF ACQUISITION OF THE GOLD FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS IS TO BE TAKEN, I.E., DATE ON WHICH GOLD HAS BEEN RECEIVED BY THE ASSESSEE ON REDEMPTION OF THE GOLD BONDS, WHICH IS ALSO CLARIFIED BY THE BOARD IN CIRCULAR NO. 415 DATED 14 .03.1985. HE HAS RELIED UPON FOLLOWING DECISIONS : (I). DECISION OF CALCUTTA HIGH COURT IN THE CASE OF CIT VS. DEBMALYA SUR, 207 ITR 996 (II). ORDER OF ITAT, MUMBAI BENCHES IN THE CASE OF SMT. L.M. PARIKH VS. 6 TH ITO, 36 TTH (BOMBAY) 29. (III). DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF VYAVASAYA VS. ITO, 30 ITD 205. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE FACTS NOTED ABOVE HAVE NOT BEEN DISPUTED BY THE PAR TIES. THE ASSESSEE DEPOSITED GOLD ON 22.11.1999 IN GOLD DEPOSIT SCHEME, 1999. TH E REDEMPTION CERTIFICATE OF GOLD WAS ISSUED ON 22.11.2006 AND THE ASSESSEE SOLD THE GOLD ON 07.11.2007. THUS, THE GOLD BOND REMAINED IN POSSESSION OF THE ASSESSE E TILL REDEMPTION OF CERTIFICATES WAS ISSUED. THE TRANSFER CAN TAKE PLACE ONLY IF THE TRANSFEROR IS IN A POSITION TO DO ITA NO. 139 TO 142/AGRA/2012 7 SO. THEREFORE, IT WAS NECESSARY THAT THE TRANSFEROR SHOULD HAVE A FULL TITLE OVER THE PROPERTY, WHICH HE TRANSFERS AND HE MUST BE IN FULL POSSESSION OF THE PROPERTY. WHEN THE ASSESSEE HAS DEPOSITED THE GOLD IN GOLD DE POSIT SCHEME, 1999, THERE CREATED AN AGREEMENT BETWEEN HIM AND THE GOVERNMENT AND GOLD BONDS WERE ISSUED IN FAVOUR OF THE ASSESSEE SUBJECT TO INTERES T. THE ASSESSEE WAS ENTITLED TO GET BACK THE GOLD ON THE DATE OF MATURITY. THEREFORE, O N THE MATURITY DATE, THE CHARACTER OF THE GOLD BOND CERTIFICATE WOULD CHANGE. ON THE M ATURITY DATE, IT WAS MERELY A DOCUMENT OF TITLE OF THE GOLD AND ON REDEMPTION OF THE CERTIFICATE, THE ASSESSEE WOULD BE ENTITLED FOR POSSESSION OF THE GOLD AS PER THE SCHEME. THUS, THE NATURE OF THE CAPITAL ASSET WHICH WAS IN POSSESSION OF THE AS SESSEE IN THE SHAPE OF GOLD BECAME CHANGED, I.E., FROM GOLD TO GOLD BONDS AND A T THE TIME OF REDEMPTION OF THE CAPITAL ASSET, WHICH WAS IN THE SHAPE OF GOLD BOND CERTIFICATE IN POSSESSION OF THE ASSESSEE, WAS FURTHER CHANGED INTO THE GOLD AND THU S, THE GOLD WHICH WAS RECEIVED BY THE ASSESSEE ON REDEMPTION WAS A NEW CAPITAL ASS ET CAME IN POSSESSION OF THE ASSESSEE ON REDEMPTION OF GOLD BOND CERTIFICATE. 5.1 CIRCULAR NO. 415, THOUGH PERTAINED TO NATIONAL DEFENSE GOLD BONDS, BUT EXPLAIN THE SIMILAR ISSUE AND READS AS UNDER : ITA NO. 139 TO 142/AGRA/2012 8 NATIONAL DEFENCE GOLD BONDS, 1980-TRANSFER OF GOLD AFTER REDEMPTION-DATE OF ACQUISITION OF GOLD FOR THE PURP OSE OF CAPITAL GAINS-INSTRUCTION REGARDING 14/03/1995 CAPITAL GAINS SECTIONS 2(42A) THE GOVERNMENT OF INDIA HAD ISSUED IN THE YEAR 1965 , NATIONAL DEFENCE GOLD BONDS, 1980. THESE BONDS WERE REDEEMAB LE AFTER 15 YEARS, I.E., ON OR AFTER 27TH OCTOBER, 1980. IT WAS CLARIFIED IN THE PRESS COMMUNIQUE BEARING NO. MMS/MMM/ANT/361/3 DATED 22ND SEPTEMBER, 1980, ISSUED BY THE DEPARTMENT OF ECONOM IC AFFAIRS, MINISTRY OF FINANCE, THAT: 'NO CAPITAL GAINS WILL ARISE WHEN THE BONDS ARE EXC HANGED FOR GOLD ON REDEMPTION. HOWEVER, ANY SUBSEQUENT SALE, EXCHAN GE OR TRANSFER OF SUCH GOLD WITHIN THE MEANING OF S. 2(47) OF THE IT ACT, WOULD ATTRACT CAPITAL GAINS TAX IN RESPECT OF CAPITAL GAINS ARISI NG FROM SUCH SALE, EXCHANGE OR TRANSFER. FOR THE PURPOSE OF COMPUTATIO N OF CAPITAL GAINS, THE COST OF ACQUISITION OF GOLD BE THE MARKET VALUE OF THE BONDS ON THE DATE OF REDEMPTION.' 2. A QUESTION HAS ARISEN AS TO WHETHER SUCH CAPITAL GAINS SHOULD BE TREATED AS LONG-TERM OR SHORT-TERM CAPITAL GAINS. T HE QUESTION HAS BEEN EXAMINED BY THE BOARD. THE EXCHANGE OF GOLD BO NDS AT THE TIME OF REDEMPTION IS AN ALTOGETHER FRESH TRANSACTION WH EN AN ASSESSEE ACQUIRES A DIFFERENT ASSET. IT HAS ALSO BEEN DECIDE D ABOVE THAT FOR THE PURPOSES OF THE COMPUTATION OF CAPITAL GAINS, COST OF ACQUISITION OF GOLD WOULD BE THE MARKET VALUE OF THE BONDS ON THE DATE OF REDEMPTION. THE MATERIAL DATE IN THIS CASE WOULD, T HEREFORE, BE THE DATE OF REDEMPTION OF GOLD BONDS WHICH WOULD BE TRE ATED AS THE DATE OF ACQUISITION OF THE GOLD. AS PER S. 2(42A), 'SHOR T-TERM CAPITAL ASSET' MEANS A CAPITAL ASSET HELD BY AN ASSESSEE FOR NOT M ORE THAN 36 MONTHS IMMEDIATELY PRECEDING THE DATE OF TRANSFER. THE QUESTION AS TO WHETHER THE GAINS ARISING IN SUCH CASES WOULD BE SH ORT OR LONG-TERM WOULD, THEREFORE, DEPEND UPON THE TIME THAT HAS PAS SED BETWEEN THE DATE OF REDEMPTION OF GOLD BONDS AND THE SUBSEQUENT SALE OF GOLD. ITA NO. 139 TO 142/AGRA/2012 9 3. THE ABOVE INSTRUCTIONS MAY PLEASE BE BROUGHT TO THE NOTICE OF ALL OFFICERS. 5.2 HONBLE CALCUTTA HIGH COURT IN THE CASE OF DEBM ALYA SUR (SUPRA) HELD AS UNDER : GOLD IS A DISTINCT ASSET WITHIN THE DEFINITION OF CAPITAL ASSET AS CONTAINED IN S. 2(14). GOLD BOND IS ANOTHER KIND OF CAPITAL ASSET WHICH IS EXCLUDED BY LEGISLATIVE DELIBERATION FROM THE SA ID DEFINITION OF CAPITAL ASSET. 'CAPITAL ASSET' IS DEFINED IN THE SA ID PROVISION, IN THE FIRST INSTANCE, IN AN EXHAUSTIVE MANNER AND THEN SH OWING SPECIFIC EXCLUSIONS. THEREFORE, IT IS VERY CLEAR THAT WHEN A PERSON EXCHANGES GOLD FOR THE GOLD BOND, HE ACQUIRES AN ALTOGETHER N EW SPECIES OF CAPITAL ASSET WHICH IS LEFT OUT OF THE SCOPE OF CAP ITAL GAINS TAXATION. AGAIN, WHEN A PERSON EXCHANGES THE BOND FOR GOLD, H E ACQUIRES A NEW SPECIES OF CAPITAL ASSET WHICH COMES WITHIN THE NET OF CAPITAL GAINS TAX. WHAT HAS BEEN URGED ON BEHALF OF THE ASSESSEE IS BASED ON COMPLETE EQUATION BETWEEN GOLD AND GOLD BONDS. THE ENTIRE LINE OF SUBMISSION PRESSED ON BEHALF OF THE ASSESSEE WANTS ONE TO ASSUME THAT, EVEN AFTER CONVERSION OF THE GOLD BONDS INTO PRIMARY GOLD, THERE IS NO ACQUISITION OF A NEW CAPITAL ASSET AND THE BO NDS AND THE GOLD REMAIN ONE AND THE SAME ASSET. THE CONTENTION IS FA LLACIOUS. IN THAT EVENT, AS A LOGICAL EXTENSION OF THE THEORY SO ADVA NCED, THE ASSESSEE SHOULD BE TOTALLY FREE OF ANY LIABILITY TO PAY TAX ON THE GAINS ARISING ON SALE OF THE GOLD RECEIVED ON REDEMPTION OF THE BOND BECAUSE THE BONDS ARE EXEMPT FROM CAPITAL GAINS. WHEN THE GOLD IS REC EIVED ON REDEMPTION OF THE BOND, WE HAVE TO TAKE IT THAT THE RE IS ACQUISITION OF GOLD AS A FRESH ASSET BY CONVERSION OF ANOTHER ASSE T, VIZ., THE GOLD BOND. SO, THE ITO'S INFERENCE THAT THE DATE OF ACQU ISITION OF THE GOLD SOLD SHOULD BE RECKONED FROM THE DATE OF MATURITY O F THE BOND IS CORRECT. IN FACT, THE DATE OF ACQUISITION COULD HAV E BEEN TAKEN AS THE ACTUAL DATE OF REDEMPTION. IF THE ASSET GIFTED IS C ONVERTED INTO ANOTHER ASSET THE FORMER LOSES ITS IDENTITY AND THE CONVERS ION OF THE SAME AS AN ASSET BECOMES AN INDEPENDENT ASSET. THE CONVERSION SNAPS ITS NEXUS WITH THE GIFT AND THE CONVERTED NEW ASSET CANNOT RE TAIN ITS CHARACTER AS THE GIFTED ASSET. IN SUCH A SITUATION, S. 49(1)( 11) HAS NO ITA NO. 139 TO 142/AGRA/2012 10 APPLICATION. THE PROVISION WHICH IS DIRECTLY ON THE POINT IS NOT ONLY S. 49, BUT S. 2(42A) R/W. S. 49. SINCE THE REDEMPTION BY ITSELF IS A TRANSACTION OF ACQUISITION OF A NEW CAPITAL ASSET, VIZ., PRIMARY GOLD, THERE COULD BE NO QUESTION OF RELATING BACK THE DAT E OF ACQUISITION OF SUCH PRIMARY GOLD ON REDEMPTION EITHER TO THE DATE OF INVESTMENT IN THE GOLD BONDS BY THE DONOR OR THE DATE OF RECEIPT OF SUCH BONDS AS GIFTS BY THE DONEE, THE ASSESSEE HEREIN. THE QUANTI TY OF GOLD RECEIVED ON REDEMPTION IS A NEW ASSET UNRELATED TO THE MODE OF ACQUISITION OF THE GOLD BOND. THE TRIBUNAL WAS NOT JUSTIFIED IN LA W IN HOLDING THAT THE CAPITAL GAIN ARISING OUT OF THE SALE OF PRIMARY GOLD BY THE ASSESSEE WAS A LONG- TERM CAPITAL GAIN. 5.3 ITAT MUMBAI BENCH IN THE CASE OF SMT. L.M. PARI KH (SUPRA) HELD THE CIRCULAR NO. 415, DATED 14TH MARCH, 1985, ISSU ED BY THE CBOT LAYS DOWN THAT CAPITAL GAINS WILL NOT ARISE WH EN THE BONDS ARE EXCHANGED FOR GOLD ON REDEMPTION BUT WOULD ARISE ON SUBSEQUENT SALE OF THE GOLD AND FOR THIS PURPOSE THE COMPUTATION SH ALL BE ON THE PREMISE THAT THE COST OF ACQUISITION OF GOLD IS MAR KET VALUE OF THE BONDS ON THE DATE OF REDEMPTION. THE PRESS COMMUNIQ UE ISSUED BY THE FINANCE MINISTRY ON 22ND SEPT., 1980, INCORPORATING THE GUIDELINES ALSO STATES THAT FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAINS, THE COST OF ACQUISITION OF GOLD IS THE MARKET VALUE OF THE BONDS ON THE DATE OF REDEMPTION. ON THE DATE WHEN THE PRESS COMMUNIQU E WAS ISSUED, ONLY ONE DATE OF REDEMPTION WAS CONCEIVABLE AND THA T WAS THE DATE WHEN THE BONDS WERE GOING TO MATURE. OBVIOUSLY, THE REFORE, WHAT IS IMPLIED IN THE PRESS COMMUNIQUE IS THE DATE OF MATU RITY OF THE BONDS, AND COULD NOT BE THE ACTUAL DATE OF REDEMPTION. IT MAY ALSO BE STATED THAT THE BONDS WERE ALSO IN THE NATURE OF DEBT OR L IABILITY AND THEIR DATE OF DISCHARGE WOULD BE THE DATE WHEN THE SAME W ERE DUE TO BE DISCHARGED WHICH, IN THIS CASE, WAS 27TH OCT., 1980 . WHEN THE GOLD BOND IS ISSUED TO A PERSON, THERE IS AN AGREEMENT B ETWEEN HIM AND THE GOVERNMENT THAT THE BOND WILL BE RETURNED ON A CERT AIN FUTURE DATE, CALLED THE MATURITY DATE AND DURING THAT TIME, HE H AS THE RIGHT TO INTEREST AND HE CAN ALSO ASSIGN THE BOND. UNDER THE TERMS OF THE AGREEMENT, THE HOLDER HAS A RIGHT TO GET BACK THE G OLD ON THE MATURITY DATE WHEREUPON THE INTEREST WOULD CEASE AND IT WOUL D NO LONGER BE ASSIGNED. THEREFORE, ON THE MATURITY DATE, THE CHAR ACTER OF THIS ITA NO. 139 TO 142/AGRA/2012 11 DOCUMENT WHICH WAS THE BOND, WOULD CHANGE. IT WOULD NOT BEAR INTEREST AND IT WOULD LOSE ASSIGNABILITY. ON THE MA TURITY DATE, IT IS MERELY A DOCUMENT OF TITLE TO THE GOLD AND ITS PRES ENTATION TO THE RESERVE BANK WOULD ENTITLE THE HOLDER OF THAT DOCUM ENT TO THE DELIVERY OF THE GOLD. THUS, THE GOLD BOND HAD ITS EXISTENCE ONLY UPTO THE DATE OF MATURITY, I.E., 27TH OCT., 1980. IN THE CIRCUMSTANC ES, THE COST OF ACQUISITION OF THE GOLD IN THE HANDS OF THE ASSESSE E HAS TO BE DETERMINED WITH REFERENCE TO THAT MATURITY DATE AND NOT WITH REFERENCE TO THE ACTUAL DATE ON WHICH THE ASSESSEE OBTAINED G OLD BY SURRENDERING THE GOLD BONDS. 5.4 THE ITAT AHMEDABAD BENCH IN THE CASE OF VYAVASA YA (SUPRA) HELD AS UNDER: RELEVANT DATE REGARDING PRICE OF GOLD OBTAINED IN RESPECT OF NATIONAL DEFENCE GOLD BONDS IS THE DATE ON WHICH NO T ONLY THE TITLE TO THE GOLD VESTED IN THE ASSESSEE BUT ALSO THE DATE O N WHICH HE ACQUIRED THE POSSESSION THEREOF. 5.5. IN THE BOARDS CIRCULAR NO. 415 (SUPRA), IT WA S DECIDED THAT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS, THE COST OF ACQUIS ITION OF THE GOLD WOULD BE THE MARKET VALUE OF THE BONDS ON THE DATE OF REDEMPTION . THE SAME POINT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY HONBLE CALCUT TA HIGH COURT AND MUMBAI AND AHMEDABAD BENCH OF ITAT (SUPRA), IN WHICH IT WAS HE LD THAT GOLD BONDS ARE DIFFERENT CAPITAL ASSETS FROM GOLD REDEEMED AND THE QUESTION WHETHER CAPITAL GAINS ARE SHORT-TERM OR LONG-TERM ON THE SALE OF GOLD HAV E TO BE DETERMINED QUA THE DATE OF REDEMPTION. MAY BE THE ABOVE CIRCULAR PERTAINS T O NATIONAL DEFENCE GOLD BONDS, BUT NO OTHER / DIFFERENT CIRCULAR ON THE GOL D SCHEME 1999 HAS BEEN BROUGHT ITA NO. 139 TO 142/AGRA/2012 12 ON RECORD BY THE REVENUE AUTHORITIES. THEREFORE, TH E SAME WOULD ALSO APPLY TO THE MATTER IN ISSUE IN THE PRESENT APPEALS. SINCE IT IS NOT IN DISPUTE THAT ON THE DATE OF MATURITY, I.E., 22.11.2006, THE CERTIFICATES OF GOL D WERE REDEEMED, THEREFORE, 22.11.2006 SHOULD BE CONSIDERED AS THE DATE OF ACQU ISITION OF THE GOLD FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. THE AUTHOR ITIES BELOW WERE, THEREFORE, NOT JUSTIFIED IN REJECTING THE CLAIM OF ASSESSEE FOR SH ORT TERM CAPITAL GAINS ON REDEMPTION OF BONDS. THE COST OF ACQUISITION OF THE GOLD IS TO BE TAKEN, I.E., VALUE OF GOLD ON THE DATE OF REDEMPTION OF CERTIFICATES W HEN A NEW CAPITAL ASSET HAS COME INTO EXISTENCE IN POSSESSION OF THE ASSESSEE. EARLI ER, THE GOLD IN POSSESSION OF THE ASSESSEE HAD LOST ITS IDENTITY WHEN THE SAME WAS CO NVERTED INTO BONDS. THE BONDS CANNOT BE TREATED AS GOLD NOR THE GOLD CAN BE TREAT ED AS BONDS. SINCE NO SPECIFIC CIRCULAR HAS BEEN BROUGHT TO OUR NOTICE DEALING WIT H THE GOLD DEPOSIT SCHEME, 1999 AND THERE IS NO SERIOUS CHALLENGE TO THE ABOVE DECISION CITED BY THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT T HE AUTHORITIES BELOW WERE NOT JUSTIFIED IN TAKING THE DATE OF ACQUISITION AS 22.1 1.1999 INSTEAD OF 22.11.2006. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THAT THE COST AND THE DATE OF ACQUISITION OF THE GOLD FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS BE TAKEN AS THE DATE ON WHICH THE GOLD HAS BEEN RECEIV ED BY ASSESSEE ON REDEMPTION OF THE GOLD BONDS, I.E., 22.11.2006. IN THE RESULT, TH E APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 139 TO 142/AGRA/2012 13 ITA NO. 140, 141 & 142/AGRA/2012 : 6. THE ISSUE IS SAME IN THESE APPEALS AS HAS BEEN C ONSIDERED IN ITA NO. 139/AGRA/2012. ACCORDINGLY, BY FOLLOWING THE REASON S FOR DECISION IN ITA NO. 139/AGRA/2012, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE APPEALS OF THE ASSESSEES ARE ALLOWED IN TERMS DECIDED ABOVE. 7. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY