2020 (9) TMI 821 - AT - Income Tax

Computation of capital gains -Treating Government Securities as Bonds or Debentures for the purpose of the third proviso (now fourth proviso) to section 48 - HELD THAT - Issue decided in favour of assessee as relying on own case 2019 (12) TMI 958 - ITAT KOLKATA . Appellate forum against the orders of the coordinate bench of this Tribunal - Proposition that, when fixed return is assured on a capital asset, indexation should not be granted, is not correct. Even on buildings or land fixed rental income is earned. Just because there is fixed returning income, it cannot be concluded that on sale of such asset no indexation would be granted of the asset is a long term capital asset. This bench has not been informed as to whether the department has accepted the earlier order of the Tribunal on this issue for A.Y. 2010-11 and A.Y. 2014-15 in and carried the matter in appeal before the Hon ble High Court in either of the case, we do not see any reason to deviate form, the proposition of law laid down by the coordinate bench of this Tribunal, on the very same issue in the case of the assessee itself, in the earlier assessment years.

Summary

Issues:
1. Treatment of 'Government Securities' as Bonds or Debentures for capital gains calculation.
2. Disallowance of long term capital loss on sale of 'Government Securities'.

Analysis:
1. The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the treatment of 'Government Securities' for capital gains calculation. The assessee argued that a similar issue was decided in their favor by the Tribunal in previous cases. The counsel contended that 'Government Securities' should not be treated as bonds or debentures for capital gains computation. The Revenue opposed, claiming that such securities are a type of bond and should not be eligible for indexation benefit. The Tribunal noted that the issue was previously decided in favor of the assessee in earlier cases and allowed the appeal based on consistency with previous decisions.

2. The Revenue argued that 'Government Securities' should not be granted indexation benefit on sale for capital gains calculation. The Tribunal disagreed, stating that fixed returns on assets do not automatically disqualify them from indexation benefits. The Tribunal emphasized that being an appellate forum, they cannot overturn decisions of the coordinate bench without substantial reasons. The Tribunal highlighted that the Revenue's challenge to the Tribunal's decision on the same issue was not maintainable. The Tribunal ultimately allowed the assessee's appeal based on the consistency of previous decisions and lack of new evidence or arguments presented by the Revenue.

3. The Tribunal's decision was based on the principle of consistency with previous rulings in the assessee's favor. The Tribunal emphasized that fixed returns on assets do not preclude indexation benefits for capital gains calculation. The Tribunal also noted the Revenue's inability to provide substantial reasons to challenge the previous decisions. As a result, the appeal of the assessee was allowed, maintaining the stance taken in previous cases regarding the treatment of 'Government Securities' for capital gains computation.