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TMI Blog2012 (12) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... gains. Cost of acquition – Held that:- The cost of acquisition of the gold is to be taken, i.e., value of gold on the date of redemption of certificates when a new capital asset has come into existence in possession of the assessee. Earlier, the gold in possession of the assessee had lost its identity when the same was converted into bonds. The Bonds cannot be treated as gold nor the gold can be treated as bonds. Therefore, 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 received by assessee on redemption of the gold bonds, i.e., 22.11.2006. In favour of assessee - IT APPEAL NOS. 139 TO 142 (AGRA) OF 2012 - - - Dated:- 14-9-2012 - BHAVNESH SAINI AND A.L. GEHLOT, JJ. Manuj Sharma for the Appellant. Km. Anuradha for the Respondent. ORDER Bhavnesh Saini, Judicial Member - All the appeals above by different assessees 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 common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee has earned income from salary, other sources and income from capital gains. During the course of assessment proceedings, it was found that the assessee had deposited gold of 1.044 kg. on 27.11.1999 in Gold Deposit Scheme 1999. Thereafter, he redeemed the certificate of gold on 22.11.2006 and finally sold the gold on 07.11.2007 at an amount of Rs.10,63,000/-. In the computation of income, the assessee has treated the date of maturity, i.e., 22.11.2006 as the date of 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. There is no difference of opinion with regard to date of sale, however, the AO asked the assessee as to why the income should not be treated as long-term capital gains because the date of acquisition should be the date on which the assessee had deposited the gold in gold deposit scheme, 1999 on 22.11.1999 and the assessee had been enjoying tax free interest since then. The assessee submitted before the AO that 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 gold bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me decision. However, the ld. CIT(A) dismissed the appeal of the assessee. 4. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and submitted that the cost and date 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 Debmalya Sur (supra), (ii) Order of ITAT, Mumbai Benches in the case of Smt. L.M. Parikh v. Sixth ITO [1990] 36 TTJ 29 (Bom.). (iii) Decision of ITAT Ahmedabad Bench in the case of Vyavasaya v. ITO [1989] 30 ITD 205 (Ahd.). On the other hand, the ld. DR relied upon the orders 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 parties. The assessee deposited gold on 22.11.1999 in gold deposit scheme, 1999. The redemption certificate of gold was issued on 22.11.2006 and the assessee sold the gold on 07.11.2007. Thus, the gol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. The question has been examined by the Board. The exchange of gold bonds at the time of redemption is an altogether fresh transaction when an assessee acquires a different asset. It has also been decided 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, therefore, be the date of redemption of gold bonds which would be treated as the date of acquisition of the gold. As per s. 2(42A), "Short-term capital asset" means a capital asset held by an assessee for not more than 36 months immediately preceding the date of transfer. The question as to whether the gains arising in such cases would be short or long-term would, therefore, depend upon the time that has passed between the date of redemption of gold bonds and the subsequent sale of gold. 3. The above instructions may please be brought to the notice of all officers." 5.2 Hon'ble Calcutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 quantity 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 law 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. Parikh (supra) held - "The circular No. 415, dated 14th March, 1985, issued by the CBOT lays down that capital gains will not arise when the bonds are exchanged for gold on redemption but would arise on subsequent sale of the gold and for this purpose the computation shall be on the premise that the cost of acquisition of gold is market value of the bonds on the date of redemption. The press communique 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 communique was issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale of gold have to be determined qua the date of redemption. May be the above circular pertains to National Defence Gold bonds, but no other/different circular on the gold scheme 1999 has been brought on record by the Revenue Authorities. Therefore, the 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 gold were redeemed, therefore, 22.11.2006 should be considered as the date of acquisition of the gold for the purpose of computation of capital gains. The authorities below were, therefore, not justified in rejecting the claim of assessee for short 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 when a new capital asset has come into existence in possession of the assessee. Earlier, the gold in possession of the assessee had lost its identity when the same was converted into bonds. The Bonds cannot be treated as gold nor the gold can be treated as bonds. Since no specific circular has been brought to our notice dealing with the Gold Deposit Scheme, 1999 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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