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TMI Blog2011 (12) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... own case in assessment year 2003-04 and 2006-07 in ITA Nos.2061/Ahd/2007 and 1942/Ahd/2009 dated 12.08.2011. He submitted that the copy of this Tribunal order is available on pages 1 to 9 of the paper book. 3. We have considered rival submissions, perused the material on record and have gone through the orders of authorities below. We find that in assessment year 2003-04 also, this very issue was there before the Tribunal for this assessee itself as to whether the assessee is eligible for deduction u/s 80-IB or not. In that year also, it was the basis of the A.O. for rejecting the claim of the assessee that the number of workers attending the factory and working in the manufacturing process was less than 10. This issue has been decided by the Tribunal in favour of the assessee in his own case as per para 6 8 of the Tribunal order which are reproduced below: 6. We have considered rival contentions, carefully gone through the orders of the authorities below and found from the record that on the basis of loose muster roll sheets found during .the course of survey the A.O. has held that assessee was not having more than 10 workers, therefore, not eligible for claim of deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to take a contrary view in the present year and hence, respectfully following the precedent, we decline to interfere in the order of Ld. CIT(A) on these two issues and ground No.1 2 are rejected. 5. The third ground has raised by Revenue is as under:- 3) The Ld. CIT(A) has erred in allowing indexation on UTI deep discount bonds disallowed by A.O. while computing income from capital gains. 6. The brief facts are that it is stated by the Assessing Officer in para-5 of the assessment order that assessee has offered ₹ 1,39,890/- under the head capital gain as Short Term Capital Gain and the assessee has claimed loss of ₹ 82,13,555/- as Long Term Capital Loss. The AO further noticed that as per the statement of capital gains, it is seen that the assessee has incurred a loss of ₹ 2,28,12,956/- on 1,14,00,000 units of UTI which were converted by UTI into tax free bonds prior to the actual date of redemption. The AO has also noted that the price of acquisition has been shown at ₹ 11,08,75,500/- in the year 1999 and the same had been sold in the year 2004 for ₹ 11.40 crores. The assessee has claimed the benefit of indexation and indexed c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough the commentary in the book LAW OF INCOME TAX written by Shri A.C. Sampath Iyengar as revised by Shri S. Rajaratnam, 10th Edition, Volume-3, pages 4330- 4332 which contains the discussion regarding indexation benefits for bonds and debentures. The relevant portion of this commentary being para-28 is reproduced below:- 28. No indexation for bonds and debentures The third proviso to section 48 was inserted by the Finance Act, 1997, with effect from 1 April, 1998. It excludes bonds and debentures other than capital indexed bonds issued by the Government from the list of capital assets eligible for the benefit of indexation. The intention is clearly to deny benefit of indexation to bonds and debentures. Bonds and debentures have not been defined under the Act. It has to be understood that the origin of bonds could be found in the practice of issue of notes by the Bank of England or Central Bank controlling currency and credit. The notes undertake encashment in currency. Where a private bank or a public company issues such notes, it takes the form of bonds and debentures. They are characterized as cash certificates or time bonds. Deposits themselves when held as investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a specified sum demanded and not by way of any standard denomjnation. Since the proviso does not use the word stocks , the stock of bonds or debentures will not be eligible for indexation. Hence, securities, when they are acquired as stock will not be so eligible, though stock of shares will be so eligible, the test being that, what is encashable on maturity on specified amount will be bonds and securities for the purpose of indexation in the light of the object of the provision. In this context, one may also refer to the definition of securities, when interest on securities was assessable under separate heads in sections 18 to 21 omitted by the Finance Act, 1998 with effect from 1-4-1999. The items covered are securities of Central and State Government and debentures or other securities for money issued by or on behalf of a local authority or a company or a Corporation especially by a Central, State or Provincial Act . This source has now been shifted to section 56 as income from other sources, where it is not assessable as business since. Section 2(42C) prior to its being replaced by the present section reads as under: 2(42C) Security means a Government securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The word security occurs in different contexts as in Explanation to sections 115AA, 194H, etc. but meaning has to be understood with reference to the context in each case. In the context of third proviso to section 48, bonds and debentures are those which are repayable in terms of money, so that there need be no doubt whatsoever, that indexation is not available for bonds issued by institutions like MTNL, ICICI, PSEB, etc. Stocks of Government securities are also similarly not eligible for indexation. 10. From the above commentary, it emerges that the relevant terms Bonds Debentures are not defined in Income-tax Act, 1961. Otherwise also, it is a fact that these two terms are not defined in the Income Tax Act. As per the definition of Bonds in Mitra s Legal and Commercial Dictionary , a bond is an instrument under seal, whereby one person binds himself to another for the payment of a specified sum either immediately or at a fixed future date. Hence, in our considered opinion, it is very much relevant to examine, consider and decide as to whether the impugned capital asset in the present case i.e. UTI, MIP-99 is a bond or not. In the Tribunal order rendered in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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