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TMI Blog2005 (10) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... g ground No. 2, the facts are that the assessee claimed long-term capital gains/loss of Rs. 1,17,920 on redemption of 7 per cent capital investment bonds (for short 'bonds') matured during the year and it is set off against long-term capital gains, which the assessee had earned on sale of its flat. According to the Assessing Officer, the redemption of bonds did not constitute transfer for the purpose computing capital gain or loss. This was confirmed by the CIT(A). While confirming, the CIT(A) considered the definition of transfer under section 2(47). According to which, there should be an asset existing on the date of the transfer. In the present case, the asset became non-existent after expiry of the period and during that period, the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arabhai v. CIT [1997] 224 ITR 422 (SC) wherein redemption of preference shares was regarded as sale. Thus, the CIT(A) confirmed the decision of the Assessing Officer. 5. Before us, the learned AR submitted that the decision of Hon'ble Kerala High Court in the case of Grace Collis on which the CIT(A) has relied has been reversed by the Hon'ble Supreme Court in Grace Collis' case. According to learned AR, the word 'transfer' includes extinguishment of rights in a capital asset, in addition to on account of transfer. Thus, according to learned AR when capital bonds are redeemed, it is an extinguishment of rights and, therefore, it is a transfer within the definition of section 2(47). Secondly, in Anarkali Sarabhai's case, redemption of prefe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny right therein amounts a transfer of capital asset. For capital gains to raise, it is not necessary that there should be a sale of capital asset. Sale is only one of the way of transfer envisaged by section 2(47) of the Act. The relinquishment of an asset or extinguishment of any right in it may not amount to a sale but still can be considered as a transfer for the purpose of section 45. Extinguishment of right in an asset would mean the end of right in the asset either by operation of law or by contractual agreement. When capital bonds are redeemed, then after the date of redemption, they do not remain bonds but certainly what remains is an asset with assessee. It cannot be denied that there was a right in the asset with the assessee, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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