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2021 (7) TMI 1151 - KERALA HIGH COURTDisallowance of loss on revaluation of bonds and sale of RBI Bonds - capital or current asset - Tribunal recorded a finding that the entry of government bonds cannot come within the purview of stock-in-trade and however committed serious error by including RBI bonds under the head 'current asset' and notional loss, at any rate, should not have been computed and allowance granted to assessee - HELD THAT:- Tribunal observed that the assessee had not made a conscious decision in investing in bonds, but the assessee was forced to accept the bonds in place of receivables and rightly held that the option could not be refused by the assessee. Otherwise the assessee would have to forego entire receivable amount. The assessee, in our view, gets cash only upon sale of the bonds. Till such time the bonds cannot be treated as capital asset, and as rightly held by the Tribunal, not even stock-in-trade. The assessee is recording notional loss or profit on revaluation of the earlier years as well. The same procedure is followed in the subject assessment year as well. There is consistency in the pattern followed by the assessee and considering the nature of business the assessee has been doing, the bonds are rightly treated as current assets in the facts and circumstances of the case. The finding of fact recorded by the Tribunal is proper and correct The option of treating the receivables converted as bonds realisable at a future point of time is tenable. In the facts of the case running out of cash reserves, the decision to treat bonds also as receivable has been taken. As correctly observed by the Tribunal, the treatment of an entry in a particular method needs to be appreciated in the peculiar facts of the case. In view of the above consideration, the questions of law cannot be decided in isolation to the circumstances of the case - Decided in favour of assessee.
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