TMI Blog2009 (5) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... t is maintaining these share as stock-in-trade and following the method of valuing shares at lower of cost or market value consistently for many years. (4)Learned Commissioner of Income-tax (Appeals) failed to appreciate that the appellant has purchased and sold shares in normal course of business and he is regular in share trading. In earlier years also there has been substantial number of transaction in share trading. (5)Learned Commissioner of Income-tax (Appeals) erred in finding that the appellant first time disclosed these shares in assessment year 1998-99 under VDIS is purely based on assumption. The appellant is regularly purchasing and selling shares in normal course of business and the opening stock as well as closing stock is a result of normal trading operations. (6)The Learned Commissioner of Income-tax (Appeals) as well as learned Income-tax Officer Ward 23(1) erred in law as well as on facts and circumstances of the case while treating gain on disposal of Indira Vikas Patra (IVPs) before the IVPs matured, as interest and not as capital gain." 2. Ground No. 1 is general in nature and does not require any adjudication. 3. The ground Nos. 2, 3, 4 and 5 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer to the demat account of the assessee took place. These facts clearly establishes that the transactions were in a speculative in nature. As per the provisions of Income-tax law such transactions are speculative transactions and any loss incurred in such speculative transactions cannot be adjusted against the normal profit and loss of the business. Keeping these facts in view we find no fault in the order of the CIT(A) and we confirm the same on this issue. 6. As far as the remission in the value of the closing stock is concerned, we find that assessee was holding the shares in stock-in-trade in the proprietorship M/s. U.S. Oberoi Co. of Rs. 4,026,251.28. This fact is evident from page No. 22 of the paper book. The shares held as a investment were reflected in the personnel balance sheet of the assessee at the end of the financial year at Rs. 75,19,123 which is evident from the page 13 of the paper book. The assessee is valuing the closing stock at the price prevailing at the end of the year as on 31st March of the year. The assessee is enhancing the value of shares wherever the shares value had been appreciated. The fact in respect of closing stock in proprietorship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or extinguishments of any rights therein or the compulsory acquisition thereof under any law or conversion of the asset by the owner in stock-in-trade of a business carried on by him or the maturity or redemption of a zero coupon bond." Sale, exchange or relinquishment or extinguishments of right are also included in the definition of transfer. 10. As the Income-tax Act, the definition of the securities is an inclusive definition which includes the following type of securities also : ( i )shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; ( ia )derivative; ( ib )units or any other instrument issued by any collective investment scheme to the investors in such schemes; ( ic )security receipt as defined in clause ( zg ) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. ( id )units or any other such instrument issued to the investors under any mutual fund scheme; [( ie )any certificate or instrument (by whatever name called), issue to an investor by any issuer being a special purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod varies. The face value is payable only at maturity. Similarly the deep discount bonds are also issued below the redemption value. The interest on the Indira Vikas Patras is not payable in-between the date of issue and the date of maturity. Similarly no interest is payable on the Deep Discount Bonds till the date of maturity. Both these instruments can be redeemed/encashed only at the time of maturity. Pre-mature redemption is not allowed. The Indira Vikas Patras are capital asset as per provisions of section 2( 14 ) of Income-tax Act, 1961 as the name of the Indira Vikas Patras does not find place in the exclusions provided in the definition of the capital asset. The Central Board of Direct Taxes issued a Circular No. 2/2002 wherein the treatment to be given to the Deep Discount Bonds has been narrated. As per this circular the treatment of tax on the transfer before maturity is as under : "5. Where the bond is transferred at any time before the maturity date, the difference between the sale price and the cost of the bond will be taxable as capital gains in the hands of an investor or as business income in the hands of a trader. For computing such gains, the cost of the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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