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2012 (12) TMI 202 - AT - Income TaxInterest income - cash system versus accrual system – Held that:- Under Section 145(1) of the Act, income chargeable under this head shall subject to the provisions sub-section (2) be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. - As already noticed the assessee is following the cash system of accounting. Therefore the interest cannot be assessed on accrual basis - in respect of OFCPN/DDB, the interest thereon could not be assessed on accrual basis since the assessee had followed cash system of accounting – In favor of assessee Capital gain - transaction of Interest Coupon Strips – short term or long term – Held that:- Capital gains arising on the sale of the deep discount bonds should be assessed as long term capital gains on the footing that he held them for a period of more than 12 months starting from 23-9-2000 before they were sold on 20-3-2002 - assessee is entitled to the exemption under Section 54EC as claimed – In favor of assessee Capital gain - Non Convertible Debenture - deduction u/s.54EC – Held that:- the capital gain should be assessed as Long Term Capital Gain on the footing that the period of holding of Deep Discount Bond is more than the period prescribed. - gain in question was to be taxed as long term capital gain - in consequence thereupon the assessee should also be entitled for exemption u/s.54AC of IT Act. - ground of the assessee is allowed
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