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2017 (7) TMI 661 - AT - Income TaxAddition being capital reserve arising on amalgamation of wholly owned subsidiary company - Held that:- In the case of the assessee, the subsidiary company was amalgamated with the assessee company and there was no business transaction in the amalgamation. Surplus on amalgamation is not taxable u/s.28(iv) of Income Tax Act and we set-aside the order of the lower authorities and allow the appeal of the assessee. Indexation benefit on capital gains u/s.48 - Held that:- From the definition of the capital asset, the government securities are not excluded from the definition of capital asset. Therefore, the government securities are capital assets. As per Sec.2(42A) the expression ‘security’ shall have the meaning assigned to Clause-11 of Securities Contracts Regulation Act, 1956 which includes government securities as discussed in the Ld.CIT(A) orders which was extracted above. From the above guidance note Bonds and securities distinguishable. The Bonds are not freely tradable and the securities are freely tradable. Therefore, the Bonds cannot be equated with the securities. The assessee has made investments in government securities and sold the securities after holding the period of more than 12 months to treat the securities as long term capital assets. The capital gains arising on transfer of long term company assets are entitled for the benefit of indexation as per Sec.48 of Income Tax Act. From the plain reading of 3rd proviso section 48 of I.T. Act, government securities are not excluded for indexation benefit only bond or debenture included in the third proviso to Sec.48. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. - Decided against revenue
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