TMI Blog1989 (12) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... r mentioned by way of a note in the returns nor in Part IV of the return anything regarding the ownership of the gold bonds. Therefore, the reopening was justified. 3. The question on merits has been considered by the Bombay Bench of the Tribunal in the case of Executors Trustees of the Estate of Late Shri R.G. Saraiya v. Second WTO [1988] 24 ITD 211 where the Tribunal has observed as follows : --- " It could be seen that the contentions of the two sides are : (a) on behalf of the assessee that the document in his hands was the gold bond, and (b) on behalf of the Revenue, that it is gold or as good as gold. In our view, it is neither. We have to state the real nature of this document on the maturity date. Now, when the gold bond is issued to a person, there is an agreement between him and the Govt. that the gold will be returned on a certain future date called the maturity date ; and during that time, the assessee has the right to interest and he can also assign the bond. Under the terms of the bond, the holder has a right to get back the gold on the maturity date whereupon the interest would cease and it would no longer be assigned. Therefore, on the maturity date, the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hment of the bond for which it had to follow certain set procedure." 5. The assessees' counsel first of all submitted that the aforesaid two decisions of the Tribunal showed that two views were possible and therefore, the one in favour of the assessee should be taken. He also submitted that the Tribunal's decision in the case of Mrs. Sakina was a subsequent decision and that therefore, it should be followed relying upon the decision of the Gujarat High Court in Gujarat Housing Board v. Nagajibhai Laxmanbhai AIR 1986 Guj. 81. Referring to the decision of the Bombay Bench he asked how the documents could be called bonds for the purpose of redemption and not bonds for the purpose of exemption. 6. The learned Departmental Representative on the other hand pointed out the decision of the Ahmedabad Bench of the Tribunal in Udayan Gajjar v. ITO which is subsequent to the decision of the Nagpur Bench in the case of Mrs. Sakina. In that case the Tribunal was concerned with the levy of capital gains tax in respect of the sale of the gold acquired by encashing the gold bonds. The Tribunal has observed "the assessee was entitled to receive the gold on 17th October, 1989 though he had an opt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also pointed out from para 5 thereof, "Both the banking and non-banking treasuries/sub-treasuries will, after determining the holder's title, authorise the linked branch of the State Bank of India/subsidiary banks to arrange delivery of gold and accrued annual payment(s) on tender of the bonds." He submitted that this showed that there was no automatic conversion of the bond into gold because the title was to be determined. From the Circular he pointed out the sentence in para 1 thereof that the bonds were redeemable on or after 27th October, 1980 which again shows that there was no automatic conversion from bond into gold. He then pointed out para 2 thereof which is as follows :--- " 2. A question has arisen as to whether such capital gains should be treated as long term or short term gains. The question has been examined by the Board. The exchange of gold bonds at the time of redemption is an altogether fresh transaction when an assessee acquires a different asset. It has also been decided above that for the purpose of computation of capital gains, cost of acquisition of gold would be the market value of the bonds on the date of redemption. The material date in this case would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee after the date of maturity has not been considered at all. Further, although that decision refers to the Patna Bench decision in favour of the Revenue nowhere considers the merits thereof nor does it try to distinguish it in any way. In view of these infirmities it did not acquire the position of precedent to be followed in subsequent cases. Moreover, the observations of the Ahmedabad Bench of the Tribunal in the case of Udayan Gajjar are against the assessee. Therefore, on the question of precedent, we cannot accept the contentions on behalf of the assessee. Although it is true that where two views are possible one in favour of the assessee should be taken, the only view in favour of the assessee being that of the Nagpur Bench suffering as it does from the above infirmities we cannot accept that view. 13. That brings us to counsel's comment on the Bombay Bench decision that the documents could not be a bond for the purpose of redemption and not a bond for the purpose of exemption. The obligation of the Government to pay back the gold on the maturity of the bond is only one condition. But that does not make it a complete bond which it was when issued. It was that bond in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession of that property." "After the maturity the bond was not assignable and the Reserve Bank would not deliver the gold to any person other than the holder of that document. In the case before us therefore, it is the market price of the gold on the date on which not only the tide to the gold vested in the assessee but also the date on which he acquired the possession thereof which was material. On the date on which the assessee got possession of the gold he was also its owner. It was on that date that he was fully in a position to sell the gold and therefore for the purpose of this case it is that date which has to be taken for ascertaining the market value. If the assessee would have bought the gold from an outside source and not by way of redemption of the gold bond from the Reserve Bank only the date of its purchase would be taken as the market price i.e. the actual purchase price. Therefore, the fact that he obtained the gold by way of redemption from the Reserve Bank is not relevant for our purpose. Just as in the case of market purchase, the date on which the assessee purchases it thus becoming the owner and possessor of the gold so, also in this case it is the date on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship thereof. There was no need for such a Notification because the assessees became entitled to the gold after maturity of the bonds by operation of law like the Reserve Bank before their maturity. 17. That brings us to the last submission that if our decision is against the assessees many persons would be exposed to the risk of penalty under section 18(1)(c) for concealment. The counsel has relied upon the observations in the judgment of the Gujarat High Court in the case of Sakarchand Chhaganlal v. CED [1969] 73 ITR 555 at page 559. The observations are as follows : " What was his interest of the deceased in the land ? What was his interest in the superstructure and what change in juridical relationship was brought about as a result of the steps taken by the deceased ? The question is one of great importance having far-reaching consequences, as it is a matter of common knowledge that in this city where co-operative housing societies have flourished to an extent unknown and unprecedented in other parts of India, hundreds of transactions of sales and gifts of plots with superstructures have taken place without any registered documents, merely by transfers of plots being recogn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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