TMI Blog1990 (7) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... med a Short Term Capital loss on sale of gold amounting to Rs. 6425. The accepted facts of the case are that National Defence Gold Bonds (equivalent to 8 Kgs.) were purchased by the appellant on 25-10-1980 for a consideration of Rs. 11,44,000. This transaction related to the immediately preceding asst. year, viz., 1981-82. These gold bonds, however, matured on 27-10-1980 and on 28-1-1981 and 31-3-1981 standard gold weighing 2 Kgs. in lieu of equivalent gold bonds was given to the appellant. The balance bonds (6 Kgs.) remained with the appellant. The market value on the date of acquisition as stated in the assessment order was Rs. 3,35,000. On 12-2-1981 and, 31-3 -1981 the gold was disposed off as required by the Reserve Bank of India for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject of "tax avoidance" vis-a-vis the decisions of the Hon'ble Supreme Court in the cases of McDowell Co. Ltd. v. CTO [1985] 154 ITR 148, Workmen of Associated Rubber Industry Ltd. v. Associated Rubber Industry Ltd. [1986] 157 ITR 77 and Kartikeya V. Sarabhai v. CIT [1985] 156 ITR 509. 6. The learned counsel for the assessee after reiterating the facts of the case which are not disputed by the department, advanced detailed arguments which can be summarised as under : (1) That the purchase of gold bonds was effected in the preceding asst. year viz. 1981-82 and this had been specifically taken note of by the ITO in the assessment order. (2) That the action of the ITO in treating the transaction as "an adventure in nature of trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) That the transaction in question be accepted as a Short Term Capital loss and the computation made by the appellant be accepted as against the surplus worked out by the ITO. For the proposition that the transaction in question was not "an adventure in the nature of trade" the learned counsel placed reliance on the decision of the Gujarat High Court in the case of D.S. Virani at pages 259 and 260. As regards the computation vis-a-vis the loss of Rs. 6425 claimed, the learned counsel placed reliance on the decision of the Tribunal in the case of Vyavasaya v. ITO [1989] 30 ITD 205 (Ahd.). 7. The learned D.R. on the other hand, strongly supported the orders of the tax authorities. The subsequent arguments advanced by him were on lines id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the present transaction is examined in the light of the decision of the Gujarat High Court in the case of D.S. Virani the conclusion which we would draw is that the same cannot be categorised as an adventure in the nature of trade since the basic attributes to hold so are missing. It is an accepted fact between the parties that the gold bonds were purchased from certain members of the "Sarabhai Family" for a consideration inasmuch as shares were allotted in lieu of the value of the gold bonds. The department has at no stage doubted either the purchase of the gold bonds or the market value placed on the gold on the day it was obtained as also the sale consideration itself. These figures stand accepted. Then again in the direction of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as decided by the Tribunal in the case of Vyavasaya. This would mean that for purposes of computing the short term capital loss the market value of the gold on the date of its acquisition would have to be taken into account rather than the cost of acquisition of the gold bonds. As this is the basis on which the assessee had calculated and claimed the short term capital loss the same was required to be accepted. The ITO is directed to allow necessary relief to the appellant. 10. The only other remaining ground in the appeal is the one pertaining to the levy of interest u/s. 217. The learned counsel for the appellant at the outset stated that the disposal of this ground was consequential to the decision that we would be taking while dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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