2003 (1) TMI 698 - AT - Income Tax

Appeal dismissed for claimed capital loss on maturity of investment. No capital gain on refund.

The Tribunal dismissed the appeal, upholding the disallowance of the claimed long term capital loss on the maturity of Indira Vikas Patra for the ... - Issues:- Sustenance of disallowance of long term capital loss claimed by the assessee on maturity of Indira Vikas Patra.Detailed Analysis:1. The solitary issue in this appeal pertains to the disallowance of a long term capital loss of Rs. 1,41,808 claimed by the assessee upon the maturity of Indira Vikas Patra for the assessment year 1993-94.2. The Assessing Officer contended that as there was no transfer of the capital asset upon maturity, there could be no capital gain or loss, leading to the disallowance.3. The CIT(A) upheld the disallowance, stating it was a case of refund without any transfer involved, thus sustaining the addition.4. The appellant relied on various precedents, arguing for the benefit of indexation in similar cases, including cases involving redemption of preference shares and fixed deposits.5. The Tribunal noted that the issue revolved around whether Indira Vikas Patra could be considered a capital asset and if surrendering it upon maturity constituted relinquishment of rights in the asset, emphasizing the necessity of transfer for capital gain.6. The Tribunal examined the nature of Indira Vikas Patra, highlighting its transferability akin to currency notes, with no specific owner recorded on the certificate, making it encashable by anyone.7. To establish capital gain, a transfer within the meaning of relevant sections was deemed essential, with the term 'transfer' encompassing various actions like sale, exchange, relinquishment, or extinguishment of rights in the asset.8. The Tribunal concluded that upon maturity, the return of the invested amount was not a transfer of any asset but a refund of the deposited money as promised by the Post Office, thereby negating the existence of capital gain and disallowing the benefit of indexed cost of acquisition.9. Consequently, the Tribunal dismissed the appeal in favor of the revenue, upholding the disallowance of the claimed long term capital loss on the maturity of Indira Vikas Patra for the assessment year in question.