Write off of Bonds-Income Tax Impact

[ROHIT GOEL]

One of our clients owned Tier-1 bonds of Yes Bank which were written off in full by the company. As per my opinion, this would amount to extinguishment of rights in bonds held by the client and would result in a transfer of capital asset.

Therefore would the client be able to claim the amount of cost of acquisition of bonds as a short term/long term loss or is this view incorrect?

AI Summary

Extinguishment of bond rights may constitute a transfer permitting claim of capital loss on cost of acquisition. Client-held Tier 1 bonds were written off by the issuer, posing whether this extinguishment of bondholder rights constitutes a transfer of a capital asset that would allow the investor to claim the cost of acquisition as a short term or long term capital loss for income tax purposes.