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ITAT upheld revision under s.263 regarding taxation of accumulated interest on debentures converted to equity shares. Assessee's contention of following cash system and deferring interest taxation to share sale was rejected. Upon conversion, entire interest amount of Rs.61.97 Lacs deemed received when debentures converted to shares at face value plus accumulated interest. While conversion itself not transfer per s.47(x), accrued interest component taxable in conversion year. Cost of acquisition for future capital gains would include both face value and interest per s.49(2A). Assessee's double taxation argument rejected as fundamentally flawed. AO's acceptance of return deemed erroneous and prejudicial to revenue interests, making revision order valid.
ITAT upheld revision under s.263 regarding taxation of accumulated interest on debentures converted to equity shares. Assessee's contention of following cash system and deferring interest taxation to share sale was rejected. Upon conversion, entire interest amount of Rs.61.97 Lacs deemed received when debentures converted to shares at face value plus accumulated interest. While conversion itself not transfer per s.47(x), accrued interest component taxable in conversion year. Cost of acquisition for future capital gains would include both face value and interest per s.49(2A). Assessee's double taxation argument rejected as fundamentally flawed. AO's acceptance of return deemed erroneous and prejudicial to revenue interests, making revision order valid.
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