AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 554
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....ia Trust, Kanpur is assessable as an AOP. The trust came into existence on 26.9.1978 with Master Yaduraj Kanodia (minor son of Shri G.P. Kanodia) as its sole beneficiary. During the previous year, relevant to the assessment year 1980-81, the trust received by way of gift the National Defence Gold Bonds weighing 10000 gms from Shri D.P. Kanodia & Smt. Ratan Devi Kanodia (wife of Shri B.M. Kanodia). These National Defence Gold Bond 1980 were issued as per notification dated 19.10.1965 (as amended upto 19.11.1965) issued by the Ministry of Finance, Department of Economic Affairs. The relevant para of the notification provided:- "Wealth Tax, capital Gains Tax and Estate Duty. The bonds will be exempt from wealth tax and any capital gains from their sales or transfer will not be subject to income-tax. Capital loss if any will not be eligible for being set off, Gifts, in a year, of Bonds by the initial subscriber will be exempt from Gift Tax to the extent of the value of Bonds for an aggregate weight of five kilogrammes of gold. The Bonds will also be exempt from Estate Duty on the first occasion on which they pass on the deat....
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....smith can purchase/covert the gold into ornaments within the prescribed time limit." 9. No capital gains will arise when the bonds are exchanged for gold on redemption. However, any subsequent sale, exchange or transfer of such gold within the meaning of section 2 (47) of the Income Tax Act would attract capital gains tax in respect of capital gains arising from such sale, exchange or transfer. For the purpose of computation of capital gains, the cost of acquisition of gold would be the market value of the Bonds on then date of redemption." 7. After the gold bonds received in gift by the trust were sold prior to the date of its redemption, the assessee made investment in fresh purchase of gold bonds. These purchases were made of 2500 grams on 6.10.1980 for Rs.3,35,000/- and 1900 grams on 27.10.1980 of Rs.2,60,000. These gold bonds were sold in the quantities of 600 grams on 17.3.1981, 800 grams on 20.3.1981 and 600 grams on 2.4.1981.On the transaction of 600 grams of gold the Assessing Officer worked out a profit of Rs.19,668/- and assessed the same for tax. The Appellate Authority by his order dated 4.11.19....
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....n the course of search. The Tribunal held:- "There was no question of converting the gold into gold jewellery as the assessee was not a dealer in gold jewellery at any time. The transactions of ultimate sale and the initial transaction of receipt of gifts cannot, in our opinion, be held to be transactions of adventure in the nature of trade. Receipt of gifts arose the sweet will of the donor who thought fit to make a gift. Sale of gold ultimately was due to the said notification of the Government which forced the assessee to sell as it could not retain the gold which it received on maturity of gold bonds. There was, of course, one transaction of purchase and sale of gold bonds a few months before the date of maturity but, in our opinion, it would not materially alter the nature of the transaction. The case laws relied upon by the learned representative of the assessee fully support the case of the assessee as mentioned above." "There is absolutely no evidence to show that the assessee has suppressed any transaction or has not recorded some transactions in its ....
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....t amount 21.1.1981 100 gms 23.1.1981 1,000 gms Rs.5,05,550 Profit Rs.54,844 2. ITR No.88 of 1991 Raghuraj Kanodia V. CIT (minor through father & natural guardian Shri S.P. Kanodia AY 1981-92 [Previous year ending on 31.3.1981] (Arising out of ITA No. 1738/A/1987) Date of purchase weight amount 3.9.1980 948 gms Rs.1,20,396 4.9.1980 1,500 gms 1,91,250 24.10.1980 3,400 gms 5,02,100 8,13,746 Date of sale weight amount 21.1.1981 2,100 gms Rs.5,05,550 Profit Rs.68,272 3. ITR No.184 of 1987 - CIT v. Yaduraj Kanodia Trust AY 1982-83 [Previous year ending on 30.6.1981] (Arising out of ITA No.2056/A/1985) Trust created on 26.9.1978 with nucleus of Rs.501/- by Smt. Ratan Devi Kanodia w/o Shri B.M. Kanodia. Sole beneficiary Yaduraj Kanodia (Minor) s/o Shri G.P. Kanodia. Date of purchase weight amount 16.10.1978 Gift 5,000 gms. Rs.3,20,000 29.3.1979 Gift 5,000 gms. 3,72,000 10,000 gms. 6,92,000 5.9.1980 sale 3,000 gms. 3,78,000 6.9.1980 sale 5,000 gms. 6,27,000 18.9.1980 sale 2,000 gms. 2,62,000 10,000 gms. 12,67,000 Gain on sale of gi....
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....o.21 of 1996 CIT v. Rituraj Kanodia Trust (AOP) Sole beneficiary (Master) Rituraj Kanodia AY 1982-83 (Accounting period ending on 30.6.1981/) (Arising out of ITA No. 720/A/1987) Trust created on 26.9 1978 with a nucleous of Rs. 251/-. Smt. Uma Shashi Kanodia w/o Shri Devi Prasad Kanodia gifted 5,000 grams gold bonds worth Rs. 5,20, 000/- on 16.10. 1978. Date of purchase/sale /gift weight amount 16.10.1978 gift from Smt. Uma Shashi Kanodia w/o Shri D. P. Kanodia 5,000gms. Rs.5,20,000/- 16.07.1980 sale 2,000 gms. 2,40,000 4.9.1980 sale 500 gms. 63,700 12.8.1980 sale 1,000 gms. 1,30,000 12.9.1980 sale 1,000 gms. 1,30,000 Profit shown Rs.2,75,750/- 7. ITR No.2 of 1998 CIT v. Rituraj Kanodia Trust (AOP) Sole beneficiary (Master) Rituraj Kanodia AY 1986-87 (Accounting period ending on 30.6.1985) (Arising out of ITA No.1516/A/1987) Date of purchase/sale weight amount Opening stock (converted into gold) 500 gms. Sale during the year resulted in profit of Rs.70,000/- Note: ITAT following its decision for AY 1982-83 in assessee's own case held that profit was not in the nature of revenue receipt. 8. ITR No.28 of 1999- CIT v. Shri D.P. ....
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..... ITR No.10 of 2000- CIT v. Master Raghuraj Kanodia (Minor) AY 1983-84 [Previous year ending on 30.6.1982] (Arising out of ITA No.680/A/1985) Profit of Rs.62,160/- on sale of gold received after redemption of gold bond 15. ITR No.112 of 1999- CIT v. Smt. Indira Kanodia AY 1981-82 (Arising out of ITA No.485/A/1991) Penalty of Rs.84,000/- for concealment of income including income of Rs.40,847/- on sale of gold bonds. 16. ITR No.59 of 1999- CIT v. Shri Ritu Raj Kanodia AY 1984-85 (Arising out of ITA No.1203/A/1989) Profit of Rs.78,513/- on sale of gold received after redemption of gold bond" 11. Shri R.K. Upadhyay has relied upon G. Venkataswami Naidu & Co. v. CIT (1959) 35 ITR 594 in which the Supreme Court held that purchase of land adjacent to the mills of the company with intention to sell at a profit raised a strong presumption that the gain was adventure in nature of trade; Laxmi & Co. vs. CIT (1961) 43 ITR 415 Alld in which it was held that the solitary transaction of purchase and sale of silver bars by cloth agent was adventure in the nature of trade; Raja Dhanraj Giriji vs. CIT (1971) 79 ITR 463 (AP) in which it was held that the pledge and sale of jewellery and pu....
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....n question were already held to be genuine by the revenue. The transactions of sale were also not questioned. The sale of gold ultimately had to be done by any person who received not on maturity of gold bonds as the gold received on the maturity could not be held such as for more than six months. The assessee had no choice. They had discharged the burden of proof and that the revenue was not able to prove that any transactions were in the nature of trade. 14. Shri Ashish Bansal relies upon Ashok Kumar Jalan v. CIT (1991) 187 ITR 316 (Bombay); A. Tushar Tanna v. CIT (2006) 284 ITR 453; CIT v. Oriental Containers Limited Ltd (1993) 113 CTR 127. In A. Tushar Tanna (supra) a similar question as in the present case has arisen and in which the Court held as follows:- "Having noticed various cases and having taken a survey of the divergent views, it is not in dispute that the NDG Bonds which were purchased were sold by the assessees in a very short span of time. The transaction in question involved in each case is an isolated one and did not form part of a series of transaction. None of the transactions are from the line of b....