AI Drafter 
TaxTMI 
TaxTMI 
2019 (4) TMI 106
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.... as the cost of acquisition and period of holding in regards to the transfer of shares. That aspect of the matter has been held against the petitioner. 2. Since the writ petition was directed to be listed for admission with an intent to dispose it off finally, we proceed to issue Rule. The respondents waive service. By consent, Rule is made returnable forthwith. 3. The facts necessary to appreciate the challenge to the impugned order, briefly stated, are as under : 4 The petitioner entered into an agreement dated June 24, 2008 with Lehman Brothers Commercial Corporation Asia Limited (hereinafter referred to as "Lehman Brothers"), a nonresident company incorporated in Hong Kong, to purchase, inter alia, 352 Zero-Coupon Foreign Currency Convertible Bonds in Nava Bharat Ventures Limited (for short "NBVL") an Indian company listed on the National Stock Exchange of India Limited (for short "NSE"). 5. NBVL issued the FCCBs on September 29, 2006, under the issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme, 1993 (for short "FCCB Scheme") to Lehman Brothers. 6. The FCCB Scheme was notified by the Central Government i....
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....e to the petitioners contentions, but did not accept the same in view of the amended provisions of the Income-tax Act vide Circular No.1 of 2009 dated 27th March, 2009, Finance Act 2008 - Explanatory Notes to the provisions of the Finance Act 2008. 9. The assessment order was served on the assessee on 13th May, 2015, and being aggrieved thereby, the assessee-petitioner filed a Revision Petition under section 264 of the Income-tax Act on 12th May, 2016. The contention in that Revision Petition was that the entire sale proceeds of 83,89,958 equity shares of NBVL an Indian company, amounting to Rs. 174,73,12,155/-had been treated as unexplained cash credit in the hands of the assessee by the AO in the final assessment order. After referring to the details of the transaction it is urged that the AO had added the entire sale proceeds received on sale of shares of NBVL which were received on conversion of FCCBs into shares on the presumption that the petitioner had subscribed to these FCCBs in September 2006 whereas it was incorporated in the Cayman Islands only on 2nd August, 2007. It was urged that this was a wrong presumption. On this premise only the AO added the sale proceeds of ....
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....ase of 323 FCCBs on 24.06.2008 divided by No. of shares allotted to it on conversion i.e. 1,29,23,073 (Rs.993/share). The closing price of the shares of NBVL as on 07.09.2006 as taken by A.O. to be the cost of acquisition of shares for calculating the STCG is not as per Section 49(2A). As per Section 49(2A), capital gains on the sale of shares of NBVL should be calculated as given below : Capital asset - 83,89,936 shares of NBVL Sale consideration - Rs. 174,73,12,155 (Jan-March 12) Cost of acquisition of the capital asset = Rs. 128,l32,79,000 ----------------------------- x 83,89,938 1,29,23,073 = Rs. 83,31,32,432 Brokerage paid = 26,20,968 Capital gains = Rs. 174,73,12,155 - Rs. 83,31,132,432- Rs. 26,20,968 = Rs. 91,15,58,755" 11. In the affidavit-in-reply, therefore, the conclusions of the authorities as referred above have been supported and it is claimed that the order under section 264 of the Income-ta....
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....ividends in respect of the bonds issued by or shares in an Indian company purchased in foreign currency in accordance with the scheme notified by the Central Government in this behalf and income by way of longterm capital gains arising from transfer of such bonds or shares is proposed to be charged to tax at the rate of ten percent. However, this rate of tax will apply on gross income of the nature specified above without allowing deduction under section 28 to 44CC, 48 and 57 and Chapter VI-A. The provisions for protection from fluctuation of rupee value against foreign currency will not apply to the aforesaid shares. Further, when the said bonds or shares are transferred outside India, by a non-resident to another non-resident, it will not be regarded as a transfer for the purpose of capital gains tax." The notes to clause dealing with section 115AC at the time of introduction reads as under : "Sub-section (1) of the new section seeks to provide that in the case of a non-resident, the income tax payable shall be the aggregate of (i) ten percent of the income by way of interest or dividends in respect of bonds issued by or, as the case may be, shares in respect of bonds issue....
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....med to be that part of the cost of debenture, debenture-stock or deposit certificates in relation to which such asset is acquired by the assessee." 18. In 2008, the Central Government notified a new and separate scheme as Foreign Currency Exchangeable Bond Scheme, 2008 (for short "FCEB Scheme"). The footnote to section 115AC was amended. The relevant part of section 115AC including the amended footnote is reproduced as below : "Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer. 115AC(1) Where the total income of an assessee, being a nonresident, includes - a) income by way of interest on bonds of an Indian company issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette* specify in this behalf or on bonds of a public sector company sold by the Government and purchased by him in foreign currency; or:" *The footnote to section 115AC(1)(a) reads as under : 66. See Issue of Foreign Currency Exchangeable Bonds Scheme,l 2008/Isssue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993/....
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....ion reads as under : "In 1992, the Government allowed established Indian companies to issue Foreign Currency Convertible Bonds (FCCBs), with special tax regime for non-resident investors, so as to encourage the flow of foreign exchange to India. The Government has now allowed established Indian companies to issue Foreign Currency Exchangeable Bond (FCEB). These are bonds expressed in foreign currency, the principal and interest in respect of which is payable in foreign currency. The FCEBs differ from FCCBs in as much as the latter can only be converted into shares of the issuing company, whereas FCEBs can also be converted into or exchanged for the shares of a group company. With a view to providing a level playing field to FCEBs, it is proposed to provide that the conversion of FCEBs into shares or debentures of any company shall not be treated as a 'transfer' within the meaning of Income-tax Act. Further it is also proposed to substitute sub-section (2A) of section 49 to provide that the cost of acquisition of the shares received upon conversion of the bond shall be the price at which the corresponding bond was acquired." 23. The bonds issued to the Petitioner are under the....
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....d upon clause 7(4) of the Scheme and computed the short-term capital gain by considering the closing price of the equity shares of the above company on the National Stock Exchange on the date of conversion of FCCBs into NBVL equity shares. The petitioner reported a taxable income of Rs. 7,63,52,016/- being the shortterm capital gain arising from the sale of equity shares. The petitioner accordingly paid the required taxes in accordance with law. The petitioner's case was selected for scrutiny assessment vide notice dated 5th September, 2014, issued under section 143(2) of the Income Tax Act, 1961 (for short 'IT Act"). The petitioner, on realising that the issuing company short paid the actual tax that ought to have been deducted and deposited in respect of the premium, voluntarily deposited this additional tax amount of Rs. 1,91,198/-, including interest payable. Subsequently, the Assessing Officer passed an order dated 13th March, 2015, copy of which is at Exhibit-E to the petition and on receipt of this assessment order, the petitioner-assessee realised the mistake therein and sought to correct the same by filing a rectification application. The Assessment Officer passed a rec....
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....s or Ordinary Shares of Issuing Company', Mr. Kaka urged that this Scheme contains under the heading 'Transfer and Redemption', the relevant clauses relied upon, namely, clauses 7(1) and 7(4). Mr. Kaka would then submit that once a non-resident holder of Global Depositary Receipts may transfer those receipts, or may ask the Overseas Depositary Bank to redeem these receipts, then, there is a mechanism set out in clause 7(1), (1A), (2) and (3) for the purpose of conversion of FCCBs. Sub-clause (4) of clause 7 sets out that the cost of acquisition in the hands of the nonresident investors would be the conversion price determined on the basis of the price of the shares at the Bombay Stock Exchange or the National Stock Exchange, on the date of conversion of Foreign Currency Convertible Bonds into shares. Hence Mr. Kaka would submit that the taxation on shares issued under the Global Depositary Receipt Mechanism would denote that this is a completely distinct Scheme. 34. On 23rd September, 2008, Circular No.17 was issued and the attention of the authorised dealers was invited to the "Issue of Foreign Currency Exchangeable Bonds (FCEB) Scheme, 2008". That Scheme was notified by the Go....
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.... the said Bill purports to amend, inter alia, section 49 of the Income Tax Act, 1961 by adding subsection (2A) and thus urged that in the Statement of Objects and Reasons, it is stated that the object of the Bill is to give effect to the finance proposals of the Central Government for the Financial Year 2008-09. Mr. Kaka then referred to the notes on clauses and urged that by clause 12 of the same, it was proposed to substitute the sub-section to provide that where the capital asset being a share or debenture of a company, became the property of the assesee in consideration of a transfer referred to in clause (x) or clause (xa) of section 47, the cost of acquisition of the asset to the assesse shall be deemed to be that part of the cost of debenture, debenture stock, bond or deposit certificates in relation to which such asset is acquired by the assessee. This amendment will take effect from 1st April, 2009 and will, accordingly, apply in relation to the Assessment Year 2008-09 for subsequent assessment years. Mr. Kaka, therefore, submits that the petitioner rightly calculated the cost of acquisition in accordance with clause 7(4) of the FCCB Scheme so as to compute the short-term ....
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....e Revisional Authority's order has been challenged in this petition so as to get a complete picture. Mr. Kaka submits that otherwise what we would be doing is to grant a discretionary power in the authorities to consider the cost of acquisition of capital asset on a particular date and subsequently disregard the same date for determining the period for holding of the capital asset. Mr. Kaka, therefore, submits that the gain arising from the sale of shares should be regarded as a long-term capital gain and should be exempt from tax under section 10(38) of the Act in the hands of the petitioner. Mr. Kaka finally submits that the respondent No.1 then should also consider the date of acquisition of FCCBs for determining the period of holding of shares and the period post the conversion. The failure of the respondent No.1 to consider the same is wholly erroneous, arbitrary and contrary to law. 39. Mr. Kaka relied upon the decision in the case of Commissioner of Income-tax vs Naveen Bhatia 287 ITR 587 rendered by the Punjab and Haryana High Court and Commissioner of Income-tax vs. Manjula J. Shah rendered by this Court and reported in 355 ITR 474. The only ground on which these decisi....
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..... Mr. Ahuja then submits that the NBVL, an Indian company, came out with its offering circular for the FCCBs on 29th September, 2006 and the assessee purchased 352 zero-coupon FCCBs of NBVL from Ms. Lehman Brothers, a non resident company incorporated in Hong Kong vide an agreement dated 24th June, 2008. However, it is not correct to say that the capital gains on the sale of equity shares of NBVL would be the cost of conversion of FCCBs and to be determined in accordance with the FCCB Scheme. Mr. Ahuja submits that the capital gains arising from the transfer of capital assets are required to be calculated in accordance with the provisions of sections 45 to 54 of the Income-tax Act. The clauses of the FCCB Scheme cannot override the express provisions contained in the Income-tax Act for calculation of capital gains in various situations. It is submitted that though section 49(2A) was brought into effect from 1st April, 2008, it will not be correct to say that the same has to be read with the FCEB Scheme only. Mr. Ahuja submits that the provisions of the amended section 49(2A) read with section 47(xa) and 115AC(1)(a) also govern the cost of acquisition of shares in the case of FCCBs.....
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....tion and rather conceded to it. In such circumstances, the Revisional Authority has not done anything by which the petitioner can be said to be prejudiced. The revisional order cannot be said to be perverse at all. It is based on the factual position noticed by the Revisional Authority. The findings and conclusion in the Revisional Authority's order are consistent with the factual and legal position noted above. Once they are so, they cannot be termed as perverse. They are not vitiated by any error of law apparent on the face of the record either. 43. Mr. Ahuja then submits that the capital asset is the shares of the Indian company which were received by the tax payer only on 18th August, 2011, and the same were sold by it in January - March, 2012. Therefore, the period of holding of the shares of NBVL in the hands of the petitioner has to be counted from 18th August, 2011 to March, 2012. Mr. Ahuja has invited our attention to sub-clause (f) of clause (i) of Explanation-1 to section 2(42A) of the Income-tax Act which sets out the definition of the words "short-term capital asset". After referring to it, Mr. Ahuja submits that the period of holding in cases like the one at hand h....
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....se any order under this section if the order has been made more than one year previously. (3) In the case of an application for revision under this section by the assessee, the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier: Provided that the [Principal Commissioner or] Commissioner may, if he is satisfied that the assessee was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period. (4) The [Principal Commissioner or] Commissioner shall not revise any order under this section in the following cases- (a) where an appeal against the order lies to the [Deputy Commissioner (Appeals) or to the Commissioner (Appeals)] or to the Appellate Tribunal but has not been made and the time within which such appeal may be made has not expired or, in the case of an appeal to the Commissioner (Appeals) or] to the Appellate Tribunal, the assessee has not waived his right of appeal; or (b) where the order is pending on an appeal before the Deputy Commissioner ....
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....e's case was that for the purpose of computation capital gains arising from the sale of shares received by the assessee upon conversion of the FCCBs, the assessee considered the cost of acquisition of the shares to be the closing price of the shares on the National Stock Exchange on the date of allotment of the shares to the assessee. The case of the assessee is that the Income-tax Act contains no specific provisions for the determination of the cost of acquisition in such circumstances. Instead, all such transactions are governed by the provisions contained in the FCCB Scheme. Relying upon the clauses of that Scheme, it was urged that cost of acquisition of equity shares received on conversion of FCCBs in the hands of non-resident investors, would be the conversion price determined on the basis of the price of the shares in the Bombay Stock Exchange and National Stock Exchange on the date of such conversion. The FCCB Scheme does not clarify whether the price that is to be considered for this purpose should be the opening price, the closing price and an average or any other price prevailing during the day. In the absence of any specific guide in the Act or the FCCB Scheme, the asse....
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....issuing company are set out in clause 3. Thereafter clause 3A deals with issue of Global Depository Receipts and then there is a special provision clause 3B for Indian companies engaged in Information Technology Software and Information Technology Services. Then, there are several other companies registered in India, but engaged in the sectors/areas of operation referred to in clause 3C and by clause 4 there are limits set out of foreign investment in the issuing company. We shall not refer to the issue structure of the Global Depository Receipts, but would straight away come to clause 7 titled as Transfer and Redemption and it is stated in clause 7(1) that a non-resident holder of Global Depository Receipts may transfer those receipts or may ask the Overseas Depository Bank to redeem those receipts and thereafter the procedure following redemption is set out. However, for the purposes of conversion of FCCBs, the cost of acquisition in the hands of the non-resident investor would be conversion price determined on the basis of the price of the shares at the Bombay Stock Exchange or the National Stock Exchange on the date of the conversion of FCCBs into shares. 55. The arguments o....
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....nclusive manner in clause (13) of section 2. The definition of "capital asset" is set out in section 2 clause (14) and reads as under : "2 Definitions.- (1) ... ... ... (14) "capital asset" means- (a) property of any kind held by an assessee, whether or not connected with his business or profession; (b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), but does not include- (i) any stock-in-trade [other than the securities referred to in sub-clause (b)], consumable stores or raw materials held for the purposes of his business or profession ; (ii) personal effects, that is to say, movable property (including-wearing apparel and furniture) held for personal us by the assessee or any member of his family dependent on him, but excludes- (a) jewellery; (b) archaeological collections; (c) drawings; (d) paintings; (e) sculptures; or (f) any work of art. Explanation 1.-For the purposes of this sub-clause, "jewellery" includes- ....
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....er the Gold Monetisation Scheme, 2015] notified by the Central Government. Explanation.-For the removal of doubts, it is hereby clarified that "property" includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever;" 59. This definition excludes from its purview any stock-in-trade other than the securities referred to in sub-clause (b), consumable stores or raw materials held for the purposes of the assessee's business or profession, personal assets and then says in the Explanation-2 that when capital asset means property of any kind held by an assessee whether or not connected with his business or profession, any securities held by a foreign institutional investor which he has invested in such securities in accordance with the regulations made under SEBI Act but excludes what is set out further and at the same time inserts in Explanation to define the expression "Foreign Institutional Investor" shall have the meaning assigned to it in clause (a) of the Explanation to section 115AD of the Income-tax Act, 1961, that expression carries the same meaning. Equally, t....
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....e (42) and the term "short-term capital asset" is defined in section 2 clause (42A). What we have before us is this definition and which refers to the share of a company. Now, this definition has undergone an amendment and we will not concern ourselves with the amendment that has been brought into effect post the controversy before us. Pertinently, by clause (hd) the expression "global depository receipt" is referred and then we have the definition of the term "short-term capital gain" to mean capital gain arising from the transfer of a short-term capital asset. That is the definition set out in section 2(42B). The term "tax" is defined in section 2 clause (43). It reads as under : "(43) "tax" in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date [and in relation to the assessment year commencing on the 1st day of April, 2006, and any subsequent assessment year includes the fringe benefit tax payable under section 115WA];....
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.... has a bearing on the issue at hand. Section 10 of the Act falls in Chapter III titled as "Incomes which do not form part of total income". There is a sub-heading 'Incomes not included in total income'. Section 10 says that in computing the total income of a previous year of any person, any income falling within any of the clauses in section 10 shall not be included. There the income arising from the transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or unit of a business trust where the transaction of sale of such equity share or unit is entered into on or after the date of which Chapter VII of the Finance (No.2) Act 2004 comes into force and such transaction is chargeable to securities transaction tax under that chapter and with all the provisions shall be the income which does not form part of the total income of the assessee. Section 10 clause (38) reads as under : "Section 10 (1) ... ... ... (38) any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund [or a unit of a business trust] where- (a) the transaction of sale of su....
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....or it deals with capital gains on distribution of assets by companies in liquidation and section 46A deals with capital gains on purchase by company of its own shares or other specified securities. Section 47 says that nothing contained in section 45 shall apply to the transfers set out therein and one such transfer is by way of conversion of bonds or debentures, debenture-stock or deposit certificates in any form of a company into shares or debentures of that company and the word 'bond' has been inserted by Finance Act 1992 in this clause with retrospective effect from 1st day of April, 1962. Clause (xa) was inserted by Finance Act 2008 with effect from 1st day of April, 2008 and that deals with conversion of bonds referred to in clause (a) of sub-section 1 of section 115AC into shares or debentures of any company. Now, the difference between clauses (x) and (xa) is apparent. Both deal with transfer and by way of conversion, inter alia, of bonds of a company into shares or debentures of that company, but clause (xa) covers transfer by way of conversion of bonds referred to in clause (a) of sub-section (1) of section 115AC into bonds or debentures of any company. 67. Now, it is ....
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....oreign currency or capital gains arising from their transfer and section 115AC which has been substituted by Finance Act 2001 with effect from 1st April, 2002, deals with tax on income from bonds or Global Depository Receipts purchased in foreign currency from capital gains arising from their transfer. Section 115AC reads as under : "115AC. (1) Where the total income of an assessee, being a nonresident, includes- (a) income by way of interest on bonds of an Indian company issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, or on bonds of a public sector company sold by the Government, and purchased by him in foreign currency; or (b) income by way of dividends, other than dividends referred to in section 115-O, on Global Depository Receipts- (i) issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, against the initial issue of shares of an Indian company and purchased by him in foreign currency through an approved intermediary; or (ii) issued against the shares of a public sector compa....
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....1) (4) It shall not be necessary for a non-resident to furnish under sub-section (1) of section 139 a return of his income if- (a) his total income in respect of which he is assessable under this Act during the previous year consisted only of income referred to in clauses (a) and (b) of sub-section (1); and (b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income. (5) Where the assessee acquired Global Depository Receipts or bonds in an amalgamated or resulting company by virtue of his holding Global Depository Receipts or bonds in the amalgamating or demerged company, as the case may be, in accordance with the provisions of sub-section (1), the provisions of that subsection shall apply to such Global Depository Receipts or bonds. Explanation.- For the purposes of this section,- (a) approved intermediary means an intermediary who is" ‖ approved in accordance with such scheme as may be notified by the Central Government in the Official Gazette; (b) Global Depository Receipts shall have the same meaning as" in clause (a) of the Explanation to section 115ACA." 71. The provision, the....
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....e circumstances that we find that there is a mechanism, set up and eventually Chapter IV deals with computation of income from capital gains, whereas Chapter XII is dealing with determination of tax in certain special cases. "48. Mode of computation.- The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: Provided that in the case of an assessee, who is a non-resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the ....
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...., the action of the A.O. in treating the total sale proceeds of Rs. 174,73,12,155/- as unexplained cash credit in the hands of the assessee is not sustainable and the revision application of the assessee is not sustainable and the revision application of the assessee u/s 264 to this extent is allowed." 75. We are really not concerned with this conclusion because the Assessee is satisfied with it and obtained the relief it sought from the Commissioner. 76. As already stated above, it is the second issue and in that regard the Revisional Authority reproduced paragraphs 16 and 18 of the assessment order and in paragraphs 9 and 10, the Commissioner says that the assessee has considered the cost of acquisition of the shares to be the closing price of the shares of NBVL on the National Stock Exchange on the date of allotment of the shares to the assessee i.e. on 18th August, 2011, but the AO faulted it. The Revisional Authority then, in paragraph 11, reproduces section 49(2A) and says that this provision refers to the transfers mentioned in clause (xa) of section 47 of the Income-tax Act, which was inserted by the Finance Act 2008 with effect from 1st April, 2008. Upon reproducing ....
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.... evident from the reading of section 47. However, the cost with reference to certain modes of acquisition is a matter dealt with by section 49 and where the capital asset becomes the property of the assessee on any distribution of assets on the total or partial partition of a Hindu undivided family or under a gift or will, by succession, inheritance or devolution, then, that is an aspect dealt with by sub-section (1). Where the capital asset being a share or shares in an amalgamated company which is an Indian company and that becomes property of the assessee in consideration of a transfer referred to in clause (vii) of section 47, the cost of acquisition of the asset shall be deemed to be the cost of acquisition to him of the share or shares in the amalgamating company and by (2A) where the the capital asset being a share or debenture of a company became the property of the assessee in consideration of a transfer referred to in clause (x) or (xa) of section 47, then the cost of acquisition of the asset to the assesee shall be deemed to be that part of the cost of bond or deposit certificate in relation to which such asset is acquired by the assessee. 79. Prior to the substitutio....
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....nvolved before us, namely, the FCCB Scheme notified by Central Government in 1993 and applicable with effect from 1st April, 1992 and enabling the computation of cost of acquisition, in terms thereof, was held to be unaffected. It was, therefore, possible to compute the cost in terms of the clauses of that scheme and which was admittedly an earlier scheme. 82. To our mind, therefore, Mr.Kaka is right in his contention that the revisional authority fell in clear error in taking assistance of the amendments made by the Finance Act, 2008. To our mind, Mr. Kaka is right in urging that the cost of acquisition of the shares was to be determined with reference to the date of acquisition of the FCCBs, then, the period for which the shares should be regarded as having been held by the petitioner assessee should also be reckoned to the date of acquisition. He is right in urging that the second respondent failed to consider the scheme and therefore, once these clauses are included in the FCCB Scheme itself, then, they would govern the FCCB related transactions to the extent the corresponding provisions are not made in the Act. The authority was not right in holding that the cost of acquisi....
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.... debentures into shares would not constitute transfer for the purposes of computation of income under the head 'capital gains'. Similarly, Section 49(2A) of the Act clarifies that for computing the capital gains on sale of shares received on conversion of convertible debentures, the cost of acquisition of shares shall be the cost of convertible debentures and thus it shall be deemed to be the cost of such shares received on conversion. In such a situation, as a necessary corollary, it would be but logical to reckon the date of acquisition of the convertible debentures as the date of acquisition of such shares received on conversion of convertible debentures. Now examining the factual matrix herein, the assessee was allotted 27160 convertible debentures of TELCO Limited on 20.12.2001 which were converted into equal number of shares on 31.3.2002. The assessee sold the said shares between 23.12.2002 to 10.3.2003 in different lot. This shall result in long term capital gains as the shares shall be deemed to have been held for a period exceeding 12 months by the assessee." 85. We do not think that this view of the High Court of Punjab and Haryana at Chandigarh is in any way inaccurat....