1989 (4) TMI 106

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.... Defence Gold Bonds which matured on 27-10-1980. The assessee tendered them to Reserve Bank on 1-11-1980 for obtaining the gold and ultimately received the gold on 24-11-1980. The assessee sold this gold during the period from January to March 1981 and received a total amount of Rs. 13,63,300. The assessee worked out the short term capital loss as above by taking the cost of acquisition at Rs. 1688 for 10 grams being the market rate on 24-11-1980 i.e., on the date of actual receipt of the gold. The ITO however arrived at the cost of acquisition by taking the market price on the maturity date of the gold bonds i.e., 27-10-1980 which was Rs. 1460 per 10 grams. He therefore arrived at a figure of capital gain amounting to Rs. 1,66,100 which he....

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....tion of the gold bonds which would be treated as the date of acquisition of the gold. Thus according to him it was the market price on the date of redemption which had to be taken. He also relied upon the assessment order u/s. 143(3) in the case of another assessee Manorama Sarabhai for the A.Y. 1982-83 where the market price on the date of redemption of the bonds was taken for calculation of the short term capital gain. On the other hand the learned DR relied upon the Tribunal's decision in the case of Executors & Trustees of the Estate of Late Shri R.G. Saraiya v. Second WTO [1988] 24 ITD 211 (Bom.) where inter alia it has been observed as follows at page 213 :-- "As rightly pointed out by the learned DR the Reserve Bank is merely cust....

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....hat case all that was necessary for the Tribunal was to decide the right of the assessee vis-a-vis the Reserve Bank. However for our purpose it was absolutely necessary that the assessee should be in a position to deliver the gold to the buyer which was not necessary for the aforesaid case before the Tribunal. After the maturity the bond was not assignable and the Reserve Bank would not deliver the gold to any person other than the holder of that document. In the case before us therefore it is the market price of the gold on the date on which not only the title to the gold vested in the assessee but also the date on which he acquired the possession thereof which was material. On the date on which the assessee got possession of the gold he w....