Capital Gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 June 2010 Suppose I made Investment of Rs 10 Lac in ICICI Bank, Maturity 5 Years and Maturity Value Rs 14.80 Lac. As per common practice Interest Accrues every year and TDS are also deducted by the Bank. Now after 5 years when I went to the Bank for the maturity of the FD, the Bank replied that they are running short of fund, so instead of cash they will be giving Shares of Rs 15 lac.
Note: Maturity Rs 14 Lac (After Deducting of TDS on Interest).
Now my question are as follows:-
1. Is it a Capital Gain?
2. If No, then the Balance of Rs 20000(15 lac-14.80 lac) or Rs 100000(15 lac-14 Lac, to be taxable under which head. (Not sure 20000/100000)
3 If yes, then-------
a) Is FD is a Capital Asset?
b) If No, then answer Q 2?
c) If yes, then ---------------
i) It is a LTCG or STCG
ii) What is the cost of acquisition?
-Rs 10 Lac
-Rs 14.80 Lac
-Rs 14 Lac
iii) If it is LTCG then indexation is allowed on FD.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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30 June 2010 1. NO IT IS NOT CAPITAL GAIN. YOU HAVE ALREADY ADD ACCURED INTEREST IN YOUR INCOME AND PAID TAX ON IT.
2. YOU HAVE RECEIVED SHARES OF RS.15 LAC FROM YOUR MATURITY VALUE. I.E COST OF ACQUISTATION OF THESE SHARES WILL BE RS. 14 LACS.
FD IS NOT CAPITAL ASSET, THERE IS NO CAPITAL GAIN. INTEREST FROM FD WILL BE TAXABLE UNDER HEAD OTHER SOURCES.

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