India: Premium received on redemption of debentures is interest income, not capital gains (tribunal decision)
Redemption of debentures is the repayment of a debt, not an extinguishment of any rights in a capital asset
Redemption of debentures is the repayment of a debt
The Mumbai bench of the Tribunal held that the premium received on the redemption of non-convertible debentures (NCDs) is interest income (and not capital gains) when the NCDs carried a 0% interest rate and the redemption premium was fixed to yield a specified percentage of return.
The tribunal also held that the redemption of debentures is the repayment of a debt, not an extinguishment of any rights in a capital asset, and thus is not treated as a transfer of a capital asset.
The case is: Khushaal C Thackersey v. ACIT
Read a May 2024 report prepared by the KPMG member firm in India
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