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Question
Assertion (A): All listed as well as unlisted companies are required to invest atleast 15% of the nominal value of debentures maturing during the year.
Reason (R): Profit on sale of debenture redemption investment during the same year is a capital profit.
In the context of the above two statements, which of the following is correct?
Options
Both (A) and (R) are correct and (R) is the correct reason of (A).
Both (A) and (R) are correct but (R) is not the correct reason of (A).
Only (A) is correct.
Both (A) and (R) are wrong.
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Solution
Only (A) is correct.
Explanation:
Assertion (A) is correct as companies (except NBFCs and HFCs) must invest at least 15% of debentures maturing during the year. Reason (R) is incorrect because profit on sale of debenture redemption investment is treated as a revenue profit, not capital profit.
