A zero coupon bond held for 14 months before its maturity is:
AA long-term capital asset
BA short-term capital asset
CNot a capital asset at all
DStock-in-trade by definition
Answer & Solution
Correct answer: A. A long-term capital asset
1. Zero coupon bonds fall in the 12-month category of section 2(42A): held for not more than 12 months they are short-term.
2. Here the holding period is 14 months, which exceeds 12 months.
3. The bond is therefore a long-term capital asset, and its maturity or redemption is treated as a transfer under section 2(47)(iva).
_Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 4 Capital Gains, PDF p. 29_
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