TMI Blog1993 (4) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... erence so arrived in pound sterling converted again into Indian rupee could only be treated as capital gain for purpose of assessment under Act - ITO, however, worked out capital gain by taking actual sale proceeds at rate of Rs. 22 and deducting therefrom cost of these shares at rate of Rs. 10 per share - Whether computation made by ITO was justified - Held, yes - Whether place where assessee resides and currency in which money is deposited in bank for purpose of purchase, etc., are relevant factors for determining income arising from transactions where cost of acquisition and consideration for transfer, etc., are all expressed in Indian rupee - Held, no - IT REFERENCE NO. 500 OF 1979 - - - Dated:- 8-4-1993 - DR. B.P. SARAF AND U.T. SHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in holding that the Appellate Assistant Commissioner of Income-tax ought not to have considered the additional ground raised by the applicant even though the subject-matter of such an additional ground was a claim made in the original return of income and all the facts relating thereto were on the ITO's records, which was subsequently withdrawn by filing a revised return of income and was once again raised in appeal before the AAC in view of a decision of the Tribunal in another case?" 2. The first two questions were referred by the Tribunal under section 256(1). The third question has been referred in pursuance of the direction of this Court issued under section 256(2) on a notice of motion taken by the assessee. 3. So far as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain by converting the cost of acquisition of the shares which was Rs. 15,00,000 into pound sterling at the then prevailing exchange rate and also by converting the sale price of the shares into pound sterling at the rate prevailing at the time of transfer. According to the assessee, the difference so arrived at in pound sterling converted again into Indian rupee can only be treated as capital gain for the purpose of assessment under the Act. By calculating in the manner aforesaid, the assessee arrived at a capital gain of Rs. 39,873 only. This amount was arrived at by adding to the cost of acquisition certain amount by way of cost of improvement of the shares. However, the assessee later submitted revised computation, deleting from the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee during the relevant previous year at the rate of Rs. 22 per share. The total sale consideration as well as the cost of acquisition are, thus, not in dispute. Both the purchase price and sale price were in rupees. None of the two transactions was expressed in foreign currency. The fact that the income did arise to the assessee in India is also not in dispute. That being so, we do not find any reason why the assessee should convert the cost of acquisition and the sale price into the currency of the country where the assessee resides, at the rates prevailing at the relevant point of time and find out the difference between the two and then convert the same in terms of India rupee for the purpose of computation of capital gain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain in foreign currency and then converting the same into Indian rupee to find out the amount chargeable to income-tax under the head 'Capital gains', cannot arise. 8. Reference may be made in this connection to a decision of this Court in CIT v. Pfizer Corpn. [IT Reference No. 106 of 1978, dated 18-1-1993]. In the above case, the assessee, who was a non-resident company, got gross dividend of Rs. 87 lakhs. The net dividend after deduction of tax at source was Rs. 72,30,000. This amount was remitted to the assessee in USA. The assessee received in US dollars 9,55,979.91. The assessee claimed that the amount received by him in US dollars should be converted into Indian rupees by application of rule 115 of the Income-tax Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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