TMI Blog1996 (11) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... . As directed by this Court in TC Petn. Nos. 166 to 177, 190, 194, 215, 216, 241 and 256 to 261 of 1978, etc., cases, dt. 14th Nov., 1978, the Tribunal referred the following question for the opinion of this Court under s. 256(2) of the IT Act, 1961 (for short 'IT Act'). Whether, on the facts and in the circumstances of the case, the method adopted by the Tribunal for valuing the cost of the shares in the hands of the respective assessees for the purpose of arriving at the taxable capital gains is correct in law? 2. All these Tax Case References relate to the asst. yr. 1973-74. Since the facts arising in all the above said Tax Cases are common, the facts relating to the case of Sri R. Naresh (in TC No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the original shares and the bonus shares. The assessee thus deducted the amount of ₹ 63,321, as the cost of acquisition from the consideration of ₹ 1,87,418 and returned ₹ 74,097 as capital gains. 5. The ITO, in his order of assessment, stated that since the original shares had been taken at the full value, the bonus shares should not have been valued again by averaging the original cost. According to him, by this process of averaging the value of bonus shares was included twice. The ITO hence restricted the cost of acquisition to ₹ 43,300 itself, relying on the decisions of the Supreme Court in the case of CIT vs. Dalmia Investment Co. Ltd. (1964) 52 ITR 567 (SC) : TC 2R.377 and in the case of CIT vs. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, which were sold. 8. In reply, the Department relied on the Bombay High Court Judgment in CIT vs. K.A. Patch (1971) 81 ITR 413 (Bom) : TC 14R.191, and supported the order passed by the ITO. 9. Considering the decisions cited by the assessee as well as the Department, the Tribunal ultimately came to the conclusion that in determining the cost of acquisition, we have to apply principles, which are part of commercial practice or which an ordinary man of business will resort to when making computation for his business purposes. This would be so even if the surplus is to be computed on account of transactions of a capital nature and is not merely confined to computation of trading profit. There can be dispute that when bonus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1970) 78 ITR 16 (SC) and in the case of Miss Dhun Dadabhoy Kapadia vs. CIT (1967) 63 ITR 651 (SC) : TC 20R.372. By applying the principles enunciated by the abovesaid decisions, the Tribunal also worked out the cost of acquisition of 696 shares, which were acquired by the Government. 10. In the case of the remaining assessees also the identical point arose for the Tribunal's consideration regarding the computation of cost of acquisition of the shares held by the respective assessees in computing their respective capital gains. The Tribunal directed the ITO to recompute the value of the cost of acquisition of the shares in terms of its directions given in the above case. 11. Before this Court, both the learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
