TMI Blog2005 (8) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... indexed cost after taking into account the fair market value as on 1-4-1981 at Rs. 52.25 per share. During the year 1982, the assessee received 8,150 bonus shares of Vardhman Spinning General Mills Ltd. on 1:1 bonus issue made by the said company. During the previous year, the appellant-company also sold 8,150 bonus equity shares of Vardhman Spinning General Mills Ltd. According to the assessee there was no cost of acquisition or cost of improvement for the said bonus shares, therefore, no capital gain was computed in view of the various decisions of the Courts including that of the Apex Court in the case of CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294 1 . The assessee had given all the relevant material facts in respect of sale of 8,150 Bonus Shares in Para 4 of the Notes on Accounts in Schedule X of the Balance Sheet attached with the return of income as reproduced hereunder : "8,150 Equity Shares of Vardhman Spinning General Mills Ltd. sold during the year for Rs. 39,12,000 which were acquired as bonus shares in 1982 having no cost of acquisition. The sale price represents capital value of asset and hence not included in capital gains." The ld. Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantum proceedings, penalty proceedings were initiated. In response to show-cause notice, the assessee submitted that there was no mens rea on its part as it was under bona fide belief that the decision of the Hon ble Supreme Court in the case of B.C. Srinivasa Setty ( supra ) was squarely applicable in their case and that it had no guilty intention to evade tax particularly when all the material facts regarding the sale or bonus shares were duly pointed out in the P L A/c. and Schedule 10 to the Balance Sheet. The Assessing Officer however held as follows : "I have gone through the assessee s reply and find it to be totally misplaced. In the assessment order the Assessing Officer had clearly brought out why the decision of the Hon ble Supreme Court in the case of B.C. Srinivasa Shetty was not applicable in the assessee s case as the issue before the Apex Court was regarding the taxability of capital gains arising out of the sale of "goodwill" and not on the sale of bonus shares. The Assessing Officer had categorically stated that assessee s reliance upon the order of the Hon ble Supreme Court was absolutely incorrect instead the decision of the jurisdictional High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue was with regard to cost of acquisition of original shares when subsequently bonus shares are issued in respect of a person holding original shares. In that context, the Hon ble Delhi High Court held that the cost of the original shares has to be determined by spreading over the cost over both the original and bonus shares. The question of cost of acquisition of bonus shares was again not the subject-matter of dispute before the Hon ble High Court. Though one could say that by implication, the ratio in the case of Escorts Farms (Ramgarh) Ltd. ( supra ), can only lead to a conclusion that the Bonus shares did have a cost of acquisition, yet the legal position was not clear and a claim based on a not so well settled legal position cannot be said to be not a bona fide claim. It was therefore, contended by the ld. counsel for the assessee that the plea of the assessee that cost of acquisition of bonus shares has to be taken as nil could still be raised as an issue by an assessee. In other words, it was submitted by him that this question had not directly been considered in any of the decisions rendered. In any event, it was submitted by him that the Hon ble Calcutta High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation and all facts had material to computation of income had been disclosed by the assessee. He therefore, submitted that even under Explanation 1 to section 271(1), the assessee had discharged his onus. Consequently it was submitted by him that the penalty imposed is liable to be cancelled. 6. The ld. DR, on the other hand, placed strong reliance on the order of the revenue authorities and in particular it was argued by the ld. DR that after the decision of the Hon ble Supreme Court in the case of K.P. Madhusudhanan v. CIT [2001] 251 ITR 99, the burden of proof was on the assessee, to show that he has not furnished inaccurate particulars. It was submitted by him that the plea taken by the assessee was not sustainable even according to the decision of the Hon ble Delhi High Court. Therefore, the explanation offered by the assessee has construed as false and penalty has to be imposed. 7. We have considered the rival submissions. As rightly contended by the ld. counsel for the assessee, the facts material to computation of income of the assessee had been duly disclosed. The question is as to whether the particulars furnished were incorrect. We have already noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
