TMI Blog2014 (8) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... se fully and truly all material facts necessary for the assessment in the original returns filed for the AY 1978-1979, and re-assessment was justified in law - the bonus shares issued by a company are acquired by a shareholder when they are issued, and they must be taken to be held by the shareholder from the date of their issue, and not from the date when the original shares in respect of which they are issued, were acquired by the shareholder – Decided in favour of revenue. - Income Tax Reference No. 371 of 1995 - - - Dated:- 6-8-2014 - S. C. Dharmadhikari And B. P. Colabawalla,JJ. For the Petitioner : Mr. Arvind Pinto For the Respondent : Mr. Mihir Naniwadek ORDER [Per B. P. Colabawalla, J ] 1. By this Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on the facts and in the circumstances of the case and on interpretation of agreement dated 28.11.77 under reference, the Tribunal was justified in concluding that the controlling interest in the PEFCO LTD was not by itself an asset but it was only an incidence consequent upon the holding of a particular number of shares and that therefore controlling interest cannot be perceived independent of transfer of shares and that the capital gain had to be calculated separately for original and bonus shares according to the date of holding? (D) Whether the learned Third Member was justified in referring to the peculiar wording of the question referred to him by the learned differing Members and then holding that there was an agreement between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the period of holding of those shares was less than 36 months. He stated that the short term capital gains arising out of their transfer had escaped assessment by reason of the omission and failure on the part of the Assessee to disclose truly and fully all the material facts necessary for the assessment for that year. This notice was canceled and another notice of re-opening was issued. The Assessee replied stating, inter alia that their interest, stake or holding in the company was a certain percentage in the total equity thereof and that full and true particulars about the sale of that interest viz. certain percentage in the equity of the company, had been given by the Assessee. The letter went on to state that the fact that the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued. The Commissioner confirmed the Income Tax Officer's order on the ground that although the assessee could have put forward its contention , it was the duty of the assessee to give particulars including date of the issue of the allotment of bonus shares in view of the decision of the Gujarat High Court in the case of Commissioner of Income Tax, Gujarat v/s Chunilal Khushaldas (1974) 93 ITR 369 (Guj) that the date of acquisition of bonus shares is the date of issue by their company. He also rejected the assessee's contention that the Income Tax Officer could have discovered with due diligence some account books or other materials. The Commissioner recorded that the assessee had contended that the entire shareholding which involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reality was not that the shares were transferred in addition to the control of the company, but the control was transferred in addition to the shares. He, therefore, held that the Assessee was not entitled to the benefit of Section 54E in respect of transfer of the bonus shares. On the other hand, the learned Accountant Member held that in view of the global nature of the transaction involving the transfer of the whole undertaking as a going concern, and since 100% controlling interest in a company was transferred from one group to another group, the entire resultant gain was in the nature of long term capital gains and was entitled to the benefit of Section 54E of the Act, in view of the fact that the entire sale proceeds were invested in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the Respondent /Assessee fairly conceded that this issue is covered against the Assessee by the judgment of this Court in the case of Manecklal Premchand (supra). In the said judgement, this Court, after relying upon a Gujarat High Court Judgement in the case of CIT Vs. Chunilal Khushaldas, [1974] 93 ITR 369, held that the bonus shares issued by a company are acquired by a shareholder when they are issued, and they must be taken to be held by the shareholder from the date of their issue, and not from the date when the original shares in respect of which they are issued, were acquired by the shareholder. 5. In view of the clear dictum of this Court in the case of Manecklal Premchand (supra), we are of the view that Questions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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