COMMISSIONER OF INCOME TAX Vs. JAGDAMBA CHARITY TRUST

JUDGEMENT

(1.) IN the case of the present reference under S. 256(1) of the INCOME TAX ACT, 1961, which relates to the asst. yr. 1972 -73, the question referred is :

(2.) THE facts of the case show that the assessee had made a small profit from the sale of investments but on an examination of the case, the ITO found that sales of ordinary and deferred shares of Dalmia Dadri Cement Ltd. was shown to be at the rate of Rs. 11 and Rs. 1.10, respectively, and the transferor and the transferee of the shares were also interconnected being connected with Shri R. Dalmia. He was also of the view that the shares have been changing hands on the sweet will of Shri Dalmia. The correct price of the shares was worked out at Rs. 67.43 for ordinary shares and Rs. 6.74 for deferred shares and thus capital gain was computed at Rs. 2,25,699. On appeal, the AAC confirmed the order of the ITO as also the application of S. 52(2) of the IT Act. The quantum of capital gain was reduced to Rs. 1,65,379 as a result of recalculation of the value of shares.

(3.) LEARNED counsel for the parties have brought to our notice that this aforementioned reference in that case of CIT vs. Bharat Development (P) Ltd. was decided as ITR No. 247 of 1975 on February 24, 1984 (1984 41 CTR (Del) 79 : (1986) 158 ITR 159 (Bom). It was there held that the question did not really arise because in the other proceedings, M/s Bharat Development Pvt. Ltd. had been held to be a dealer in shares and, therefore, the question of capital gain did not arise. However, there is a discussion to some extent regarding the question now before us. It has also been pointed out there that the Supreme Court had decided the application and conditions for applying s. 52(2) in K. P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC). There was, therefore, some support for the answer given by the Tribunal to the referred question in the judgment of the Tribunal in this particular case.