LAWS(DLH)-1967-4-6

KHANNA A C Vs. COMMISSIONER OF INCOME TAX

Decided On April 06, 1967
A.C.KHANNA Appellant
V/S
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

(1.) THIS is a reference under s. 66(2) of the Indian IT Act 1922 (to be hereinafter referred to as "the Act"). The question of law, referred to this Court for its opinion, is :

(2.) THE facts material for the purpose of deciding this reference are these : On November 10, 1942, the assessee's wife, Smt. Kailashwati Khanna, purchased out of her own funds from one Raghbir Singh 4 share in the Delhi Biscuit Co. Ltd. for a sum of Rs. 500, each share being of the face value of Rs. 125. During the year 1948, Smt. Kailashwati Khanna purchased 52 more shares from the Delhi Biscuit Co. Ltd. from out of the funds provided by the assessee. In 1951, the Delhi Biscuit Co., Ltd. sold the concern to Britania Biscuit Co. Ltd., Calcutta, for a consideration of Rs. 4,35,138. THE said consideration was discharged in the shape of ordinary shares of the vendee-company. THE face value of those shares was Rs. 10 per share; but its market value was Rs. 22. For a consideration of Rs. 4,35,138, the vendee company made over to the vendor 19,779 shares. THEse shares were made over by the Delhi Biscuit Co. Ltd. to its shareholders at the rate of 19 shares of the vendee-company to 1 share of the vendor-company. In lieu of her 56 shares, the assessee's wife got 1,064 shares of the vendee company. Out of these shares, admittedly 76 shares were given to her in lieu of the 4 shares which she had purchased from out of her own funds. At present there is no dispute that the dividend relating to those 76 shares is not assessable to tax in the hands of the assessee. THE controversy is whether the dividend realised by the assessee's wife in respect of her 988 shares, which she got in lieu of the 52 shares of the vendor company, that she had purchased from out of the funds provided by the assessee, is assessable to tax in the hands of the assessee for the asst. yr. 1957-58, the relevant previous year being 1956- 57.