COMMISSIONER OF INCOME TAX Vs. SUHASHBAI VADILAL

JUDGEMENT

(1.) THE Tribunal has referred the following question for the opinion of this Court under S. 256(1) of the IT Act, 1961 ('the Act') :

(2.) IN the relevant asst. year 1975 76, the assessee sold 500 shares of Rajesh Textile Mills Ltd. for Rs. 51,125 against the cost price of Rs. 1,04,375 claiming loss of Rs. 53,250, which was allowed by the ITO. The CIT(A), however, by his order passed under S. 263 of the said Act, rejected the assessee's claim as regards the sale of shares in Rajesh Textile Mills Ltd., that as the shares in Rajesh Textile Mills Ltd. were received as right shares on the holding of shares in Sayaji Mills Ltd., the cost of shares of Rajesh Textiles Mills Ltd. was the cost of such shares plus depreciation in the value of shares of Sayaji Mills Ltd. at the rate of Rs. 108.75 per share. The CIT drew distinction between the cost of shares of Rajesh Textile Mills Ltd. to the assessee and the cost of similar such shares to his father, whose similar claim was earlier allowed, by saying that while the assessee's father had sold the shares immediately, the assessee had held on the shares of Rajesh Textile Mills Ltd. for 12 years and therefore, in his case the cost would be different. The Tribunal held that the cost of the shares of Rajesh Textile Mills Ltd., which the assessee acquired, got fixed at the point of acquisition and it was irrelevant when the shares were sold. The Tribunal relied upon the earlier decision dt. 6th Jan., 1982 of the Tribunal in the case of the assessee's father as well as its decision dt. 6th Jan., 1982 in ITO vs. Suhashbhai Vadilal Family Trust for the asst. year 1980 81.

(3.) THE present assessee had sold 500 shares of Rajesh Textile Mills Ltd., which he had acquired in view of the above arrangement against his holding in Sayaji Mills Ltd. for Rs. 51,125 in the asst. yr. 1975 76. While calculating the cost price of these 500 shares, he added to the face value of Rs. 50,000 being the amount at which they were offered to him as a shareholder of Sayaji Mills Ltd., the depreciation in the value of his shares in Sayaji Mills Ltd., which was, as aforesaid Rs. 108.75 when the shares came to be sold without the right to receive the shares of Rajesh Textile Mills Ltd. The assessee accordingly, claimed a loss of Rs. 53,250.