AR ALAGAPPA CHETTIAR Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This appeal is directed against the order of the Income-Tax Appellate Tribunal, upholding the orders of the authorities below and it pertains to the assessment year 1991-1992. The dispute relates to the computation of long term capital gains arising out of the transfer of 4 198 shares held by the appellant in M/s Consolidated Coffee Limited (hereinafter referred to as 'CCL') to M/s Tata Tea Limited ( hereinafter referred to as 'TTL').

(2.) The appellant was holding 4198 shares in CCL. The TTL desired to acquire the majority shares in CCL and this prompted TTL to make an open offer to the shareholders of the CCL. The offer was to the effect that for transfer of every two shares of CCL to TTL, the latter would give a consideration in cash of Rs.100/- and one equity share of face value of Rs.10/- out of the fresh issue of TTL. This offer was made by TTL on 20.10.1989 and the same was accepted by the appellant. Following this, TTL formalised the contract by sending the transfer deed for the transfer of shares in CCL, on 31.10.1990. The appellant received the consideration as stipulated in the offer i.e, Rs.100 /- in cash and a fresh issue of one equity share in TTL of the face value of Rs.10/- for every two shares in CCL. The appellant while submitting his return for 1991-1992, apparently worked out the capital gains pertaining to 4198 shares of CCL by taking the sale consideration of Rs.55/- per share, which figure he arrived at by calculating as follows, Rs.100/- + Rs.10/- 2 The Assessing Officer, however took note of the fact that by a letter dated 8.10.1990, the TTL informed the appellant that the market price of each share of TTL has gone up to Rs.450/- and proceeded to find out the value of the shares of TTL as on 31.10.1990 as per the daily official listing of Bombay Stock Exchange. The Assessing Officer found, the Stock Exchange mentioned Rs.400.25 as value of one share of TTL and adopting that, computed the full value of the consideration received by the appellant at Rs.10,50,025/- (2099 TTL shares at Rs.400.25 + Rs.2,09,900 (2099 x 100)).

(3.) The appellant filed an appeal before the Commissioner of Income Tax contending that the Assessing Officer ought to have taken only the face value of the equity share of TTL at Rs.10/- and not the market value at Rs.400.25. However, this contention was not accepted by the appellate authority, which prompted the appellant to file an Income Tax Appeal before the Income Tax Appellate Tribunal, Madras. By an order dated 4.9.2001, the Tribunal dismissed the appeal upholding the orders of the authorities below. Being aggrieved by the orders referred above, the appellant has filed this appeal before this Court.