S RANGARAJAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this tax case, at the instance of the assessee, Sri S. Rangarajan, Madras, the Tribunal referred the following question of law for the opinion of this court :

(2.) THE assessee is an individual. For the assessment year 1972-73, corresponding to the previous year ended March 31, 1972, the Income-tax Officer had to determine the capital gains arising out of the transfer of a property known as "Sabarmathi", which was sold on October 13, 1971, for Rs. 2,80,000.

(3.) ON further appeal, it was found that in the case of another shareholder of Kasthuri Estates Private Limited, the Appellate Tribunal has held by its order dated May 26, 1979, in I. T. A. Nos. 115 and 116/Mds. of 1978-79 that in view of the conditions laid down by this court allowing the reduction in the share capital of the company, only the exact amount reduced could be returned to the shareholder and, therefore, the value of the property received by the assessee in lieu of reduction in share capital could not be anything more than the amount stated to be returned to him. Hence, the Appellate Tribunal held that the assessee was not entitled to substitute the market value of the property in the place of the value for which the property was transferred to the assessee for the cost of acquisition in computing the capital gains.