COMMISSIONER OF INCOME TAX Vs. SARASWATHI ACHI T

JUDGEMENT

(1.) THIS is a reference under S. 256(1) of the IT Act, 1961. The following two questions have been referred :

(2.) ON 22nd September, 1960, the assessee gifted to her minor daughter 10,000 shares in Rajendra Mills Ltd. During the course of the year ending March 31, 1969, Rajendra Mills Ltd. issued bonus shares as a result of which the minor daughter of the assessee came to own another 10,000 shares. The dividend on the 10,000 bonus shares amounting to Rs. 3,897 came to be included in the assessee's total income under S. 64(iv) of the Act. The assessee appealed to the AAC, who, following the decision of the Bombay High Court in Poppatlal Bikamchand vs. CIT (1959) 36 ITR 577, held that the dividend income from the bonus shares issued to the minor daughter could not be included in the total income of the assessee. The Revenue went up on appeal to the Tribunal and the appeal came to be heard along with the wealth - tax appeals filed by the same assessee in which also there was a similar point regarding the inclusion of the bonus shares as part of the wealth of the assessee by invoking S. 4(1)(a) of the W. T. Act. The Tribunal dealt with the wealth - tax appeal as the main appeal and held thereon that the value of the bonus shares could not be taxed in the hands of the mother, i.e., the present assessee, and that the dividend income from the bonus shares could not be included under S. 64(iv) of the IT Act, 1961. This order of the Tribunal under the IT Act has given rise to the present reference.