COMMISSIONER OF INCOME TAX Vs. ASBESTOS CEMENT LTD

JUDGEMENT

(1.) THIS is an application under s. 256 (2) of the IT Act at the instance of the Revenue. The revenue desires that the following questions should be raised by the Tribunal and referred to us.

(2.) THE relevant assessment year is 1974-75. The assessee-company is a foreign company and is being assessed to income-tax through its agents M/s Asbestos Cement Ltd. During the asst. yr. 1974-75, the assessee- company sold a total of 1,50,000 shares of an Indian company namely, hindustan Ferodo Ltd. to the LIC of India and the UTI, (75,000 shares each to both the companies ). The shares were sold at a price of Rs. 22 per share, which was the rate claimed to have been approved by the Government. The assessee-company had computed capital gains in pound Sterling and then converted the figure to Indian rupees for the purpose of Indian taxation. In the computation of capital gains, the assessee-company in its original return of income dt. 29th June, 1974, had calculated, inter alia, the capital gains in Pound Sterling after considering the cost of improvement of these shares. However, the assessee-company filed a revised return in which the assessee- company withdrew its claim for deduction of cost of improvement of the shares while calculating capital gains. As per the revised return, therefore, capital gains were calculated without taking into account the cost of improvement of shares.

(3.) THE ITO by his order dt. 7th Jan. , 1975, therefore, completed the assessment by computing capital gains without taking into account the cost of improvement of these shares. We are not concerned in this reference with the other controversies which were raised relating to the calculation of capital gains. The order of the ITO, `a' Ward, Thane, is of 7th Jan. , 1975.