COMMISSIONER OF INCOME TAX Vs. TRIKAMLAL MANEKLAL HUF

JUDGEMENT

(1.) THE question we are called upon to answer in this reference made at the instance of the Revenue under section 256(1) of the Income -tax Act, 1961, reads thus :

(2.) WE are concerned with the assessment years 1966 -67 and 1968 -69. The assessee is a Hindu undivided family. Its karta, one T. Maneklal, had in 1954 acquired shares of M/s. T. Maneklal . at their face value of Rs. 100 a share. In the previous year relevant to the assessment year 1962 -63, the said Maneklal threw these shares into the hotchpot of the Hindu undivided family. In the previous year relevant to the assessment year 1966 -67, two hundred and fifty of these shares were sold by the Hindu undivided family for a sum of Rs. 86,250. In the previous year relevant to the assessment year 1968 -69, seven hundred and fifty of these shares were sold by the Hindu undivided family for a sum of Rs. 2,37,375.

(3.) THE Hindu undivided family contended before the Income -tax Officer that for the purposes of computing the capital gains under section 48 of the Income -tax Act, 1961, in respect of the aforesaid sales, there should be deducted from the sale price, the market value of the shares on the date on which they had been thrown into its hotchpot. Accordingly, the Hindu undivided family claimed a loss on the sale of the shares in the assessment year 1966 -67 in the sum of Rs. 61,250 and in the assessment year 1968 -69 in the sum of Rs. 1,62,375. The Income -tax Officer took the view that the cost of acquisition of the shares by the Hindu undivided family was nil and he treated the entire sale proceeds as capital gains and assessed accordingly.