MANECKLAL PREMCHAND DECD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO questions are referred to us in this reference made at the instance of the assessee. They read thus :

(2.) THE bonus shares numbering 120 of Century Mills Ltd., were received by the assessee during the previous year relevant to the assessment year 1070 -71 and were sold during the same previous year, the assessee realising the sum or Rs. 84,492 thereby. The Income -tax Officer treated the capital gain of Rs. 84,492 as a short -term capital gain and subjected the assessee to tax accordingly. In appeal, the Appellate Assistant Commissioner and in second appeal, the Income -tax Appellate Tribunal affirmed the decision of the Income -tax Officer. The Tribunal relied upon the decision of the Gujarat High Court in CIT v. Chunilal Khushaldas : [1974]93ITR369(Guj) . This decision squarely covers the point before us and it held that the bonus shares issued by a company are acquired by a shareholder when they are issued and they must be taken to be held by the shareholder from the date of their issue and not from the date when the original shares in respect of which they are issued were acquired by the shareholder.

(3.) WE have been taken through the decision of the Gujarat High Court aforementioned and we are, respectfully, in full agreement therewith. It is difficult to see how a bonus share can be said to have been acquired or held by an assessee before the date of the issue.