COMMISSIONER OF INCOME TAX Vs. A GHOSH

JUDGEMENT

(1.) This reference arises out of four applications dated February 11, 1972, made by the Commissioner of Income-tax, West Bengal-II, Calcutta, under Section 156(1) of the I.T. Act, 1961, in respect of the assessment years 1961-62 and 1964-65. Mrs. A. Ghosh was the assessee in these two years. But in a set of cases she was assessed in her personal capacity while in others she was the legal heir and representative of her deceased husband, Dr. A. Ghosh.

(2.) Both Dr. and Mrs. A. Ghosh held shares in a public limited company, viz., Standard Pharmaceutical Works Ltd. This concern (hereinafter referred to as "the company") is stated to have been started some time in 1934 with whatever personal resources Dr. and Mrs. Ghosh had. Dr. Ghosh was the technical director and Mrs. Ghosh, a director of the company. The company undisputedly was nurtured by Dr. and Mrs. Ghosh. Dr. Ghosh carried on his research work on antibiotics and Mrs. Ghosh, who was also technically qualified, assisted her husband in this regard. The company over the years had made considerable progress in the technical field. The previous year under consideration was the financial year ended on March 31, 1961, so far as the assessment year 1961-62 was concerned. In this period both Dr. and Mrs. Ghosh effected sales of certain shares. According to them, the surplus which arose was assessable only as capital gains and they showed such surplus as income from capital gains.

(3.) In the case of Dr. Ghosh, the ITO accepted that the surplus arising out of the sale of 1,145 equity shares, acquired prior to 1944, and 14,000 deferred shares, acquired prior to 1946, represented capital gains. There were also sales by Dr. Ghosh of 20,000 equity shares which it is stated in the assessment order were acquired in September, 1960, and sold a few days thereafter. The surplus from such sales was assessed as business income.