PROTIMA ROY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference relating to two assessment years, viz., the assessment years 1968-69 and 1969-70. The assessee owned 20,200 shares in Jaipur Udyog Ltd., 12,900 shares in Orissa Cement Ltd. and 1,000 shares in Dubhar Mills Ltd. It appears, during the assessment year 1967-68, the assessee received 2,580 bonus shares from Orissa Cement Ltd. totalling 15,480 holding shares in that company. In the assessment year 1968-69, the assessee received 4,040 bonus shares in Jaipur Udyog Ltd. also and the shareholding in this company thus became 24,240. In the assessment year 1968-69, the assessee sold away the entire shareholdings in the Jaipur Udyog Ltd. and Orissa Cement Ltd., and claimed to have suffered a loss of Rs. 75,280 as compared to the reduced cost of the shares at which these were purchased by the assessee from time to time. In the assessment year 1969-70 the assessee also received 250 shares from Jaipur Udyog Ltd. which raised the assessee's holding in that company to 1,250 shares. These shares were also sold by the assessee in the same assessment year at a loss of Rs. 19,573 with reference to the cost price of the original shares. Before the ITO it was claimed that the loss suffered was higher inasmuch as the sale also included the bonus shares which had to be valued separately in view of the decision of the Supreme Court in the case of CIT v. Dalmia Investment Co. Ltd. The ITO, however, rejected this claim and determined the loss on the figure stated above.

(2.) There was an appeal before the AAC. He agreed with the ITO's findings in both these years.

(3.) Being aggrieved by the said order, the assessee went up in appeal before the Tribunal. There, the assessee repeated its claim and it was argued before the Tribunal that the sales included the bonus shares but this had to be separately valued in accordance with the principles laid down by the Supreme Court in the above-mentioned case, which value had to be added to the cost of the original shares and the resultant losses required to be allowed in the computation of the assessee's income. The Tribunal, after considering the rival contentions, held, inter alia, as follows :