Income-tax---

-----Reference---Capital gains---Academic questions cannot be referred---Share certificates delivered and consideration received in a particular year---Transfer of shares for purposes of S.45, Indian Income Tax Act, 1961, complete in that year---Question regarding date of transfer of shares is academic and cannot be referred---Indian Income Tax Act, 1961, Ss. 45 & 256.

In the case of transfer of shares, for purposes of section 45 of the Income Tax Act, 1961, as between the transferor and the transferee, the transaction is complete when the share certificates are handed over. The mere fact that the company has not registered the transfers in its books would not justify the claim that the transfer took place only later.

Howrah Trading Co. Ltd. v CIT (1959) 36 ITR 215; 29 Comp. Cas. 282 (SC), Vasudeve Ramchandra Shelat v. Pranlal Jayanand Thakar (1975) 45 Comp. Cas. 43 (SC) and CIT v. M. Ramaswamy (1985) 1511TR 122 (Mad.) fol.

Held, that the assessee-company which held shares of other companies passed a resolution and the share certificates were delivered and consideration was also received during the accounting period relevant to the assessment year 1978-79. As between the transferor and the transferee, the transaction was complete. The share certificates were handed over to the broker on June 28, 1977. In such circumstances, the transfer of shares for the purpose of section 45 of the Income Tax Act, 1961, was complete in the assessment year 1978-79. The decision so arrived at by the Appellate Tribunal was based on the decisions of the Supreme Court. The question as to the date of the transfer raised was merely academic. It was not a referable question of law.

CWT v. Babulal Jatia (1982) 137 ITR 540 (Cal.) and Seth R. Dalmia v CIT (1977) 110 ITR 644 (SC) ref.

C.N. Ramachandran Nair for Petitioner.

P.K.R. Menon and N.R.K. Nair for Respondent. /'

JUDGMENT

K.S. PARIPOORNAN, J: --The petitioner is a public limited company. The respondent is the Revenue. The matter involved herein relates to the assessment year 1978-79 for which the previous year ended on June 30, 1977. During the accounting year relevant to the assessment year, the assessee had transferred certain shares of other companies held by it. The entire sale consideration was received by the assessee on June 29, 1977. The board of directors passed a resolution to transfer the share on June 27, 1977. The blank transfer certificates were produced before the Registrar of Companies for getting his approval on June 27, 1977. They were signed by the transferor and handed over to the broker on June 28, 1977. The Revenue took the view that the transfer of the shares took place during the previous year ended on June 30, 1977. The assessee contended that the transfer of shares was registered in the books maintained by the company only after the close of the accounting year, i.e. after June 30, 1977. In this perspective, according to the assessee, the transfer for the purpose of section 45 of the Income Tax Act, 1961, takes place only in the subsequent year, i.e. 1979-80 assessment year. The Income-tax Officer, the Commissioner of income-tax as also the Income-tax Appellate Tribunal negatived the said plea. The Appellate Tribunal took the view that the shares are movable assets and, therefore, transfer thereof is guided by the Sale of Goods Act. It took place as and when possession was handed over to the transferee and consideration was received. The Appellate Tribunal relied upon the decision of the Supreme Court in Howrah Trading Co. Ltd. v. CIT (1959) 36 ITR 215, of the Calcutta High Court in CWT v. Babulal Jatia (1982) 137 ITR 540 and the decision of the Supreme Court in Vasudev Ramchandra Shelat v. Pranlal Jayanand Thakar (1975) 45 Comp. Cas. 43. Most of the above decisions were reviewed by the Madras High Court in CIT v. M. kamaswamy (1985) 151 ITR 122. It was held that, as between the transferor and the transferee, the transaction was complete when the share certificates were handed over. The mere fact that the company has not registered the transfers in its books would not justify the claim that the transfer took place only later. The plea of the assessee was negatived. It was held that the assessee cannot contend that there is no transfer of shares for the purpose of section 45 of the Act in the assessment year 1978-79. The order of the Appellate Tribunal is dated October 29, 1985. The assessee filed an application under section 256(1) of the Income Tax Act, 1961, for referring the following question of law for the decision of this Court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that transfer of shares by the company took place during the previous year relevant ;o the assessment year 1978-79 and hence has been correctly assessed to capital gains by the Income Tax Officer?" `

The Appellate Tribunal declined the said plea by its order dated May 12, 1987. The Appellate Tribunal held that its decision is based on the decisions of the Supreme Court in Howrah Trading Co. Ltd. v. CIT (1959) 3(, ITR 215 at page 219 and Seth R. Dalmia v. CIT (1977) 110 ITR 644. Since the decision of, the Appellate Tribunal is based on the decisions of the Supreme Court, it was held that no referable question of law arose for being referred to this Court. It is thereafter that this original petition was filed by the assessee praying that the Appellate Tribunal may be directed to refer the question of law formulated in paragraph 6 of the original petition for the decision of this Court.

We heard counsel. We perused the appellate order passed by the Appellate Tribunal. The relevant dates are not in dispute. It is conceded that the company passed a resolution and the share certificates were delivered and consideration was also received during the accounting period relevant to the assessment year 1978-79. As between the transferor and the transferee, the transaction was complete. The share certificates were handed over to the broker on June 28, 1977. In such circumstances, as held by the Supreme Court in Howrah Trading Co. Ltd.'s case (1959) 36 ITR 215 and Shelat's case (1975) 45 Comp. Cas. 43, and by the Madras High Court in CIT v. M. Ramaswamy (1985) 151 ITR 122, the transfer of shares for the purpose of section 45 of the Income Tax Act, 1961, was complete in the assessment year 1978-79. The decision so arrived at by the Appellate Tribunal is based on the decisions of the Supreme Court. The question of law raised is merely academic. It is not a referable question of law.

We, therefore, decline to direct the Income-tax Appellate Tribunal to refer the question of law, formulated in paragraph 6 of the original petition. The original petition is dismissed.

M.BA./195/T.F.Petition dismissed.