SUMANTH RAMANUJAM VS COMMISSIONER OF INCOME-TAX
2001 P T D 2512
[248 I T R 816]
[Supreme Court of India]
Present: S.P. Bharucha, N. Santosh Negde and Y.K. Sabharwal, JJ
Master SUMANTH RAMANUJAM and another
versus
OMMISSIONER OF INCOME‑TAX
Tax Reference Cases Nos. 5 and 6 of 1995, decided on 13/03/2001.
(Cases referred under section 257 of the Income Tax Act, 1961, by the Income‑tax Appellate Tribunal, Madras Bench 'B'. in R. As. Nos. 1174/Mds. of 1990 and 1175/Mds. of 1990 arising out of I.T.As. Nos. 2330/Mds. of 1986 and 2331/Mds. of 1986).
Income-tax----
‑‑‑‑Capital gains‑‑‑Cost of acquisition‑‑‑Shares‑‑‑Bonus shares‑‑‑Transfer of original shares‑‑‑Subsequent issue of bonus shares to be taken into account to reduce cost of acquisition of original shares‑‑‑Indian Income Tax Act, 1961, Ss.45 & 48.
Where in relation to original shares held by the assessee in a company, bonus shares are issued by the company, in computing the capital gains arising from the transfer of original shares, the issue of bonus shares should be taken into account for the purpose of averaging and reducing the cost of acquisition of those original shares.
Escorts Farms (Ramgarh) Ltd. v. CIT (1996) 222 ITR 509 (SC) fol.
A.T.M. Sampath and V. Balaji, Advocates for the Assessees.
T.L.V. Iyer, Senior Advocate (B.K. Prasad, Advocate with him) for the Commissioner.
ORDER
In view of a conflict of opinion, the following question stands referred to this Court:
"Whether, on the facts and in the circumstances of the case, in computing the capital gains arising from the transfer of original shares, the subsequent issue of bonus shares should be taken into account for the purpose of averaging and reducing the cost of acquisition of those original shares?"
The question is now covered by the decision of this Court, in Escorts Farms (Ramgarh) Limited v. CIT (1996) 222 ITR 509. Following that decision, the question is answered in the affirmative and in favour of the Revenue.
The civil appeal is, accordingly, disposed of.
No order as to costs.
M.B.A./968/FC Reference answered.