Commissioner Of Income-Tax vs Vikram Shridhar Shriram
1992 Latest Caselaw 529 Del

JUDGMENT

1. The petitioner seeks reference of the following questions :

"1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that there is a mistake apparent deserving to be rectified under section 254 of the Income-tax act, 1961 ?

2. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the cost of bonus shares be determined separately for determining capital gains even though original shares, right share an bonus shares were sold together ?"

2. The respondent had originally purchased 701 shares at a cost of Rs. 26,247. The respondent was also allotted 1,691 bonus shares. These 2,392 shares were then sold at a price of Rs. 1,39,808. The question which had arisen was as to what was the capital gain derived by the assessed. The Tribunal placed reliance on a judgment of this court in the case of Escorts Farms (Ramgarh) Ltd. v. CIT [1983] 143 ITR 749 and came to the conclusion that the value of the original shares had to be spread over the original and bonus shares in order to determine the value of bonus shares. Having enunciated this principle, the Tribunal, however dismissed the appeal of the assessed.

3. The assessed thereafter filed an application under section 254 of the Income-tax Act contending that a mistake of fact had been committed by the Tribunal as in determining the cost of 2,392 shares, the cost of the bonus shares, arrived at by applying the aforesaid principle, had not been taken into consideration. This was accepted by the Tribunal and the mistake was corrected. It is against this order that the present reference application has been filed.

4. In our opinion, the decision of this court in Escorts Farms' case [1983] 143 ITR 749 was rightly referred to by the Tribunal but was, initially, wrongly applied. The original order of the Tribunal clearly shows that the total price spent by the assessed for acquiring 701 shares was taken to be the sum price in respect of the entire lot of 2,392 shares. In actual fact for the purpose of determining the capital gain the Tribunal had to deduct from the sale price the original cost of Rs. 26,247 plus the value of the bonus shares as arrived at by applying the principle of Escorts Farms' case [1983] 143 ITR 749 (Delhi). This value comes to Rs. 17,721.68. This is a mistake which had been committed earlier and was rectified by the Tribunal later.

5. In our opinion, no question of laws, therefore, arises. The petition is dismissed.

6. There will be no order as to costs.