Ajit K. Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1982-83, the following questions of law have been referred to this court : R. A. No, 1475/(Cal) of 1986 : "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Officer was correct in law in holding that the investment in public sector undertakings was a capital asset within the meaning of Section 2(14) of the Income-tax Act, 1961 ? (2) Whether the finding of the Tribunal that the assessee-trust had invested in the units of the Unit Trust of India during the relevant previous year was based on proper evidence and materials ? (3) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the entire sale proceeds from shares were invested in the acquisition of other capital assets within the meaning of Section 11(1A) of the Income-tax Act, 1961? (4) Whether the Income-tax Appellate Tribunal was justified in holding that the assessee-trust was entitled to exemption under Section 11(1A) of the Income-tax Act, 1961, in respect of the capital gains of Rs. 23,79,538 on the sale of shares." R. A. No, 1476/(Cal) of 1986 : "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in holding that there was extinguishment of the right of the assessee in the debenture-stock held by it in Messrs. Braithwaite and Co. (I.) Ltd., within the meaning of Section 2(47) read with Section 45 of the Income-tax Act, 1961, upon the receipt of the letter from the Commissioner of Payments that nothing could be paid to it for the stock so held by it. (2) Whether the Tribunal was justified in law in holding that the assessee incurred capital loss of Rs. 1,30,000 (1ong-term) in respect of the debenture-stock held by it in Messrs. Braithwaite and Co. (I.) Ltd."
(2.) Shortly stated, the facts are that the assessee in this case is a trust and the assessment year involved is 1982-83 for which the previous year ended on December 31, 1981. During the relevant previous year, the assessee-trust sold shares of various companies which formed the corpus of the trust fund for a net consideration of Rs. 37,78,640. On this transaction, the capital gains shown amounted to Rs. 23,79,538. The assessee claimed that the net consideration of the sale was utilised for acquiring new capital assets as under : JUDGEMENT_152_ITR206_1994Html1.htm
(3.) Out of the above, a sum of Rs. 7,00,000 was invested after December 31, 1981, and an option was exercised under the Explanation to Section 11(1) requesting the Income-tax Officer to treat the above sum as deemed application during the year ended on December 31, 1981. It was. urged that the capital gains of Rs. 23,79,538 was, therefore, exempt from tax under Section 11(1) of the Income-tax Act, 1961.;