COMMISSIONER PF INCOME TAX CENTRAL CALCUTTA Vs. GOLD MOHORE INVESTMENT COMPANY LIMITED

JUDGEMENT

(1.) THE Judgment of the court was delivered by

(2.) . These are two appeals by the Commissioner ofIncome-tax, central, Calcutta, against Messrs. Gold Mohore InvestmentCo. Ltd. and arise out of Income-tax Reference 65/54, decided by theCalcutta High court on 27/08/1963. The point involved in the appealsis the valuation of bonus/shares in the assessment years ending 31/03/1950 and 1951, respectively. The previous years corresponding to theassessment years were the financial years ending 31/03/1949 and 1950,respectively.

(3.) . In the Assessment year 1950-51, the account year being 1949-50,the Assessee Company held 122 first preference shares of Fort Gloster JuteCompany Ltd. which had cost to the Assessee Company Rs. 22,883/12/-.In the year of account there was an issue of bonus shares (second preference)and the Assessee Company received 137 shares of the face value of Rs. 100.00 each.' The Assessee Company sold 125 shares (second preference) for Rs.14,500.00. It was therefore, left with 122 shares (first preference) and 12 shares(second preference). The Assessee Company returned a profit of Rs. 1,997.00as follows: <FRM>JUDGEMENT_460_2_1969Html3.htm</FRM> It will be seen that the cost of bonus shares was shown at the face valueof the shares plus minor charge of Rs.3.00. Rs. 13,703.00 were credited tocapital reserve. The Income-tax Officer spread out the cost of 122 1stpreference shares (Rs. 23.883/12/-) over the 122 shares (first preference) and137 shares (second preference). He worked out the average cost at<PG>463</PG>Rs. 92./3/6 per share and found the profit to be Rs. 2,973.00. His method ofcalculation was as follows : <FRM>JUDGEMENT_460_2_1969Html4.htm</FRM> The tribunal confirmed the assessment as made by the Incom-tax Officer.It may be pointed out that the Appellate Assistant Commissioner had in eachcase confirmed the order of the Income-tax Officer.