T.S. Srinivasan (Deceased) and Others vs Commissioner of Income Tax

N.V. Balasubramanian, J.—The question of law referred at the instance of the assessee u/s 256(2) of the Income Tax Act, 1961, for the

assessment year 1973-74 is whether, on the facts and circumstances of the case, the method adopted by the Tribunal for valuing the cost of the

shares in the hands of the assessee for the purpose of arriving at the taxable capital gains is correct in law.

The assessee was an investor in shares and he purchased the shares after January 1, 1954, and certain bonus shares were also issued in his

favour. The question that arises is regarding the computation of capital gains arising on the sale of both original shares as well as bonus shares. The

Tribunal held that no separate value should be allotted to the bonus scares as the entire block of shares has been sold and the whole cost of

origina] shares including the bonus shares being"" a known figure, it would be unnecessary to ascertain the individual cost of each share.

A similar question as regards the mode of computation when the entire original shares and bonus shares were transferred came up for

consideration before this court in the case of Mala Ramesh Vs. Commissioner of Income Tax, , where the entire block of shares including bonus

shares were acquired by the Government in the case of another shareholder, and this court held that it is not necessary to ascertain the individual

cost of each share when the whole lot of shares including the bonus shares were acquired by the Government. It is not disputed that the earlier

decision rendered by this court in Mala Ramesh Vs. Commissioner of Income Tax, , applies to the facts of the present case, and following the said

decision, we are of the opinion that there is no infirmity in the order of the Appellate Tribunal.

Accordingly, we answer the question of law referred to us in the affirmative, and against the assessee. However, in the circumstances of the

case, there will be no order as to costs.