26 September 1996
Supreme Court
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COMMISSIONER OF INCOME TAX Vs SAKARLAL BALABHAI & CO.

Bench: PARIPOORNAN,K.S.(J)
Case number: C.A. No.-003180-003180 / 1992
Diary number: 79192 / 1992
Advocates: P. PARMESWARAN Vs


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PETITIONER: THE COMMISSIONER OF INCOME TAX,GUJARAT, AHMEDABAD

       Vs.

RESPONDENT: SAKARLAL BALABHAI & CO. LTD. OTHERS

DATE OF JUDGMENT:       26/09/1996

BENCH: PARIPOORNAN, K.S.(J) BENCH: PARIPOORNAN, K.S.(J) JEEVAN REDDY, B.P. (J)

ACT:

HEADNOTE:

JUDGMENT:                             WITH CIVIL APPEALS  NOS. 3358, 4635, 4238, 4636 OF 1992 AND 1664- 65 OF 1994. The Commissioner of Income Tax, Gujarat III, Ahmedabad V. Shri Nand Kishore Sakarlal Balabhai etc.etc.                             AND             CIVIL APPEALS NOS 12531-533 OF 1996       (Arising out of S.L.P.(C) NOS.15006-08 OF 1992) Commissioner of Income-Tax, Gujarat-I, Ahmedabad V. Navnitlal Sakarlal (HUF) & Anr.                       J U D G M E N T PARIPOORNAN, J. 1.   Special leave  granted in  S.L.P. Nos.  15006-15008  of 1992. 2.   The revenue  represented by  the Commissioner of Income Tax, Gujarat at Ahmedabad, is the appellant in this batch of 10 cases. The Respondents are different assessees to income- tax. 3.   The revenue has filed the appeals from different orders passed  by   the  High   Court  of  Gujarat,  rejecting  the applications filed  by the  revenue under  Section 256(2) of the Income-tax  Act, 1961.  The question  formulated by  the revenue in different cases are specified herein-below: C.A. No.3180/92      "Whether the  Appellate Tribunal is right in law and on      facts in holding that while computing long term capital      gains and  sale of  shares, the bonus shares ought have      been  valued  at  average  cost  for  the  purposes  of      computing the cost of acquisition ?" C.A. NO.3358/92.      "WHETHER, the Appellate Tribunal is right in law and on      facts in directing the I.T.O. to take the average price

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    of bonus  shares for  computation of  capital gains  in      respect of  sale of  530  equity  shares  of  Sarangpur      Cotton Mfg.  Co. Ltd.,  without reducing the cost price      on receipt of bonus shares?" C.A. No. 4635/92      "WHETHER, the Appellate Tribunal is right in law and on      facts in directing the I.T.O. to take the average price      of bonus  shares for  computation of  capital gains  in      respect of  sale of  716  equity  shares  of  Sarangpur      Cotton Mfg.  Co. Ltd.  without  reducing  the  cost  of      original shares  on averaging the cost price on receipt      of bonus shares ?" C.A. No.4238/92      "WHETHER the  Appellate Tribunal is right in law and on      facts in directing the I.T.O. to take the average price      of bonus  shares for  computation of  capital gains  in      respect of  sale of  1633 equity  shares  of  Sarangpur      Cotton Mfg. Co. Ltd. without reducing the cost price on      receipt of bonus shares?" C . A. No. 4636/92      "Whether the  Appellate Tribunal is right in law and on      the facts  in directing  the I.T.O. to take the average      price of  bonus shares for computation of capital gains      in respect  of sale  of 660  equity shares of Sarangpur      Cotton Mfg. Co. Ltd. without reducing the cost price on      receipt of bonus shares?" C.A. Nos. 1664-65 (NT) of 1994      "Whether the  court below  were right  in  law  and  on      facts, in  holding that  the cost  of  original  shares      should be  taken   either at  the cost  price or at the      substitute price as’ on 1. 1.64 ?" C.A. Nos. 12531-35 of 1996 (@ S.L.P. Nos. 15006-08 of 1992)      "Whether the  Appellate Tribunal is right in law and on      facts in  directing the  Income-tax Officer to take the      average  price  of  bonus  shares  for  computation  of      capital gain in respect of sale of 414 equity shares of      Sarangpur  Cotton   Manufacturing  Co.   Ltd.,  without      reducing the  cost of  original shares on averaging the      cost price on receipt of bonus shares ?" 4.   We heard  counsel. In  rejecting the applications under Section 256(2) of the Income-tax Act, the High Court has not even adverted  to the minimal facts, and the findings of the Appellate Tribunal  and has failed to give the reasons as to why the  applications are  rejected. Various orders appealed against are  far from  satisfactory.  We  have  perused  the orders passed  by the  Appellate Tribunal in the appeals. We are of the view that on the basis of the findings entered by the Appellate  Tribunal and the decisions adverted to by it, the question  of law posed in the various cases do arise out of the  order of the Appellate Tribunal. It appears from the orders of  the Appellate  Tribunal that  in disposing of the appeals and  entering appropriate  findings,  discussion  of alternate views was called for. 5.   In the facts and circumstances, we set aside the orders passed by  the High  Court rejecting the applications of the revenue filed under Section 256(2) of the Income-tax Act. We direct the Income Tax Appellate Tribunal, Ahmedabad to refer the questions  of law  in the  different cases, as specified herein above, for the decision of the High Court and forward the same  along with  the statement  of  the  case  and  the relevant documents.  We expect  that the  Appellate Tribunal will take  appropriate steps  expeditiously, to  enable  the High Court to dispose of the matter finally. The appeals are allowed. There shall be no order as to costs.

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