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Issues involved:
The judgment deals with the computation of capital gains on the sale of shares by an individual, focusing on the method of valuing the cost of shares for tax purposes. Details of the judgment: The assessee sold 675 shares and the Income-tax Officer included the original holding and bonus shares in computing the average cost per share. The Appellate Assistant Commissioner found the method adopted by the Officer as erroneous. The Tribunal computed the cost of acquisition based on the fair market value opted by the assessee for the original shares and a different method for the bonus shares sold. The Revenue appealed, questioning the Tribunal's method. The High Court referred to the mode of acquisition of shares by the assessee, emphasizing the fair market value opted by the assessee for the original shares. The Court highlighted the Supreme Court decision in Shekhawati General Traders Ltd. v. ITO [1971] 82 ITR 788, which clarified the cost of acquisition under section 55(2) of the Act. The Court emphasized that the fair market value determined by the assessee's option should be used to compute the cost of acquisition for the original shares. Regarding the bonus shares sold, the Court referred to the method laid down by the Supreme Court in CIT v. Dalmia Investment Co. Ltd. [1964] 52 ITR 567. It was noted that the cost of acquisition of bonus shares should be determined based on the particular point of time when the shares were acquired. The Court highlighted the relevance of section 48 (ii) of the Act in computing capital gains, emphasizing the deduction of the cost of acquisition from the full value of consideration received. In conclusion, the Court upheld the Tribunal's method of valuing the cost of shares for computing capital gains. The question of law was answered in the affirmative, ruling in favor of the assessee and awarding costs for the reference. Separate Judgment: No separate judgment was delivered by the judges in this case.
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