1987 (12) TMI 11 - HC - Income Tax

Summary

Issues involved:
The judgment involves a challenge to the order made by the Commissioner of Income-tax u/s 264 of the Income-tax Act, 1961 regarding capital gains arising from the sale and resale of shares in a company.

Details of the judgment:

1. Background:
The petitioners held 1,700 shares each in a company and entered into a contract for the sale of shares, which was conditional upon obtaining necessary permissions. The shares were agreed to be sold before a specified date.

2. Contention:
The appellants argued that the shares were not actually sold due to lack of required sanctions, and thus, the capital gains reported in their returns were a mistake.

3. Court's Analysis:
Upon examining the agreement, the court found that the intention of the parties was clear - if any shares remained unsold due to lack of permissions, even the shares already transferred had to be resold and the amounts repaid.

4. Conclusion:
The court upheld the Commissioner's decision, stating that the assessees did not err in filing their returns as the transaction was understood by the parties involved. The appeals were dismissed, and each party was directed to bear their respective costs.