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Issues involved:
The judgment involves issues related to the cost of acquisition for computing capital loss or gains, the passing of controlling interest to family members, and the exemption of capital gains under a specific tax order. Cost of acquisition for computing capital loss or gains: The case involved a dispute over the cost of acquisition of shares for computing capital loss or gains. The assessee purchased shares at a higher price than the market value, claiming it was for acquiring controlling interest. The Tribunal held that the excess amount paid represented the price of controlling interest, which the assessee contended was an error. The High Court disagreed with the Tribunal, stating that controlling interest is an incidence arising from holding shares and cannot be separately acquired or transferred. The Court held that the cost of acquisition should be what the assessee actually paid for holding the block of shares. Passing of controlling interest to family members: Another issue was whether the controlling interest of the assessee in a company passed on to family members along with the shares sold to them. The Tribunal did not allow this alternative case to be set up initially, but the High Court directed the Tribunal to refer this question. However, as the first issue was decided in favor of the assessee, this question did not survive for consideration. Exemption of capital gains under specific tax order: The final issue was regarding the exemption of capital gains realized on the sale of land within the compound of a palace under a specific tax order. The assessee contended that the capital gains were exempt under a particular provision, but the Tribunal rejected this claim. The High Court agreed with the Tribunal, stating that the exemption did not cover income in the form of capital gains. Therefore, the capital gains realized by the assessee were not exempt from taxation under the relevant tax order. The High Court answered the questions accordingly, with each party bearing their own costs in both references.
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