2001 (3) TMI 5 - SCH - Income Tax

Whether, in computing the capital gains arising from the transfer of original shares, the subsequent issue of bonus shares should be taken into account for the purpose of averaging and reducing the cost of acquisition of those original shares - question is now covered by the decision of this court in Escorts Farms (Ramgarh) Limited v. CIT - Following that decision, the question is answered in the affirmative and in favour of the Revenue.

Summary

The Supreme Court ruled that in computing capital gains from the transfer of original shares, subsequent issue of bonus shares should be considered for averaging and reducing the cost of acquisition. The decision was based on the case of Escorts Farms (Ramgarh) Limited v. CIT [1996] 222 ITR 509. The appeal was disposed of in favor of the Revenue with no costs ordered.