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TMI Blog1990 (10) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta, the karta of the HUF. The karta died on13-1-1980. The aforesaid company issued 348 bonus shares on13-8-1980i.e., after the death of the karta. These shares were sold on29-5-1985. The delivery of these bonus shares was withheld by the company for want of succession certificate. The succession certificate was issued on21-3-1985. The assessee's plea was that these bonus shares were held for more than 36 months before their sale and the resultant profits were, therefore, long-term capital gains. 4. According to the assessing officer, these 348 bonus shares came into existence only after21-3-1985when as a result of the succession certificate, these were mutated in the name of the new karta of the HUF. The assessing officer further got s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F only after the succession certificate was obtained and the shares mutated. According to him, the transfer of shares in the name of new karta was a mere formality under the Company Law and did not divest the assessee HUF of the ownership of these shares at any stage. It was also submitted that once these shares were registered in the name of the new karta, these would relate back to the date when the bonus shares were actually issued. It was further submitted that omission to show the value of these bonus shares in the wealth-tax returns of the assessee HUF for assessment years 1981-82 to 1983-84 was a mistake for which the Department had an other remedy but that it would not mean that these bonus shares were not held by the assessee at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m capital gains. 9. Under the Company Law the person claimed to be the legal representative has to produce a Succession certificate or other legal evidence if the company requires such proof. It was precisely for this reason that after the death of the karta when 348 bonus shares were issued the company blocked the delivery of these bonus shares and these bonus shares were transferred/mutated only after the legal formalities had been complied with. 10. We also do not find any merit in the stand of the assessing officer that since the assessee did not enlist these shares in the affidavit or did not show them in the Wealth-tax returns for assessment years 1981-82 to 1983-84, the shares were not in existence till21-3-1985. These bonus shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued to a person until a share certificate is given to him. As regards 'allotment', it was held that in Company Law 'allotment' means "the appropriation out of the previously unappropriated capital of a company of a certain number of shares to a person. Till such allotment the shares do not exist as such. It is allotment in this sense that the shares come into existence." 13. On the basis of the above reasoning, we have no hesitation in holding that the bonus shares in the instant case definitely came into existence in August, 1980 and that these were issued to the assessee HUF on that very date even though share certificates were with held for want of legal formalities. So far as the assessee HUF was concerned, it was the owner of such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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