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TMI Blog1982 (10) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... s to his grandchildren for a total sum of Rs. 2,56,250. Gemini Pictures Circuit (P.) Ltd. was a private limited company whose authorised capital was Rs. 25 lakhs, divided into 25,000 shares of Rs. 100 each. By 30-12-1953, 16,535 shares of the face value of Rs. 100 each were issued, subscribed and fully paid up. On 31-12-1953. 4,311 shares of the face value of Rs. 100 each were issued to five shareholders, including the assessee, of which only Rs, 10 per share was called and paid, i.e., by 31-12-1963, the subscribed capital of the company was Rs. 16,96,910 made up of 16,535 shares of Rs. 100 each fully paid up and 4,311 shares of the face value of Rs. 100 each, but only Rs. 10 paid. This company had also reserves to the extent of Rs. 16 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-1953 in respect of 1,055 shares 94,950 Total cost of shares ----------------- 1,44,580 " ----------------- It will be seen from the above working that the subsequent calls paid on this partly paid up shares of Rs. 94,950 was added by the ITO to arrive at the total cost of the shares. That is now the bone of contention before us which we will presently show how it had been treated. 4. Aggrieved by this calculation of shares as on 1-1-1954, the assessee preferred appeal to the AAC who confirmed the computation of the capital gains as made by the ITO. 5. In the further appeal filed before the Tribunal against the order of the AAC, the Tribunal, after considering the legal position, directed the ITO to revalue the shares as on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (of the order of the Tribunal), it is clear that the Tribunal had taken into consideration that certain shares were partly paid as on 1-1-1954 and they have also observed that it is immaterial for the determination of the value of the shares as on 1-1-1954. Hence, the fair market value of the share as determined by the Tribunal is only Rs. 158.14 per share." The AAC then considered the question whether the amount of Rs. 90 per share paid subsequently could be taken as cost of improvement of the asset under section 55(b)(i) of the Income-tax Act, 1961 (' the Act '). He rejected this contention saying that the subsequent payment on shares could not be considered as cost of acquisition of shares as on 1-1-1954. It is against this order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81] 131 ITR 234, that the paid up capital meant capital paid as on 1-1-1954 and in arriving at the value of the shares as on 1-1-1954, the capital paid on that date alone should be taken. Subsequent payments even if they are in pursuance of a resolution, should not be considered at all because the subsequent payments could not be regarded as capital paid as on 1-1-1954, That was also the direction of the Tribunal. The ITO, therefore, correctly took the value of the shares and in this context there is no necessity to include Rs. 94,230 again when the ITO considered the partly paid shares and worked it out at Rs. 158.14 per share. The amount paid by way of call money must also be deemed to have been included in the value of Rs. 158.14 and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment with the following observations : ". . . in the result the assessment is set aside with a direction to the ITO to go through the contract papers again and do the assessment afresh. . . " Before the ITO could take up the matter again, the Supreme Court, in the meantime, delivered a judgment holding that proceeds from sale of loom hours were of capital nature, not assessable as income. The assessee, thereafter, filed a revised return claiming that the sum of Rs. 5 lakhs odd representing the sale proceeds of loom hours was not taxable. The ITO rejected the assessee's claim and passed a fresh assessment order. On further appeal, the AAC held that the sum of Rs. 5 lakhs odd was not taxable. On further appeal, the Tribunal set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAC, the AAC was precluded from entertaining a new plea, based on the latest decision of the Supreme Court, in the subsequent appeal. This decision is, therefore, an authority for the proposition that while giving effect to the orders of the appellate authorities, the ITO is precluded from disturbing the original assessment, i.e., to disturb the findings given in the original assessment which were not in dispute. They assumed finality and to disturb them, if they are found to be incorrect, the proceedings to be taken are under different sections but not in the guise of giving effect to the orders of the appellate authorities. Since the ITO had jurisdiction only to look into the points that had been before the appellate authorities and not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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