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TMI Blog2011 (1) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... LIFULLA F. M., KIRUBAKARAN N. JJ. JUDGMENT F. M. Ibrahim Kalifulla J.- 1. The assessee is the appellant. The substantial question of law that arises for consideration in this appeal reads as under : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in not accepting the cost of acquisition of shares as adopted by the appellant ?" 2. The brief facts which are required to be stated are that the appellant filed its return of income for the assessment year 1990-91 declaring a total income of Rs. 3,22,760. The Assessing Officer issued a notice under section 148 of the Income-tax Act, 1961 (for short, "the Act") on August 1, 1995, calling upon the assessee to show cause as to why the sale proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t original cost 12,99,274 Cost of 42538 bonus shares at average cost 6,49,637 19,48,911 (A) 10,28,749 (ii) Sale of 31078 equity shares of Coonoor Tea Estates Co. Ltd. 9,63,418 Cost of 15539 original shares at original cost 4,47,015 Cost of 15539 bonus shares at average cost 2,23,508 6,70,523 (B) 2,92,895 (iii) Sale of 17522 equity shares of Lucky Valley Investments and Holdings Ltd. 5,60,704 Cost of 17522 equity shares at 1-4-74 market value 3,46,060 (C) 2,14,644 Total (A + B + C) 15,36,288 48(2) Basic deduction 10,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) and the Commissioner of Income-tax (Appeals) having dismissed the appeal, further appeal was preferred by the appellant before the Income-tax Appellate Tribunal and by the order impugned in this appeal, the Tribunal also rejected the stand of the appellant. That is how the appellant has come forward with the present appeal before us. 7. We have heard Mr. R. Venkatanarayanan, learned counsel for the appellant and Mr. Naresh Kumar, learned senior standing counsel for the respondent. 8. The learned counsel for the appellant, in his submissions, relied upon the subsequent Division Bench decision of this court reported as CIT v. R.Ramachandran [2001] 249 ITR 511 (Mad) and contended that having regard to the said Division Bench decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f shares made by the appellant related to the original shares along with the bonus shares acquired by him. Having regard to the year of sale, the calculation will have to be made by treating the cut-off date, viz., April 1, 1974, as was stipulated under section 55(2)(b)(i) of the Act. Keeping the said fact in mind, when we analyze the ratio laid down by the earlier Division Bench of this court in the decision reported as T. V. S. and Sons Ltd. [1983] 143 ITR 644 (Mad), the principle laid down therein has been clearly set out at pages 648 and 649, which reads as under : "It must be clear, as a principle of elementary arithmetic, that by getting at the average cost of bonus shares which are included in the total holdings consisting of ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the original shares was not only for the original shares themselves but also for such shares which had yielded subsequently in the form of bonus shares and consequently the method of spreading over the cost of acquisition from the original shares on both the original and the bonus shares was the only proper method of determining the value of original shares, which were shown after the issue of the bonus shares and the sale of both were effected to them. Viewed in that respect, the method of calculation as adopted by the Assessing Officer was perfectly in order and consequently the long-term capital gains as arrived at by the Assessing Officer was fully justified. 13. As far as the later Division Bench decision of this court repor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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