9911796707
TMI Blog1968 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year 1946-47 ; Rs. 41,625 in the assessment year 1948-49 ; Rs. 1,43,050 in the assessment year 1949-50 and Rs. 33,170 in the assessment year 1950-51 being the sale proceeds of the bonus shares, holding that those receipts represented income of the assessees arising from their business in shares. The order of the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal. At the instance of the assessees, the Tribunal referred the following question of law to the High Court of Allahabad for opinion : " Whether the sale proceeds of bonus shares which had been issued in respect of shares which formed part of the assessees' stock-in-trade of the share dealing business are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively against the whole world whether it will withhold profits it has accumulated from distribution to its shareholders as income, and as an alternative, not distribute them at all, but apply them in paying up the capital sums which shareholders electing to take up unissued shares would otherwise have to contribute. If this is done, the money so applied is capital and never becomes profit in the hands of the shareholder at all. What the latter gets is no doubt a valuable thing. But it is a thing in the nature of an extra share certificate in the company. His new shares do not give him an immediate right to a larger amount of the existing assets. These remain where they were. The new shares simply confer a title to a larger proportion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court (to which reference was made by the Tribunal) in Commissioner of Income-tax v. Maniklal Chunnilal and Sons Ltd. (I.T. Reference No. 16 of 1948) that bonus shares received by a shareholder who carriers on business in shares and securities " ipso facto become accretion to his stock-in-trade. " Bonus shares would normally be deemed to be distributed by the company as capital and the shareholder receives the shares as capital. The bonus shares are accretions to the shares in respect of which they are issued, but on that account those shares do not become stock-in-trade of the business of the shareholder. A trader may acquire a commodity in which he is dealing for his own purposes, and hold it apart from the stock-in-trade of his bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the Tribunal cannot be sustained. Counsel invited our attention to the supplementary statement of case in which the Tribunal recorded that in the copies of balance-sheets filed by the assessees as of February 14, 1948, March 8, 1949, and March 8, 1950, the shares did not find a place and that the sale, proceeds of the bonus shares were credited in the capital account of the assessees for the four years in question on the last dates of the relevant accounting years. But the Tribunal has found that the sale proceeds of the bonus shares were received in the course and as part of their business in shares and were on that account taxable. It is somewhat unfortunate that the Tribunal has not set out in detail the facts found by it and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
