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TMI Blog1967 (11) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... orm of, (a) 13,087 shares of Gwalior Rayon and Silk Manufacturing Co. Ltd. @ Rs. 10 per share 1,30,870.00 (b) 416 shares of Hind Cycles Ltd. @ Rs. 125 per share 52,000.00 (c) In cash 358.40 ------------------------------ Rs. 1,83,228.40 ------------------------------ The Income-tax Officer valued the shares of Gwalior Rayon and Silk Manufacturing Co. Ltd. and Hind Cycles Ltd., at the market rate, namely, at Rs. 14.60 per share for Gwalior Rayon and Silk Manufacturing Co. Ltd. and at Rs. 128.50 per share for Hind Cycles Ltd. and came to the conclusion that the total shares, received by the assessee in the aforesaid two companies, were equivalent in terms of money to Rs. 2,44,526. Since the assessee had shown the value of the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps, according to the market value when they have reached the hands of the assessee, in the hands of the distributing company, however, the said share scrips have been accepted to be of the value put upon them by the distributing company. The department, obviously, cannot adopt two standards of value in respect of the same item. The departmental representative also placed reliance upon the decision of their Lordships of the Supreme Court in the case of Kantilal Manilal. The relevant observation, upon which great stress has been laid by the departmental representative, reads as follows : " If instead of selling the right in the market and then distributing the proceeds, the mills directly transferred the right, the benefit in the hands of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed as an extra dividend income of the assessee ? " In contending for a negative answer to the question, the learned counsel for the revenue relied upon the decision of the Supreme Court in Kantilal Manilal v. Commissioner of Income-tax. What happened in that case was that the Bank of India, which had passed a resolution for increasing its share capital, offered new shares of Rs. 50 each to its existing shareholders in the proportion of one new share for every three shares held by them, at a premium of Rs. 50. The Navjivan Mills Ltd., which held 5,000 shares in the bank and which became entitled to 1,666 new shares, purchased 66 shares in the bank and pursuant to a resolution of its board of directors, distributed the right to purchase t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of property or right having monetary value. The resolution, it is true, did not purport to distribute the right amongst the shareholders as dividend. It did not also take the form of a resolution for distribution of dividend; it took the form of distribution of a right which had a monetary value. But by the form of the resolution sanctioning the distribution, the true character of the resolution could not be altered. We are, therefore, of the view that the High Court was right in holding that the distribution of the right to apply for and obtain two shares of the Bank of India (at half their market value) for each share held by the shareholders of the mills amounted to distribution of dividend. " In this case, the amount received by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the corporation were accepted to be of the value put upon them by the corporation. If the accumulation be of a particular value, it cannot, assume a different value on distribution. Then again, the assessee was entitled to dividend at the rate declared by the Pilani Investment Corporation Ltd. It could not aspire for more and had no right to anything more. It may be that what it got was more favourable than cash payment. But that is fortuitous. Let us examine it from another point of view. If the shares received by the assessee, as dividend in kind, happened to be of lesser market value than what was put on them by the dividend declaring company and if the assessee received the same in full satisfaction of the dividend declared, could i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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