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TMI Blog2001 (9) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... er sections 45 and 48 of the Act? 2. Whether the Tribunal was right in its view that B. C. Srinivasa Setty's case [1981] 128 ITR 294 (SC) has effected a change in the legal position hitherto obtaining since Dalmia's case [1964] 52 ITR 567 (SC), with regard to capital gains on the sale of bonus shares and in that view exempting the surplus arising out of the sale of bonus shares from capital gains tax?" The assessee, Harsh Chemicals Ltd. is a company. The relevant assessment year is 1992-93. The assessee has 55,000 equity shares in Russell Industries Ltd. The shares were purchased in the account year relevant to the assessment year 1994-95 (sic). In respect of those shares, the assessee was allotted bonus shares on May 27, 1991, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that now the issue has been concluded by a decision of the apex court in the case of Escorts Farms (Ramgarh) Ltd. v. CIT [1996] 222 ITR 509. Their Lordships in the case of Escorts Farms (Ramgarh) Ltd. [1996] 222 ITR 509 (SC), have considered whether bonus shares have any cost of acquisition for the purpose of capital gains liable to tax under section 45 of the Act. While considering the issue whether bonus shares have any cost for taxing capital gains on the sale of such bonus shares, their Lordships have analysed the issue at page 521 which reads as under: "A close analysis of the facts of the above case, and the ultimate conclusion reached by this court, will go to show that the learned judges laid stress on the fact that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral applications. We should also state that the character of the owner of the shares as an 'investor' or as a 'dealer' is of no consequence." Following the view taken by the learned judge in the case of Escorts Farms (Ramgarh) Ltd. [1996] 222 ITR 509 (SC), it appears that the Tribunal has committed an error in following the decision of the Supreme Court in the case of B. C. Srinivasa Setty [1981] 128 ITR 294. In the result, we answer the first question in the negative, that is, in favour of the Revenue and against the assessee. We also answer the second question in the negative, that is, in favour of the Revenue and against the assessee. The reference application so made, accordingly, stands disposed of. All parties are to act o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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