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TMI Blog1998 (4) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer of 3,933 shares by the assessee to C. B. Muthuswamy Chettiar and Co., was the assessee's capital gain resulting from the transfer of the shares within the meaning of section 2(47) of the Income-tax Act, 1961 ?" The assessee purchased 7,866 shares in Beena Roller Flour Mills (P.) Ltd., Thiruvalla, Kerala, from Gupta Group of Bombay at Rs. 65 per share. In the meeting of the board of directors of the assessee-company, held on June 16, 1979, the abovesaid transaction was referred to, apart from the further reference about the information given by the manager P. Subramania Pillai, to the board that there was an oral understanding with C.B. Muthuswamy Chettiar and Co., to purchase 3,393 equity shares out of the abovesaid 7,866 share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee before the Commissioner of Income-tax (Appeals) and the said appeal also met with the same fate. While deciding so, the Commissioner of Income-tax (Appeals) had found that the assessee was not the trustee of C.B. Muthuswamy Chettiar and Co., that there was no trust deed or written instrument evidencing the same and that the surplus of Rs. 58,995 would constitute capital gain under section 45 read with section 2(47) of the Act. On further appeal, the Appellate Tribunal concurred with the order of the Commissioner of Income-tax (Appeals) and further held that the reference made by the assessee to section 82 of the Indian Trusts Act will have no application and, therefore, the assessee is liable to pay tax on the short-term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of the board of directors of the assessee-company on July 21, 1979, wherein it was resolved to transfer the abovesaid 3,933 equity shares to C.B. Muthuswamy and Co., or its nominee for a consideration of Rs. 80 per share and to authorise M. Jayaram Pillai, the director of the company to take necessary steps for the transfer of the abovesaid shares. As per the resolution of the board of directors 3,933 shares were transferred to Muthuswamy and Co., and the value of the abovesaid shares at Rs. 80 each was adjusted from and out of the amount already credited by Muthuswamy and Co., in the account of the assessee-company. It is not in dispute that the assessee had earned a profit of Rs. 58,995 because of the transfer of the abovesaid 3,933 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not at Rs. 80 per share. As rightly contended by learned counsel for the Revenue, Muthuswamy and Co., had not supported the contention raised on behalf of the assessee that the assessee acted as a trustee in purchasing and holding the shares, which were transferred to Muthuswamy and Co. Therefore, the contention raised by learned counsel for the assessee that the abovesaid 3,933 shares were purchased by the assessee in trust for Muthuswamy and Co., as per section 82 of the Indian Trusts Act, cannot be sustained. In view of the abovesaid conclusion, reliance placed by learned counsel for the assessee on section 88 of the Indian Trusts Act, 1882, with regard to the advantage gained in a fiduciary character or on section 94 of the said Act re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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