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TMI Blog1985 (12) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... nnual general meeting on 29-8-1979, they are going to offer 28,55,500 new equity shares of Rs. 10 each for cash and out of the said shares 16,05,500 would be offered as right shares to the existing members in the proportion of one new equity share for every existing five equity shares and another resolution in the same meeting was passed by which bonus shares were issued to the shareholders in the proportion of one equity share for every five equity shares held by the members of the company. The record date was fixed for the issue of right and bonus issues on 27-10-1979. The assessee-company was offered 16,106 right shares. The assessee-company sold 4,000 right for right shares whereas the right for 12,106 shares lapsed. The assessee sold r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han the public issue. He, therefore, took the cost of right at Rs. 3.50 and, accordingly, urged that there was no capital gain. 4. The department as well as the assessee are in appeal against the order of the Commissioner (Appeals). Shri Bhattacharjee, the counsel of the assessee, stated the facts and urged that the Commissioner (Appeals) was not justified in attributing the cost of the right at Rs. 3.50. Shri Bhattacharjee stated the facts in detail and urged that after the record date the shares were quoted as ex-bonus and right. Before the issue of right and bonus, the shares were quoted at Rs. 42.75. After the issuance of right and bonus, the shares of the company were quoted at Rs. 30.25. Therefore, the value for right and bonus was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termined by the ITO at the rate of Rs. 1.79 per share. The ITO first calculated the cum-right value and thereafter deducted the ex-right bonus value and divided the same by three, on the ground that the East India Hotels Ltd. issued right, bonus and public issue. The calculation of the ITO was modified by the Commissioner (Appeals) who excluded the public issue and came to the conclusion that by the public issue the right of a shareholder is not affected. Further, he after considering the fact that the right issue was more than the public issue, took the higher value for the cost at Rs. 3.50 per share. 7. The calculation of the value of the rights which has been renunciated by the assessee-company for 4,000 right shares is very simple. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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