Court directs Revenue to calculate tax based on share value at Rs. 147 for capital gains. Fair valuation emphasized.

The court ruled in favor of the appellant in part, directing the Revenue to calculate the tax based on the value of one share of the acquiring company at Rs. 147 for the computation of long term capital gains on the transfer of shares. The court disagreed with the Tribunal's decision to consider the market value of the acquiring company's shares, emphasizing the importance of fairness and reasonableness in valuation for tax purposes. The appellant's appeal was allowed in part, highlighting the need for consistency in determining the value of shares in similar cases.

---

---

Issues:
1. Computation of long term capital gains on transfer of shares.
2. Consideration received for transfer of shares - market value vs. face value.
3. Application of Tribunal's earlier order in a similar case.

Computation of long term capital gains on transfer of shares:
The case involved a dispute regarding the computation of long term capital gains arising from the transfer of shares held by the appellant in a company. The appellant had 4,198 shares in the company, and another company desired to acquire the majority shares, leading to an open offer to shareholders. The appellant accepted the offer, receiving consideration in cash and equity shares. The Assessing Officer calculated the value of consideration based on the market value of the acquiring company's shares, resulting in a higher figure than what the appellant had initially considered. The appellant contested this calculation, leading to an appeal before the Income-tax Appellate Tribunal, which upheld the Assessing Officer's decision.

Consideration received for transfer of shares - market value vs. face value:
The primary issue in the case was whether the market value or the face value of the acquiring company's shares should be considered for computing the consideration received for the transfer of shares. The appellant argued that only the face value should be taken into account, while the authorities considered the market value. The Tribunal referenced a previous case where the value of the acquiring company's shares was determined at Rs. 147, and based on that, upheld the decision to consider the market value for computing the consideration. However, the court disagreed with this approach, emphasizing that the value of the shares should be fixed at Rs. 147, and the Revenue should calculate the tax due based on this value.

Application of Tribunal's earlier order in a similar case:
The Tribunal's decision in a previous case regarding the valuation of the acquiring company's shares was a crucial aspect of the current case. The Tribunal's reliance on the earlier order to dismiss the appellant's appeal was challenged by the court, which pointed out that if the Tribunal had fixed the value of the shares at Rs. 147 in the previous case, it should do the same in the current case. The court emphasized the importance of equity, fairness, and reasonableness in determining the value of the shares for tax calculation purposes. Ultimately, the court allowed the appeal in part, directing the Revenue to calculate the tax based on the value of one share of the acquiring company at Rs. 147.

---