TaxTMI 
TaxTMI 
2002 (10) TMI 21
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....hares of SISCO Ltd. As per the offer, for the transfer of each share, ESSAR Shipping Ltd. would give a consideration in cash of Rs. 65 and 50 equity shares of ESSAR Shipping Ltd. of the face value of Rs. 10 each as fully paid. Pursuant to the said offer, the appellant sold his 255 shares to ESSAR. The assessee got 12,750 shares of ESSAR and Rs. 16,575 as consideration for the transfer of 255 shares of SISCO. The appellant filed his return of income under the Act for the assessment year 1992-93, wherein he had returned capital gains on account of the sale of 255 equity shares of SISCO Ltd., at Rs. 66,810. The appellant for the purpose of computation of the capital gains had adopted the full value of the consideration of a share of ESSAR at ....
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....ed by the Supreme Court in CIT v. Motors and General Stores (P.) Ltd. [1967] 66 ITR 692. In view of the nature of the controversy involved in this appeal, it is necessary to refer to the terms of the offer with reference to which the appellant had sold his shares. The terms of the offer made by ESSAR for acquiring the shares of SISCO are contained in the order of the Tribunal. The relevant portion of the same are extracted hereinbelow: "1. Background of the offer: Essar Shipping Ltd. (ESSAR) is one of the Essar group of companies. The other, major companies in the group are Essar Gujarat Ltd., and Essar Invest ment Ltd. The group is committed to high growth, high technology core sector and has diversified over the years into various acti....
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....; 20.00 Essar Investments Ltd. 13,250 2.21 ---------- ------- 1,33,235 &nb....
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....sixty five only) in cash. This total consideration is hereinafter referred to as "the offer price". As on February 28, 1991, the closing market price of ESSAR's equity shares were Rs. 38.50 per share at the Madras Stock Exchange and Rs. 37.50 at the Bombay Stock Exchange. Based on these prices, the offer price is more than the highest market price of the equity shares of SISCO during the six months immediately preceding this date. The closing market price of ESSAR shares was Rs. 38.50 per share at Madras Stock Exchange as on March 6, 1991, which was the date on which ESSAR's board of directors decided on the consideration to be offered to the shareholders of SISCO." The contention of counsel for the assessee is that the consideration f....
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....ecessarily the same has to be fixed in terms of the market value (Motors and General Stores (P.) Ltd. v. CIT [1967] 66 ITR 701 (AP)). We find that ESSAR in the offer has clearly stated that as on February 28, 1991, the closing market price of ESSAR equity shares was Rs. 38.50 at the Madras Stock Exchange and Rs. 37.50 at the Bombay Stock Exchange and ESSAR has clearly stated that: "Based on these prices, the offer price is more than the highest market price of the equity shares of SISCO during the six months immediately preceding to this date." The offer further states that: "The closing market price of ESSAR shares was Rs. 38.50 per share at the Madras Stock Exchange as on March 6, 1991, which was the date on which ESSAR's board of dir....