2001 (9) TMI 61

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....under section 2(14) and the sale thereof does not give rise to capital gains liable to tax under 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 (si....

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..... None appeared for the assessee. Heard learned counsel for the Revenue. Mr. Agarwal submits 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 reache....