2001 (1) TMI 43

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....hese references at the instance of the Revenue, the following common question is referred to us in respect of the assessment year 1983-84: "Whether, the Appellate Tribunal is right in law and on facts in directing the Income-tax Officer to take the average price of bonus shares for computation of capital gains in, respect of sale of equity shares of Sarangpur Cotton Mfg. Co. Ltd. without reduci....

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....the method of average costing for bonus shares relying upon the principles laid down by the Supreme Court in CIT v. Dalmia Investment Co. Ltd. [1964] 52 ITR 567 and Shekhawati General Traders Ltd. v. ITO [1971] 82 ITR 788 and certain other decisions. The Income-tax Officer did not accept the above method of determining the value of the bonus shares and took the actual cost for the shares purchased....

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.... the references, Mr. Akil Qureshi, learned counsel for the Revenue, and Mr. R. K. Patel, learned counsel for the assessees, stated that the controversy raised in these references is now concluded by the decision of the apex court in Escorts Farms (Ramgarh) Ltd. v. CIT [1996] 222 ITR 509, wherein it has been held that where bonus shares are issued and some of the original shares are sold subsequent....

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....opted or determined as it existed on the relevant statutory date because the shares were purchased prior to such statutory date. Mr. Patel for the assessees states that in all the present cases the original shares were purchased before the relevant statutory date and, therefore, the Tribunal was justified in following the principle laid down in Shekhawati General Traders Ltd.'s case [1971] 82 I....