2000 (11) TMI 75

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.....--- During the assessment year 1973-74, the assessee sold 500 shares in Madras Motor and General Insurance Company Limited, of which, the assessee had acquired 25 shares prior to January 1, 1954, and in respect of which the assessee was entitled to opt for treating the fair market value as on January 1, 1954, as the cost of acquisition under section 55(2) of the Income-tax Act, 1961. The assessee....

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....e bonus shares were required to be assigned a value by spreading the cost of acquisition over the original shares and the bonus shares, but in respect of the shares held prior to January 1, 1954, the cost of acquisition of shares could not be disturbed. The Tribunal also held that the actual cost of acquisition for the shares held subsequent to January 1, 1954, should also be left undisturbed. ....

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....nus shares has to be determined by spreading the cost of the old shares over the old shares and new shares. However, while so holding, the court distinguished the case before it from that of Shekhawati General Traders Ltd.'s case [1971] 82 ITR 788 (SC), as no question of considering the manner in which the statutory cost of acquisition of shares held prior to January 1, 1954, arose for considerati....

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.... to January 1, 1954, cannot be disturbed, the assessee having opted to have the fair market value of that asset as on January 1, 1954, as the cost of acquisition. The value of the bonus shares subsequently received which are relatable to those shares cannot be regarded as being without any value. Their value has to be determined by spreading that statutory cost over the 17 shares. Thus, while the ....