1993 (7) TMI 49

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.... present reference under section 256(1) of the Income-tax Act, 1961, the following question is referred to us for our decision : "Whether, on the facts and in the circumstances of the case, the cost of acquisition of the 300 shares in Alembic Chemicals Industries and 200 shares in Alembic Glass Industries, sold by the assessee during the previous year relevant to the assessment year in question....

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....hares on February 26, 1965, at the rate of Rs. 205 per share. According to the assessee, the cost of acquisition for the purpose of computation of capital gains should be worked out only on the basis of the actual cost incurred by the assessee, i.e., the price paid for the purchase of these shares. However, according to the Revenue, bonus shares had been issued to the assessee on the basis of the ....

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....e Income-tax Officer. The Tribunal appears to have taken the view that the specific shares which were sold, in respect of which the capital gains were required to be computed, were shares purchased from the market and in respect of which the cost of acquisition was specifically indicated by the assessee. The principle of averaging out was not applied by the Tribunal on the basis of its observat....

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....reme Court in the case of CIT v. Dalmia Investment Co. Ltd. [1964] 52 ITR 567, this court observed that the question before the Supreme Court was not merely with regard to the cost of bonus shares. The Supreme Court had worked out the cost of original as well as bonus shares by spreading the cost of original shares over the original shares and the bonus shares. Hence, for the purpose of working ou....