TaxTMI 
TaxTMI 
1983 (9) TMI 71
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....9 and 1960: From the Tribunal's judgment for each of the assessment years, both the Commissioner and the assessee applied for reference being made to the High Court. Therefore, for each of the three assessment years, common references have been made for such questions of law as the Tribunal thought should be referred on the applications moved by the Commissioner and the assessee. The law applicable for each of the three assessment years was the Indian I.T. Act, 1922. The questions referred to the High Court in I.T. Rs. Nos. 114 and 115 of 1972 (assessment year 1959-60) are as under : " 1. Whether, on the facts and in the circumstances of the case, sum of Rs. 2,19,380 representing the difference between the market value and the cost of....
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....fly stated, the facts, so far as they are relevant, are these. The assessee was formerly known as Bharat Bank Ltd. It held a number of shares in various companies and these shares constituted stock-in-trade in the hands of the assessee. Among the shares thus held were 1,24,000 ordinary shares of the New Central Jute Mills Co. Ltd., 12,455 ordinary shares of the Punjab National Bank Ltd. and another lot of 73,900 ordinary shares of the Punjab National Bank Ltd., relevant to the assessment years 1959-60, 1960-61 and 1961-62. By resolutions passed on October 31, 1958, September 23, 1959, and September 28, 1960, the assessee declared dividend on its ordinary shares in specie in the shape of shares of the three respective companies being distrib....
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....nilal v. CIT [1961] 41 ITR 275 (SC), has any relevance at all to the issues) before us. We may, therefore, only notice this decision on which strong reliance has been placed. The Bank of India had passed a resolution for increasing its share capital. It offered new shares of Rs. 50 each to its existing shareholders in the proportion of one new share for every three shares held by them at a premium of Rs. 50. The Navjivan Mills Ltd. held 5,000 shares in the said bank and thus became entitled to 1,666 new shares. The Navjivan Mills Ltd. purchased 66 shares and pursuant to a resolution by its board of directors distributed the right to purchase the remaining 1,600 shares among shareholders in the proportion of two shares of the bank for eac....
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....sion does not help the Revenue at all. The Supreme Court was only concerned with construing s. 2(6A) of the Act. It held that dividend may be distributed in cash or in specie. It was not concerned with any question as to the value of the specie distributed by way of dividend qua the company declaring the dividend. Distribution of dividend in specie, in our opinion, cannot be regarded as a trading activity, even where what is distributed is stock-in-trade of the assessee. As to what will be the value of the right or thing in the hands of the share-holders is wholly irrelevant for purposes of assessment of profit and loss of the company distributing the asset. We are, therefore, of the view that the Tribunal was right in coming to the conclus....