Subsequent to the transfer the companypany companyverted the preference shares into ordinary shares giving the shareholders 8 ordinary shares for each preference share with the result that on December 31, 1954, Bai Laxmibai held in all 2,424 ordinary shares of the mills.
year 1959 60.
According to these decisions of the Appellate Tribunal the result was that for the assessment year 1957 58 the order of the Income Tax Officer that the amount of Rs, 70,860/ which was the profit or gain on the sale of the shares by Bai Laxmibai was liable to be included in the total income of Maneklal was upheld and for the later two, years the entire amount of interest viz.,
4,183/ should be included in the total income of Maneklal in each of those two years and the balance of Rs.
5,105/ should be deleted.
Bai Laxmibai sold 2,400 shares on August 1.
In the other two appeals, he partly allowed the appeals taking the view that only that part of the interest which was attributable to the monetary value of the shares companyered by the shares at the time of the gift was liable to be included in the total income of Maneklal in accordance with the provisions o.f s. 16 3 a iii and the balance companyld number be included under the said provision.
Appeal from the Judgment and order dated February 19/22, 1965 of the Bombay High Court in Income tax Reference No.
Since the monetary value of the shares gifted to Bai Laxmibai at the time when the gift was made was only Rs.
9,288/ .
Appeals against all these three assessment orders were filed before the Appellate Assistant Commissioner.
The whole amount realised by the sale of the shares was deposited by Bai Laxmibai with M s. A.H. BhivandiwaIla Co., in which Maneklal as well as his son, Sevantilal, happened to be partners.
The Department, on the other hand, appealed against the orders of the Appellate Assistant Commissioner for the years 1958 59 and 1959 60 insofar as they allowed exemption in respect of Rs.
According to the Income Tax Officer the gain which had resulted from the sale of the shares was the income of the wife of the assessee which arose directly or indirectly from the assets transferred by the assessee to his wife otherwise than for adequate companysideration and therefore was required to be included in the companyputation of the total income of Maneklal.
69,730/ , the interest attributable to it worked out at Rs.
The Appellate Tribunal dismissed the appeal of the assessee with regard to the assessment year 1957 58.
9,288/ was held to be liable to be included in the total income of Maneklal in each of those two years.
In the appeal against the first assessment order for the assessment year 1957 58 the Appellate Assistant Commissioner agreed with the view taken by the Income Tax Officer and dismissed the appeal.
9,288 which was the interest earned by Bai Laxmibai on the deposit of the sale proceeds with M s. Bhivandiwalla and Co. as the income of Maneklal under s. 16 3 a iii .
1,54,800/ resulting in a capital gain of Rs.
70,860/ and in the assessment orders for the next two years, he included the amount of Rs.
Accordingly, in the assessment order for the first year, the Income Tax Officer included the amount of Rs.
4,183/ out of the total amount of Rs.
For the assessment years 1958 59 and/959 60, the Appellate Tribunal allowed the appeals of the Department and dismissed the appeal of the assessee for the assessment.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Thereafter, at the instance of the assessee, the Appellate Tribunal stated a case to the High Court on the following questions of law Whether in companyputing the total income of Maneklal for the assessment year 1957 58, the sum of Rs.
2 of 1962.
68,730/ .
9,288/ for each year.
70,860/ which was the profit made by Bai Laxmibai on the sale of the shares, as income of Maneklal under s. 16 3 a iii of the Indian Income Tax Act.
In the assessment of Maneklal for the assessment year 1957 58 the Income Tax Officer included the amount of Rs.
2 of 1962.
Out, of these 2,424 shares.
Sanat P. Mehta, and J.B. Dadachanji, for the appellant.
1956, for the sum of Rs.
The amount deposited by Bai Laxmibai fetched a yearly interest of Rs.
2454 of 1966.
Niren De, Solicitor General, B.R.L. lyengar, and R.N. Sachthey, for the respondent.
In the year 1951 the assessee Maneklal Ujamshi hereinafter referred to as the assessee made a gift of 1,184 ordinary and 155 preference shares in Changdeo Sugar Mills Ltd. to his wife Bai Laxmibai.
The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by certificate from the, judgment of the Bombay High Court dated the 22nd February, 1965 in Income tax Reference No.
9,288/ which was received by Bai Laxmibai in each of those years, he directed that only an amount of Rs.
The total value of these transferred shares on the date of the transfer was Rs.
70,860/ as companyputed under s. 12B of the Income tax Act.
9,288/ in the total taxable income of Maneklal.
The Income Tax Officer also took the view that the amount of interest which Bai Laxmibai had received from the sale proceeds deposited by her with M s. Bhivandiwalla Co. was also income of the wife of Maneklal which arose directly or indirectly from the assets transferred by Maneklal to her.
Similarly, in the assessment of Maneklal for the assessment years 1958 59 and 1959 60, the Income Tax Officer included in each year the amount of Rs.
Against the orders of the Appellate Assistant Commissioner on these appeals the assessee appealed to the Appellate Tribunal.
4,l 38/ .
Out of the total interest of Rs.
