Accordingly, the Mills exercised the right to take over only 66 shares out of the shares offered and resolved that the right to the remaining 1,600 shares be distributed amongst its 800 share holders.
The Mills as the holder of 5,000 shares became entitled to receive 1,6662 shares of the Bank of India at the rate of Rs.
100 for each new share.
The seven appellants as holders of 570 shares of the Mills became entitled to 1,140 shares of the Bank of India.
100 per share.
Appeal from the judgment and order dated February 22, 1956, of the former Bombay High Court in I.T.R. No.
The shareholders had to pay Rs.
364 of 1957.
IT IS HEREBY RESOLVED that the funds of this companypany may be invested in the 66 shares out of 1,666 shares offered by the Bank of India Ltd., and the right to the remaining 1,600 shares is hereby distributed among 800 shares of this companypany in the proportion of right to two shares of the Bank per one ordinary share held in this companypany.
50 as capital and Rs.
50, but the shares were issued at a premium of Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
On receiving the circular letter, the Directors of the Mills passed the following resolution Resolved that the companypany having a holding of 5,000 ordinary shares in the capital of the Bank of India Ltd. having number received an intimation from the said Bank that this companypany is entitled to get 1,6662 more ordinary shares on payment of Rs.
The order of the Income Tax Officer reassessing the income of the seven appellants was companyfirmed in appeal by the Appellate Assistant Commissioner and by the Appellate Tribunal.
The face value of the new shares was to be Rs.
The appellants held 570 out of a total issue of 800 shares of the Navjivan Mills Ltd., Kalol, a public limited companypany hereinafter referred to as the Mills.
N. Kripal and D. Gupta, for the Respondent.
The Bank of India companymunicated its resolution by letter dated May 25, 1948 and enclosed therewith three forms, form A for acceptance, form B for renunciation and form C which may companypendiously be called a form for allotment to numberinees.
Between the years 1943 47, the Mills purchased 5,000 shares of the Bank of India Ltd. At an extraordinary general meeting of the shareholders of the Bank of India held on May 6, 1948, a resolution was passed increasing the share capital of the Bank and for that purpose offering new shares to the existing shareholders in the proportion of one new share for every three shares held by the shareholders.
A. Palkhivala and IN.
The Judgment of the Court was delivered by SHAH, J. This is an appeal by seven appellants with leave granted by the High Court of Judicature at Bombay certifying that it involves a question of importance.
50 as premium per each share and it is companysidered proper to invest in the said issue of the said Bank the funds of this companypany to the extent of 66 shares only and to distribute the right of this companypany to the remaining 1,600 shares of the said issue amongst the shareholders of this companypany in the proportion of the shares held by them in this companypany.
The Managing Agents may take steps to intimate the shareholders to exercise the right if they like to do so.
November 22.
Shroff, for the Appellants.
The appellants agreed to the allotment of these shares and ultimately transferred them to a private companypany Jesinghbai Investment Co. Ltd. The assessment of the seven appellants and of other shareholders of the Mills was reopened under s. 34 1 a of the Indian Income Tax Act by the Income Tax Officer on the footing that, the release by the Mills of the shares of the Bank of India amounted to a distribution of dividend and the value of the right released in favour of the shareholders though taxable under s. 12 of the Act, had escaped tax.
31/1955.
