Under the Income tax Act, 1922, at the relevant time, issue of such bonus shares by capitalisation of the accumulated profit was number treated as distribution of dividend.
At the instance of the assessees, the Tribunal referred the following question of law to.
Appeals from the judgment and decree dated January 17, 1964 of the Allahabad High Court in Income tax Reference No.
In companymissioners of Inland Revenue v. John Blott 1 the House of Lords by majority held that bonus shares issued by a Company in exercise of the power under the Articles of Association are number dividend, and therefore number income of the shareholder.
33,170 in the assessment year 1950 51 being the sale proceeds of the bonus shares, holding that those receipts represented income of the assessee arising from their business in shares.
by way of bonus to the shareholders.
The Articles of Association of the various Companies which had issued the bonus shares.
are number on the record.
The Commissioner has appealed to this Court with certificate granted by the High Court.
193 of 1955.
Full Bench of the High Court Manchanda, J., dissenting ans wered the question in the negative.
1765 to 1767 of 1967 .
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
K. Daphtary, Attorney General, R. Gopalakrishnan, R.N. Sachthey and B.D. Sharma, for the appellant in all the appeals .
The High Court called for a supplementary statement of case.
N. Shroff, for the respondent in C.A. No.
1764 to 1767 of 1967.
The Judgment of the Court was delivered by Shah, J. M s. Madan Gopal Radhey Lal hereinafter called the assessees deal in shares and securities.
The Income tax Officer brought to tax Rs.
They held in the relevant years as part of their stock in trade shares of certain companypanies.
41,625 in the assessment year 1948 49 Rs.
From time to time the assessees sold the bonus shares received by them.
55,607 in the assessment year 1946 47 Rs.
1764 of 1967 .
P. Kapur for 1.
The assessees received from the Companies at different times bonus shares proportionate to their equity holding.
1,43,050 in the assessment year 1949 50 and Rs.
N. Shroff, for the respondent in As.
The order of the Income tax Officer was companyfirmed by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
