5215/ has number been explained.
234231/ as the income of the appellant from the sale of the shares and brought the said amount to tax.
in respect of its shares sold to k. d. jalan the appellant received rs.
he also acquired the managing agency of the elphinstone mills for a companysideration of rs.
1042990/ received by the assessee as allotted by mulraj kersondas out of the sum of rs.
80/ and each preference share was paid at the rate of rs.
234231/ .
sanat p. mehta j. b. dadachanji and o. c. mathur for the appellant.
appeal from the judgment and order dated april 21/22 1964 of the bombay high companyrt in income tax reference number 19 of 1961.
45 lakhs the balance of rs.
80/ per ordinary share and rs.
in the year 1942 mulraj kersondas obtained companytrol of the elphinstone spinning and weaving mills hereinafter referred to as the elphinstone mills .
the offer for sale was accompanied by a further offer that if the offer for sale was accepted mulraj kersondas would obtain the resignation of the present directors of the elphinstone mills and would also get appointed as directors persons of the choice of k. d. jalan and that he would obtain the resignation of the present managing agents of the elphinstone mills viz.
he stated in that letter that the shares offered stood in the names of himself his family members and his allied companycerns.
against the decision of the appellate assistant companymissioner the department appealed to the income tax appellant tribunal which allowed the appeal.
803544/ and the profit on the sale was worked out in the appellants books at rs.
88/ per preference share but when mulraj kersondas distributed rs.
the offer which mulraj kersondas made on september 25 1953 companysisted of four items viz.
j. the appellant is a private limited companypany controlled by mulraj kersondas and his numberinees.
45 lakhs out of which mulraj kersondas paid rs.
on september 25 1953 mulraj kersondas wrote a letter to k. jalan a well knumbern businessman of calcutta making an offer of sale of 25000 ordinary shares and 10000 preference shares of the elphinstone mills for a total sum of rs.
37/ per ordinary share and rs.
it was companytended for the appellant that the companysideration of rs.
37/ per ordinary share and rs.
88/ respectively to the respective shareholders whose shares had been sold to k. d. jalan.
the appellant took the matter in appeal to the appellate assistant companymissioner who accepted its companytention that the said amount represented a capital gain and did number form part of the income from the business of the appellant and accordingly allowed its appeal.
chidambaram mulraj and company limited it was further stated in the letter that the price to be paid the transfer of the shares the resignation of the directors and the appointment of the new directors of the choice of the purchaser and the resignation of the managing agents would all be simultaneous.
on the other hand the appellant purchased some more shares and added to its holdings in the shares of the said mills.
it was pointed out for the appellant that at the material time when the transaction had gone throughthe market price for elphinstone mills shares was rs.
10 lakhs from the total consideration of rs.
1042990/ though the appellant recorded its total receipts as rs.
sen t. a. ramachandran r. n. sachthey and s. p. nayar for the respondent.
k. d. jalan accepted the offer and paid the sum of rs.
in 1943 mulraj kersondas assigned the managing agency to a private companypany knumbern as chidambaram mulraj company limited whose shareholders were mulraj kersondas his numberinees and the appellant.
45 lakhs for this offer was a companyposite companysideration for all the four items.
civil appellate jurisdiction civil appeal number 2462 of 1966.
relinquishment of managing agency.
37/ and rs.
234.230/ was the income of the assessee ?
set aside the order of the appellate assistant companymissioner and restored that of the income tax officer.
45 lakhs.
the balance was distributed at rs.
35 lakhs among the ordinary and preference shares each ordinary share was paid at the rate of rs.
1037775/ and the discrepancy of rs.
1501 .
therefore in the year 1953 the appellant held in all 8693 ordinary shares and 2117 preference shares of the elphinstone mills.
1501 per preference share of the elphinstone mills as against the prevailing market price of rs.
thereafter at the instance of the appellant the income tax appellate tribunal stated a case to the high companyrt under s. 66 1 of the indian income tax act.
on the direction of the high companyrt the tribunal submitted a supplementary statement of the case and referred the following additional questions of law 2 .
35 lakhs was distributed by mulraj kersondas among the 25000 ordinary shares and 10000 preference shares.
45 lakhs was made by him to mulraj kersondas the latter appropriated rs.
after the offer was accepted by k. d jalan and the payment of rs.
at the end of the year 1948 the appellant held 5137 ordinary shares and 1131 preference shares of the elphinstone mills.
10 lakhs of the companysideration to one of the four items viz.
during the years subsequent to the year 1948 the appellant did number effect any sale in the elphinstone mills shares excepting a solitary transac tion of 160 shares in the year 1952.
38/ per preference share.
he paid the amount to the managing agents chidambaram mulraj and company limited deducting the amount of rs.
the appellant however did number show the surplus in its profit loss account but took it to the capital reserve account and showed it as a capital reserve in its balance sheet.
the case of the appellant is that the transaction entered into by mulraj kersondas with k. d. jalan which involved the sale of 25000 ordinary shares and 10000 preference shares of the elphinstone mills was number merely a transaction for the sale of the shares.
10 lakhs to chidambaram mulraj and company limited which relin quished the managing agency at his instance.
it is a dealer in shares both in forward and ready market.
the judgment of the companyrt was delivered by ramaswami.
during the years 1942 to 1948 the dealings in shares of the appellant included dealings in shares of elphinstone mills also and the profit and loss in the dealings of elphinstone mills was taken by the appellant to its revenue account during these years.
6 lakhs.
the present appeal is brought to this companyrt on a certificate granted by the high companyrt under s. 66 a of the indian income tax act 1922.
it appears that during the years from 1948 onwards there was a slump in the price of the shares of the elphinstone mills and the prices of the ordinary and preference shares on the material date in 1953 were rs.
1 the sale of 25000 ordinary shares and 10000 preference shares 2 procuring the resignations of the present directors of the elphinstone mills 3 securing the appointment of persons of the choice of k. d. jalan as directors of the mills and 4 obtaining the resignation of the present managing agents of the elphinstone mills.
in the assessment of the appellant for the assessment wear 1954 55 the income tax officer treated the amount of rs.
the companyt price of the shares to the appellant was rs.
