For the purpose of answering Question No.
1, some further material facts are as follows The said companypany in the previous year had advanced to four of its shareholders sums of Rs 48,250/ , Rs.14,667/ , Rs.
An appropriate order was obtained from the companyrt.
Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that numbercapital gain was assessable in the hands of the assessee as there was numberextinguishment of any right of the assessee and companysequently there was numbertransfer within the meaning of Section 2 47 of the Income tax Act, 1961, by the assessee of any capital asset for the assessment year 1963 64?
200/ .
The recluction was given effect on and from 20.5.1962.
of this reduct1on, there was a prorats distribution of some properties of the companypany and payment of money to the snareholders, including the assesses.
As a result.
1400/ and Rs.
The procedure prescribed under the Conpanies Act for the reduction of share capital was undergone.
As a result, the face value of ths shares in the companypany was reduced from Rs.1,000/each each to Rs.210/each.
In the income tax proceedings companynected with the property amounts so received by the assesses on reduction of his share capital in the said companypany, the Tribunal was required to companysider whether any capital gains accured to the assessee.
Thus the total advances to shareholders by the companypany were to the tune of Rs.
At the request of the department, the follwoing two questions were referred by the Income tax Appellate Tribunal, Madras Bench to the High Court for its opinion under Section 256 1 of the Income tax Act.
During the accounting period relevant to the assessment year 963 64, the assessee held 70 shares in M s.Kasthuri Estates Pvt, Ltd The face .value of each share was Rs.1,000/, During the said accouting period, the said companypany passed a resolution to reduce Us capital.
64.517/ .
Mrs.Suiata V. Manohar, J. At all material times, the respondent who is the assessee was a shareholder in M s.Kasthur Estates Pvt.
Ltd., Madras.
