Gujarat High Court
Navnitlal Sakarlal vs Commissioner Of Income-Tax on 20 March, 1993
Equivalent citations: [1994]208ITR194(GUJ)
JUDGMENT G.T. Nanavati, J.
1. The Income-tax Appellate Tribunal has referred the following three questions to this court under section 256(1) of the Income-tax Act, 1961 :
"1. Whether the Income-tax Appellate Tribunal erred in law in confirming the order of the Appellate Assistant Commissioner that as the bonus shares in question were acquired after January 1, 1954, the assessee could not be allowed the option of substitution of the market value as on January 1, 1954, in regard to the bonus shares ?
2. Whether the amount of Rs. 26,221 being 1/3rd of the sum of Rs. 78,663 paid to the Life Insurance Corporation of India by Sarangpur Mills for purchase of deferred annuity policy is includible in the hands of the assessee as income chargeable under the head 'Salaries' ?
3. Whether, on the facts, circumstances and evidence on record, the Income-tax Appellate Tribunal was right in law in coming to the conclusion that the amount of Rs. 26,221 utilised by Sarangpur Mills towards purchase of single premium for obtaining the deferred annuity policy did not form part of the remuneration payable to the assessee for the calendar year 1972 relevant to the assessment year 1973-74 ?"
2. Questions Nos. 2 and 3 are covered by our decision rendered in Income-tax References Nos. 445 of 1980, 212 of 1982 and 213 of 1982 (CIT v. Nandkishore Sakarlal (Indl.) [1994] 208 ITR 14). Following that decision, we answer question No. 2 in the negative and question No. 3 in the affirmative, that is, in favour of the assessee and against the Revenue. It may be stated that questions Nos. 2 and 3 were referred to this court at the instance of the Revenue, whereas question No. 1 is referred at the instance of the assessee.
3. As regards question No. 1, what we have to consider is whether the assessee was entitled to the option made available by section 55(2)(b)(i), even though the bonus shares in question were acquired after January 1, 1954. It was submitted by learned counsel for the assessee that even in respect of bonus shares, the assessee would be entitled to the option available under section 55(2)(b)(i). That would, no doubt, be so, provided the bonus shares were acquired before the relevant date mentioned in that provision. At the relevant time, the date which was mentioned in that provision was January 1, 1954. Therefore, in order to claim the benefit, the assessee was required to satisfy that the conditions mentioned in that provision were fulfilled. One of the conditions of that provision was that the asset in question should have become the property of the assessee before January 1, 1954. The bonus shares had not become the property of the assessee before January 1, 1954, and, therefore, the condition prescribed by section 55(2)(b)(i) was obviously not satisfied. Therefore, the contention raised on behalf of the assessee has become infructuous. In the result, question No. 1 is answered in the negative, that is, against the assessee and in favour of the Revenue. No order as to costs.