Law:

Section:

Section 2(47), of the Income-tax Act, 1961 - Capital gains - Transfer - Assessment year 1982-83 - Assessee converted its investment in shares to stock-in-trade and contributed those shares to a firm as his capital - Assessing Officer held that there was transfer of capital asset, hence, capital gain was chargeable - Whether since revenue admitted in no uncertain terms that capital assets were transferred within meaning of section 2(47) from assessee to firm by way of capital contribution, genuineness of said firm could not be questioned - Held, yes - Whether since transfer was without consideration, no tax on capital gain could be levied as computation machinery failed - Held, yes Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Whether non-consideration of of jurisdictional High Court or Apex Court would always constitute mistake apparent from record and Tribunal, in exercise of powers under section 254(2) can rectify it - Held, yes FACTS The assessee was holding certain shares as capital assets in its books of account. The said shares were converted into stock-in-trade and contri-buted by the assessee to a partnership firm as his capital. The Assessing Officer held that the conversion of capital assets into stock-in-trade was not genuine and only capital assets were transferred to the partnership firm and not stock-in-trade as claimed by the assessee. Accordingly, the Assessing Officer taxed the difference in cost of the shares and market value of the shares as capital gains in the hands of the assessee. The order of the Assessing Officer was also confirmed by the Commissioner (Appeals). On further appeal, the Tribunal upholding the order of the the Commissioner (Appeals) held that the transaction would amount to transfer within the meaning of section 2(47) in light of the decision in the case of Sunil Siddharthbhai v. CIT [1985] 16 ITR 509/23 Taxman 14W. Thereafter the assessee preferred miscellaneous application contending that the Tribunal failed to apply second proposition of said decision of the Supreme Court and that the instant case fell outside the scope of capital gain taxation. The miscellaneous application was allowed by…

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