Law:

Section:

Section 45 of the Income-tax Act, 1961 - Capital gains - Chargeable as - Assessment year 1968-69 - Assessee was a minor and 'G', his uncle, was his guardian - 'G' purchased certain shares of a company which was managed by him out of money belonging to assessee - Shares were sold immediately at Rs. 80 - per share which gave rise to a short term capital gain to assessee - Subsequently book value of shares was reduced from Rs. 80 - to Rs. 50 - per share - ITO calculated capital gains at Rs. 50 per share - On appeal, Tribunal by relying on certain entries in books of account of 'G' (HUF) concluded that money had been received by assessee and therefore, capital again was to be assessed in hands of assessee - Whether if there is no challenge to transaction represented by entries or to genuineness of entries, it is not open to revenue to contend that what is shown by entries, is not real state of affairs - Held, yes - Whether since there was no evidence before Tribunal to come to conclusion that amount did reach representative assessee (i.e., 'G') in his capacity as guardian of assessee, no capital gains was assessable in hands of assessee - Held, yes FACTS The assessee was a minor and his father 'S' was his natural guardian. 'S' gave the assessee in adoption to his brother 'G' who had no son. There were disputes amongst the members of the family to which the two brothers, belonged and the disputes were referred to two arbitrators. The arbitrators gave the management of company 'N' in the hands of 'G' and 'S'. During the accounting year relevant to the assessment year 1968-69, certain shares of company 'N' were purchased by 'G' at Rs. 80 per share as fixed by the arbitrator out of money belonging to the assessee. The shares were sold which immediately gave rise to a share term capital gains to the assessee. By a supplementary award, the arbitrators reduced the price of the share from Rs. 80 - to Rs. 50 - per share. In view of the supplementary award, the ITO calculated the capital gains on the footing that the cost of acquisition per share was Rs. 50 per share and assessed the income accordingly. On appeal, the AAC held that the capital gains were to be computed on…

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