Law:

Section:

section 45 of the income-tax act, 1961, read with rule 115(b ) of the income-tax rules, 1962-capital gains-chargeability as-assessee sold certain shares and securities held by him in uk on different dates, many of them prior to 19-11-1967 and remaining thereafter, but all of them before 31-3-1968-prior to 18-11-1967 official exchange rate between pound sterling and indian rupee was 1 : 21 which was fixed at 1:18 on and from 19-11-1967 due to devaluation by uk of its pound sterling-whether, official exchange rate between pound sterling and rupee prevailing on 31-3-1968, that being last day for computation of total income of relevant assessment year, should alone be basis for computation of capital gains and not as on very different rates they were received, arose or accrued-held, no-whether rule 115 of the income-tax rules, 1962 is ultra vires the 1961 act-held, no Facts The assessee, a British subject but a resident Indian sold certain shares and securities held by him in the UK on different dates many of them prior to 19-11-1967 and the remaining thereafter but all of them prior to 31-3-1968. Prior to 18-11-1967, the official exchange rate between pound sterling and the Indian rupee was 1 : 21. On 18-11-1967, UK devalued its pound sterling and thereafter the official exchange rate on and from 19-11-1967 between pound sterling and the rupee was fixed at 1:18. For the assessment year 1968-69, corresponding to previous year ended on 31-3-1968, the assessee claimed that the capital gains which accrued from the sale of shares and securities in UK including dividends from UK should be computed at the official exchange rate prevailing as on 31-3-1968 and not as on the very dates they were received, arose or accrued either in UK or in India. The ITO rejected the assessee's claim. On appeal, the Tribunal, while placing reliance on rule 115(b) of the Income-tax Rules, 1962 also upheld the ITO's order. On reference, the assessee contended inter alia that rule 115 was ultra vires the 1961 Act. Held The chargeability of income for 'capital gains' under section 45 is with reference to the full value of the consideration received or accruing as a result of the transfer of…

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