Law:

Section:

Section 4 of the Income-tax Act, 1961 [Corresponding to section 3 of the Indian Income-Tax Act, 1922] - Income - Chargeable as - Assessment year 1945-46 - Whether though findings given by ITO in assessment for one year does not bind ITO in proceedings for subsequent assessment year, but those findings are relevant and could be taken into account - Held, yes - Assessee was carrying on business in money-lending and share dealing - Some shares held by assessee were transferred to investment account while others remained as its stock-in-trade - Later assessee received equal number of bonus shares against his holding of ordinary shares and consequently, shares held as investment as well stock-in-trade increased - Assessee sold investment shares as well as stock-in-trade shares and claimed sale consideration as capital receipt - It was found that after assessment had been made in 1943-44 on basis that some shares had been transferred to investment account, assessee quietly submitted to additional tax which he was required to pay on that basis and there was actual disposal of all investment shares - Further facts found by Tribunal showed that assessee did give effect to his intention by making necessary entries - Whether on facts, there was no material to come to conclusion that assessee went on dealing with so-called investment shares in same manner as his other shares which were his stock-in-trade - Held, yes - Whether bonus shares, being shares received by virtue of holding of ordinary shares, nature of their receipt in hands of shareholder for purposes of charge to tax must be determined by determining nature of ordinary shares held, to which bonus shares were accretions - Held, yes - Whether bonus shares received as accretion to shares held as capital investment were capital gain earned by assessee on his shares held as capital investment - Held, yes - Whether so far as other bonus shares were concerned, they were received by virtue of ordinary shares held as stock-in-trade and when computing income for purposes of assessment of income-tax, they were to be treated as additions to stock-in-trade on date on which they were received by assessee - Held, yes - Whether…

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