Law:

Section:

Section 48 of the Income-tax Act, 1961 (corresponding to section 12B(2) of the Indian Income-tax Act, 1922) - Capital gains - Computation of - Whether expression "full consideration" in section 12B(2) of 1922 Act cannot be construed as having a reference to market value of asset transferred but expression only means full value of thing received by transferor in exchange for capital asset transferred by him - Held, yes - Assessee-company transferred certain shares at book value that was much less than market value of said shares on date of transfer - ITO computed difference between market price and book value of shares and treated it as capital gain under section 12B of 1922 Act - Tribunal upheld ITO's order - Held, court, however, held that difference between market price and book value did not represent capital gains - Whether question of law referred to the High Court could not be answered as language used by Appellate Tribunal in recording its finding as to actual contract price paid to assessee for sale of shares was obscure and its import could not be determined - Held, yes [-Matter remanded to Tribunal for disposal afresh] Words & phrases : Words "full value of consideration" as occurring in section 12B(2) of the Indian Income-tax Act, 1922 FACTS The assessee-company transferred the shares at the rate less than the market value on the date of transfer. On the same date, the transferee further transferred the shares but retained the share scrips with blank transfer forms. The shares were later registered in the name of second transferee. In assessing the assessee, the ITO took the difference between book value and market value of shares and treated it as capital gain under section 12B of the 1922 Act. On appeal, the AAC confirmed the order of the ITO. On second appeal, the Tribunal confirmed the order of the AAC. On reference, the High Court, however, held that the difference in book value and market price of the shares did not represent capital gains. On appeal to the Supreme Court: HELD It is manifest that the consideration for the transfer of capital asset is what the transferor receives in lieu of the asset he parts with, namely, money or money's…

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