Delhi H.C : There is a mistake apparent deserving to be rectified under s. 254(2) of the IT Act, 1961 ?

High Court Of Delhi

CIT vs. Vikram Shudhar Sharatram

Sections 254(2), 256(2)

B.N. Kirpal & P.K. Bahri, JJ.

ITC No. 10 of 1992

17th September, 1992

Counsel Appeared

Rajendra with D.C. Taneja, for the Petitioner : S.K. Aggarwal, for the Respondent

BY THE COURT:

The petitioner seeks reference of the following questions : “

1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that there is a mistake apparent deserving to be rectified under s. 254(2) of the IT Act, 1961 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the cost of Bonus shares be determined separately for determining capital gains even though original shares, right shares and bonus shares were sold together ?”

The respondent had originally purchased 701 shares at a cost of Rs. 26,247. The respondent was also allotted 1691 bonus shares. These 2392 shares were then sold at a price of Rs. 1,39,808. The question which had arisen was as to what was the capital gain derived by the assessee. The Tribunal placed reliance on a judgment of this Court in the case of Escorts Farms (Ramgarh) Ltd. vs. CIT (1983) 35 CTR (Del) 170 : (1983) 143 ITR 749 (Del) and came to the conclusion that the value of the original shares had to be spread over the original and bonus shares in order to determine the value of bonus shares. Having enunciated this principle, the Tribunal, however, dismissed the appeal of the assessee.

The assessee thereafter filed an application under s. 254 of the IT Act contending that a mistake of fact had been committed by the Tribunal inasmuch as in determining the cost of 2392 shares, the cost of the bonus shares, arrived at by applying the aforesaid principle, had not been taken into consideration. This was accepted by the Tribunal and the mistake corrected. It is against this order that the present reference application has been filed.

In our opinion the decision of this Court in Escorts Farms’ case (supra) was rightly referred to by the Tribunal but was, initially, wrongly applied. The original order of the Tribunal clearly shows that the total price spent by the assessee for acquiring 701 shares was taken to be the cost price in respect of the entire lot of 2392 shares. In actual fact for purposes of determining the capital gains the Tribunal had to deduct from the sale price the original cost of Rs. 26,247 plus the value of the bonus shares as arrived at by applying the principle of Escorts Farms’ case (supra). This value comes to Rs. 17,721.68. This is a mistake which had been committed earlier and was rectified by the Tribunal later.

In our opinion no question of law therefore, arises. The petition is dismissed. There will be no order as to costs.

[Citation : 201 ITR 447]

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