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PETITIONER: KANTILAL MANILAL AND ORS.
Vs.
RESPONDENT: THE COMMISSIONER OF INCOME-TAX, BOMBAY
DATE OF JUDGMENT: 22/11/1960
BENCH: SHAH, J.C. BENCH: SHAH, J.C. KAPUR, J.L. HIDAYATULLAH, M.
CITATION: 1961 AIR 1038 1961 SCR (2) 584
ACT: Income-tax--Distribution of new shares at half the market value--If amounts to distribution of dividend--Assessment--Reopening of--The Indian Income-tax Act, 1922 (11 of 1922), SS. 2(6A) (a), 66(1).
HEADNOTE: The appellants were shareholders of a company known as Navjivan Mills Ltd. which held a large number of shares of the Bank of India. The Bank with the object of increasing their share capital offered some more shares to the Mills for a price including premium which was about half the market value. The Mills purchased a small number of the shares so offered with their own funds and distributed their right to acquire the remaining shares to their shareholders in the proportion of two shares of the Bank for one share held by them. The assessment of the appellant was reopened by the Income Tax Officer under s. 34(1)(a) of the Income-tax Act on the footing that the release of the right to the shares of the Bank of India amounted to distribution of dividend. Appeals against the order of the Income Tax Officer having failed, the High Court at the instance of the appellants framed the follow...