A single fatal blow inflicted with a blunt weapon during a sudden quarrel, without premeditation, attracts Section 304 Part II IPC when the accused acts with knowledge of likely death but without intention to kill. In a free fight with injuries on both sides, absence of prior concert or meeting of minds negates common object under Section 149 IPC. Medical evidence corroborating ocular testimony regarding a fatal head injury is sufficient to sustain conviction under Section 304 Part II IPC. Advanced age of the accused, long lapse of time since the offence, and substantial incarceration already undergone justify reduction of sentence to the period already served, without disturbing the conviction.

Indian Penal Code, 1860 – Sections 299, 300, 304 Part II

Culpable homicide not amounting to murder – Single blow – Knowledge without intention

Where death is caused by a single blow with a blunt weapon during a sudden quarrel and free fight, without premeditation, and the circumstances indicate knowledge that the act was likely to cause death but no intention to cause death, the offence falls under Section 304 Part II IPC, and not under Section 302 IPC.
(Paras 5.1–5.1.5, 5.4–5.6)

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Indian Penal Code, 1860 – Sections 147, 148, 149

Unlawful assembly – Common object – Not established

In a free fight arising out of a sudden quarrel, where both sides sustain injuries and there is no evidence of prior meeting of minds, common object under Section 149 IPC is not established, and conviction under Sections 147, 148, and 149 IPC is unsustainable.
(Paras 5.2–5.2.1)

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Evidence – Ocular and medical evidence

Single head injury – Corroboration

Conviction under Section 304 Part II IPC can be sustained where ocular evidence attributing a blow to the accused is corroborated by medical evidence showing a fatal head injury caused by a hard and blunt object.
(Paras 3.7–3.9, 5.3–5.4)

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Right of private defence – Extent

Where the accused also suffers injuries in the same occurrence and the incident arises out of a sudden clash, the plea of private defence may explain absence of premeditation, but does not exonerate the accused when his individual act causes death with knowledge of likely consequences.
(Paras 3.3, 5.3–5.5)

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Sentencing – Reduction on humanitarian grounds

Advanced age – Long lapse of time – Period already undergone

While upholding conviction under Section 304 Part II IPC, the sentence may be reduced to period already undergone, considering advanced age of the appellant, long passage of time since the offence, and substantial incarceration already suffered.
(Paras 6–6.1)

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ANALYSIS

1. Nature of the incident

The occurrence arose from a sudden quarrel between neighbours, culminating in a free fight involving both sides. Injuries were suffered by the deceased as well as by the appellant.
(Paras 3–3.4, 5.2)

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2. Absence of common object

The Court affirmed the High Court’s finding that the facts did not disclose formation of an unlawful assembly with a common object to kill. Consequently, collective liability under Section 149 IPC was ruled out.
(Paras 5.2–5.2.1)

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3. Individual role of the appellant

The appellant’s liability was assessed individually, based on evidence that he delivered a lathi blow on the head of the deceased. The medical evidence confirmed a fatal head injury caused by a blunt object.
(Paras 3.7–3.9, 5.3–5.4)

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4. Distinction between murder and culpable homicide

The Court revisited the statutory distinction between Sections 299, 300, and 304 IPC, reiterating that absence of intention to cause death, coupled with presence of knowledge of likely fatal consequences, attracts Section 304 Part II IPC.
(Paras 5.1–5.1.5)

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5. Application to facts

Given the suddenness of the fight, lack of premeditation, use of a blunt weapon, and the context of mutual assault, the offence did not amount to murder. However, the appellant was attributed knowledge that the act could cause death.
(Paras 5.4–5.6)

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6. Sentence modification

Although conviction was sustained, the Court exercised discretion to reduce the sentence to period already undergone, considering that the appellant was over 80 years of age and had already undergone more than six years of incarceration.
(Paras 6–6.1)

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RATIO DECIDENDI

1. A single fatal blow inflicted with a blunt weapon during a sudden quarrel, without premeditation, attracts Section 304 Part II IPC when the accused acts with knowledge of likely death but without intention to kill.

2. In a free fight with injuries on both sides, absence of prior concert or meeting of minds negates common object under Section 149 IPC.

3. Medical evidence corroborating ocular testimony regarding a fatal head injury is sufficient to sustain conviction under Section 304 Part II IPC.

4. Advanced age of the accused, long lapse of time since the offence, and substantial incarceration already undergone justify reduction of sentence to the period already served, without disturbing the conviction.

Jurisdiction under Section 439 CrPC is limited to deciding bail and does not empower the High Court to issue mandatory or general directions governing investigation or evidence collection. The High Court cannot enlarge statutory bail jurisdiction by invoking its constitutional status; constitutional and statutory powers operate in distinct spheres. Medical age determination of a POCSO victim cannot be mandated as a matter of course and may be resorted to only in the absence of documentary evidence contemplated under Section 94 of the JJ Act. Determination of the victim’s age is a matter for trial; at the bail stage, courts may take only a prima facie view without testing the correctness of age-related documents. A bail court cannot conduct a mini trial, re-appreciate evidence, or order investigative exercises such as constitution of medical boards for age determination. Judicial directions cannot override or dilute the legislative scheme under Section 94 JJ Act by compelling medical age determination in every POCSO case.

Criminal Procedure Code, 1973 – Section 439

Scope of bail jurisdiction – Limits – Issuance of general directions

Jurisdiction under Section 439 CrPC is confined to deciding whether the accused should be released on bail pending trial. The High Court, while exercising bail jurisdiction, cannot issue general or mandatory directions governing investigation, nor can it enlarge the scope of statutory powers by invoking its constitutional status.
(Paras 10–11.5, 18)

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High Court – Constitutional powers vs. statutory jurisdiction

Fusion impermissible

Although the High Court is a constitutional court, constitutional status cannot be used to expand a narrowly circumscribed statutory jurisdiction. Powers exercised under Section 439 CrPC remain statutory and cannot be enlarged by reference to constitutional obligations.
(Paras 11.2–11.5, 18)

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POCSO Act, 2012 – Section 27 r/w Section 164-A CrPC

Medical examination – Scope

Medical examination under Section 27 POCSO Act read with Section 164-A CrPC is meant for collection of medical evidence relating to sexual assault. These provisions do not mandate compulsory medical age determination of the victim in every POCSO case.
(Paras 8.1–8.2, 12, 17–18)

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Juvenile Justice (Care and Protection of Children) Act, 2015 – Section 94

Age determination – Hierarchy of evidence

Section 94 prescribes a statutory hierarchy for age determination:
(i) school/matriculation certificate,
(ii) municipal birth certificate, and
(iii) medical opinion only in absence of (i) and (ii).
Medical age determination cannot be mandated as a matter of course and can be resorted to only when statutory documents are unavailable.
(Paras 8.3, 13.1, 16–17)

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Victim under POCSO Act – Determination of age

Stage and forum

Determination of the age of the victim under POCSO Act is a matter for trial, not for adjudication at the stage of bail. At the bail stage, the Court may take only a prima facie view based on documents, without examining their correctness.
(Paras 14.8–14.10, 16, 18)

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Bail proceedings – Mini trial

Impermissibility

A bail court cannot conduct a mini trial, re-appreciate evidence, test the correctness of age-related documents, or direct investigative exercises such as constitution of medical boards for age determination.
(Paras 15–15.3, 16, 18)

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POCSO Act – Presumption and legislative intent

Strict adherence to statutory scheme

Judicial directions cannot override or dilute the legislative intent underlying Section 94 JJ Act by mandating medical age determination in every case. Courts must adhere to the procedure expressly provided by Parliament.
(Paras 17–18)

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Effect on prior High Court judgments

Prospective operation

Directions issued in Aman v. State of U.P. and Monish v. State of U.P., being intrinsically connected to the impugned judgment, stand set aside. However, the effect of the present judgment is prospective, and bail already granted under those judgments is not disturbed.
(Para 20(b)–(d))

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ANALYSIS

1. Core issue

The Supreme Court examined whether the High Court, while exercising bail jurisdiction under Section 439 CrPC, could (i) mandate medical age determination of victims in all POCSO cases, and (ii) adjudicate the correctness of age-related documents at the bail stage.
(Paras 6–7, 10)

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2. Jurisdictional transgression

The Court held that the High Court overstepped its jurisdiction by issuing general directions affecting investigation. Bail jurisdiction is limited and cannot be converted into a supervisory or law-making exercise.
(Paras 11–11.5)

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3. Constitutional vs. statutory power

A detailed distinction was drawn between constitutional powers and statutory powers, emphasizing that constitutional status does not permit expansion of statutory jurisdiction.
(Paras 11.3–11.5)

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4. Statutory scheme of age determination

The Court reaffirmed that Section 94 JJ Act governs age determination even for POCSO victims, following Jarnail Singh v. State of Haryana, and that medical tests are the last resort, not the first.
(Paras 13.1, 14.6–14.7, 16–17)

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5. Bail stage limitations

At the bail stage, courts may only examine whether age documents exist and what they disclose prima facie. Any challenge to their authenticity or correctness must await trial, as testing them would amount to a mini trial.
(Paras 14.10, 15–16)

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6. Victim vs. juvenile offender

The Court carefully distinguished between juvenility claims by accused persons, which may be raised at any stage, and age determination of victims, which must be settled early and conclusively at trial to avoid vitiation of proceedings.
(Paras 14.9–14.10)

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7. Caution on misuse of POCSO

While disapproving the High Court’s directions, the Court acknowledged concerns regarding misuse of POCSO Act in consensual adolescent relationships and suggested legislative consideration, including a possible Romeo-Juliet clause.
(Paras 19–20)

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RATIO DECIDENDI

1. Jurisdiction under Section 439 CrPC is limited to deciding bail and does not empower the High Court to issue mandatory or general directions governing investigation or evidence collection.

2. The High Court cannot enlarge statutory bail jurisdiction by invoking its constitutional status; constitutional and statutory powers operate in distinct spheres.

3. Medical age determination of a POCSO victim cannot be mandated as a matter of course and may be resorted to only in the absence of documentary evidence contemplated under Section 94 of the JJ Act.

4. Determination of the victim’s age is a matter for trial; at the bail stage, courts may take only a prima facie view without testing the correctness of age-related documents.

5. A bail court cannot conduct a mini trial, re-appreciate evidence, or order investigative exercises such as constitution of medical boards for age determination.

6. Judicial directions cannot override or dilute the legislative scheme under Section 94 JJ Act by compelling medical age determination in every POCSO case.

Companies Act, 2013 – Sections 448, 451, 447, 212(6) Cognizance – Statutory bar – Private complaint – Fraud offences An offence under Section 448 (false statement) is inextricably linked to Section 447 (punishment for fraud). Since punishment under Section 448 can be imposed only through Section 447, an offence under Section 448 is an “offence covered under Section 447” for the purpose of Section 212(6). Consequently, cognizance cannot be taken on a private complaint in view of the second proviso to Section 212(6). (Paras 33–35, 41–45)

Companies Act, 2013 – Sections 448, 451, 447, 212(6)

Cognizance – Statutory bar – Private complaint – Fraud offences

An offence under Section 448 (false statement) is inextricably linked to Section 447 (punishment for fraud). Since punishment under Section 448 can be imposed only through Section 447, an offence under Section 448 is an “offence covered under Section 447” for the purpose of Section 212(6). Consequently, cognizance cannot be taken on a private complaint in view of the second proviso to Section 212(6).
(Paras 33–35, 41–45)

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Companies Act, 2013 – Section 212(6) (Second Proviso)

Mandatory pre-condition – Cognizance by Special Court

Where allegations attract liability under Section 447, cognizance by the Special Court is permissible only upon a complaint in writing by the Director, SFIO or an officer authorised by the Central Government. The bar is a jurisdictional safeguard against frivolous private prosecutions alleging corporate fraud.
(Paras 24–26, 35)

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Companies Act, 2013 – Section 451

Punishment for repeated default – Dependent offence

When cognizance of the principal offence under Section 448 is barred, cognizance for repeated default under Section 451 is not maintainable, as the foundation offence itself cannot proceed.
(Paras 46–47)

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Interpretation of amended Section 212(6) (2015 Amendment)

Legislative intent – Narrowing of rigour

Post-2015 amendment, Section 212(6) restricts the stringent regime to offences relating to fraud under Section 447. However, offences which derive punishment through Section 447 (such as Section 448) remain within its sweep for purposes of cognizance bar, notwithstanding that Section 447 is not expressly invoked in the complaint.
(Paras 27–35)

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Criminal Procedure Code, 1973 – Section 482

Quashing – Lack of jurisdiction – Abuse of process

Where cognizance is taken in violation of an express statutory bar, continuation of proceedings constitutes abuse of process, warranting interference under Section 482 CrPC.
(Paras 41–47)

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Companies Act, 2013 – Section 436(2)

Jurisdiction of Special Court – IPC offences

A Special Court may try IPC offences only when it is also trying an offence under the Companies Act. Once proceedings under the Companies Act are quashed, the Special Court loses jurisdiction over IPC offences, which must then be tried by the competent court of territorial jurisdiction.
(Paras 49–54)

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Civil disputes and criminal liability

Parallel proceedings – Maintainability

Pendency of civil suits or company petitions (including proceedings before NCLT) does not bar criminal prosecution where allegations disclose distinct criminal offences under the IPC.
(Paras 55–57)

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ANALYSIS

1. Core controversy

The appellants sought quashing of criminal proceedings arising from a private complaint alleging falsification of corporate records and fraud, where the Special Court had taken cognizance under Sections 448 and 451 of the Companies Act and various IPC offences.
(Paras 1–11)

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2. Statutory architecture

• Section 448 defines false statements but does not prescribe punishment.

• Punishment flows only through Section 447 (fraud).

• Section 212(6) bars cognizance of offences “covered under Section 447” except on complaint by SFIO / authorised Central Government officer.
  (Paras 21–33)

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3. Effect of 2015 Amendment

The Court examined legislative history and the Statement of Objects and Reasons, holding that while bail rigour was narrowed, the cognizance safeguard for fraud offences remained intact where liability flows through Section 447.
(Paras 27–35)

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4. Indirect circumvention impermissible

The Court held that what cannot be done directly (taking cognizance under Section 447 on a private complaint) cannot be done indirectly by invoking Section 448 alone while avoiding Section 447.
(Paras 43–45)

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5. Precedent consistency

The Court noted consistent views of the Telangana, Madras, Karnataka and Delhi High Courts, and held that the impugned High Court judgment erred in not following or referring the issue to a larger bench.
(Paras 36–40)

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6. Consequence on Section 451

Since Section 451 presupposes a valid underlying offence, its invocation collapsed once Section 448 proceedings were barred.
(Paras 46–47)

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7. IPC offences severable

Relying on S. Satyanarayana v. Energo Masch Power Engg. & Consulting (P) Ltd., the Court held that IPC offences survive independently and must be tried by the proper territorial court, not the Companies Act Special Court.
(Paras 49–54)

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8. Civil nature argument rejected

The Court reaffirmed that civil and criminal remedies may coexist, and pendency of civil/NCLT proceedings does not ipso facto render criminal prosecution abusive.
(Paras 55–57)

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RATIO DECIDENDI

1. An offence under Section 448 of the Companies Act is an offence “covered under Section 447” for the purpose of Section 212(6), since punishment for Section 448 is imposable only through Section 447.

2. Cognizance of such offences cannot be taken on a private complaint and must comply with the second proviso to Section 212(6), i.e., a complaint by SFIO or an authorised Central Government officer.

3. Invoking Section 448 without Section 447 to bypass the statutory bar is impermissible in law.

4. Where cognizance under the Companies Act is barred, consequential proceedings under Section 451 also fail.

5. Once Companies Act offences are quashed, the Special Court loses jurisdiction under Section 436(2) to try IPC offences, which must be transferred to the competent territorial court.

6. Pendency of civil or company law proceedings does not bar continuation of criminal proceedings under the IPC where criminality is alleged.

An order granting bail in a serious POCSO offence is liable to be set aside where the court ignores the gravity of the offence, statutory rigour, and prima facie material, even in the absence of supervening circumstances. In offences involving sexual assault on minors, alleged consent is legally irrelevant and cannot form the basis for grant of bail. Delay in lodging FIR in sexual offences against minors does not, by itself, discredit the prosecution, particularly where fear, trauma or intimidation explains such delay. Protection of the victim and preservation of a fair trial are paramount considerations; likelihood of intimidation or trauma to a minor victim justifies cancellation of bail. Mechanical or context-free reliance on precedents while granting bail constitutes a serious infirmity warranting interference by the Supreme Court.

Bail – Cancellation of bail – Scope and principles

Bail can be cancelled not only on the basis of supervening circumstances, but also where the order granting bail is perverse, ignores relevant material, considers irrelevant factors, or results in miscarriage of justice, particularly in heinous offences.
(Paras 13, 16, 17)

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Protection of Children from Sexual Offences Act, 2012 – Sections 5(l), 6, 9(g), 10

Sexual offences against minors – Gravity – Bail

In offences involving aggravated penetrative sexual assault on a minor, accompanied by intimidation, repeated abuse and recording of sexual acts, courts must exercise heightened caution while granting bail, having due regard to the statutory rigour of the POCSO Act and the vulnerability of the victim.
(Paras 11–15)

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Bharatiya Nagarik Suraksha Sanhita, 2023 – Sections 65(1), 74, 137(2), 352

Heinous offences – Nature and gravity

Allegations of rape of a minor under armed intimidation, kidnapping, repeated sexual assault and criminal intimidation constitute heinous and grave offences, carrying severe punishment including life imprisonment, thereby warranting strict scrutiny at the stage of bail.
(Paras 9, 11, 12)

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Bail jurisprudence – Relevant considerations

While considering bail, the court must examine the nature and gravity of the offence, prima facie material, severity of punishment, likelihood of witness intimidation, and impact on fair trial. Failure to consider these factors vitiates the order granting bail.
(Paras 12–16)

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Delay in FIR – Sexual offences against minors

Delay in lodging FIR in cases involving sexual offences against minors cannot by itself be treated as fatal, particularly where the delay is attributable to fear, threats, trauma or social circumstances of the victim.
(Para 13, relying on Bhagwan Singh v. Dilip Kumar @ Deepu)

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Consent – Minor victim

Where the victim is a minor, any alleged consent is legally irrelevant, and submissions based on consensual relationship are untenable in law.
(Paras 11, 12)

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Witness intimidation – Post-bail conduct

In sexual offences against children, the likelihood of intimidation, psychological pressure or trauma to the victim after release of the accused is a decisive factor warranting cancellation of bail to protect the purity of the trial process.
(Paras 15–17)

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ANALYSIS

1. Nature of challenge

The appeal challenged the High Court’s order granting bail to Respondent No.2 accused of gang rape and aggravated penetrative sexual assault on a minor, punishable under the BNSS and the POCSO Act.
(Paras 1–3, 8)

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2. Prosecution material

The prosecution relied upon:

• the victim’s statement under Section 183 BNSS (equivalent to Section 164 Cr.P.C.),

• medical evidence corroborating sexual assault,

• documentary proof of minority (date of birth: 18.07.2010), and

• chargesheet filed prior to grant of bail.
  (Paras 3.3, 8, 9.1)

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3. Error in High Court’s approach

The Supreme Court found that the High Court:

• failed to appreciate the heinous nature and gravity of offences,

• overlooked statutory rigour of the POCSO Act,

• ignored prima facie material, and

• placed reliance on irrelevant considerations such as delay in FIR and speculative observations regarding age.
  (Paras 13–14, 16)

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4. Bail cancellation without supervening circumstances

Relying on Deepak Yadav v. State of Uttar Pradesh, the Court reiterated that bail can be cancelled even without supervening circumstances where the order granting bail is perverse or suffers from serious infirmities.
(Paras 4.5, 13)

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5. Protection of fair trial

The Court emphasised that the primary object of cancellation of bail is to protect a fair trial and prevent intimidation of witnesses, especially in cases involving minor victims residing in proximity to the accused.
(Paras 15–17)

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6. Misplaced reliance on precedents

The High Court’s reliance on Satender Kumar Antil and Manish Sisodia was held to be misplaced, as those decisions turned on entirely different factual matrices and could not be mechanically applied.
(Para 14)

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7. Final directions

The impugned order was set aside, bail cancelled, and the accused directed to surrender within two weeks, with liberty to the trial court to secure custody. The trial court was also directed to expeditiously conclude the trial.
(Paras 17–18)

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RATIO DECIDENDI

1. An order granting bail in a serious POCSO offence is liable to be set aside where the court ignores the gravity of the offence, statutory rigour, and prima facie material, even in the absence of supervening circumstances.

2. In offences involving sexual assault on minors, alleged consent is legally irrelevant and cannot form the basis for grant of bail.

3. Delay in lodging FIR in sexual offences against minors does not, by itself, discredit the prosecution, particularly where fear, trauma or intimidation explains such delay.

4. Protection of the victim and preservation of a fair trial are paramount considerations; likelihood of intimidation or trauma to a minor victim justifies cancellation of bail.

5. Mechanical or context-free reliance on precedents while granting bail constitutes a serious infirmity warranting interference by the Supreme Court.

ADVOCATEMMMOHAN: Where shares of an amalgamating company are held a...

ADVOCATEMMMOHAN: Where shares of an amalgamating company are held a...: advocatemmmohan Income-tax Act, 1961 – Section 28 Profits and gains of business – Stock-in-trade – Amalgamation Where shares of an amalgam...

Income-tax Act, 1961 – Section 28

Profits and gains of business – Stock-in-trade – Amalgamation

Where shares of an amalgamating company, held as stock-in-trade, are substituted by shares of the amalgamated company pursuant to a court-sanctioned scheme of amalgamation, and such substituted shares are realisable in money and capable of definite valuation, the substitution constitutes commercial realisation giving rise to taxable business income under Section 28.
(Paras 30, 31)

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Income-tax Act, 1961 – Sections 2(47), 45 and 47(vii)

Transfer – Capital assets – Distinction from stock-in-trade

Section 47(vii) exempts only transfers of capital assets in a scheme of amalgamation. The exemption does not extend to shares held as stock-in-trade, which fall outside the capital gains regime and are governed by Section 28.
(Paras 12, 27)

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Income-tax Act, 1961 – Section 28

Real income – Receipt in kind – Commercial realisability

Business income under Section 28 may arise in kind and does not require an actual sale or exchange, provided the assessee receives a real and presently realisable commercial benefit. Mere statutory substitution without realisability does not attract tax.
(Paras 15, 18, 24)

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Amalgamation – Nature and effect

Amalgamation results in the extinguishment of the corporate identity of the amalgamating company and statutory substitution of rights in the amalgamated company. Such substitution may amount to commercial realisation when trading assets are replaced by assets of definite market value.
(Paras 16, 18, 19)

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Accrual and timing of taxability – Section 28

In cases of amalgamation involving stock-in-trade, taxability under Section 28 arises only upon allotment of the new shares, and not on the appointed date or date of court sanction.
(Paras 25, 30)

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High Court jurisdiction – Section 260A

The High Court does not exceed jurisdiction under Section 260A by dealing with incidental or collateral questions of law necessary for deciding the appeal, even if not formally framed, provided parties had full opportunity to address them.
(Paras 9–9.6)

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ANALYSIS

1. Core controversy

The principal issue was whether, upon amalgamation, substitution of shares held as stock-in-trade by shares of the amalgamated company results in taxable business income under Section 28, or whether taxation arises only upon subsequent sale.

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2. Tribunal vs High Court

The Tribunal declined to decide whether the shares were capital assets or stock-in-trade, holding that no income accrues without sale or transfer. The High Court reversed this approach, holding that if shares were stock-in-trade, substitution itself could result in taxable business income, and remitted the matter for factual determination.

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3. Supreme Court on Section 260A

The Court rejected the objection that the High Court exceeded jurisdiction, holding that:

• the issue of Section 28 taxability was incidental to the framed questions;

• parties were fully heard; and

• no prejudice was caused.
  (Paras 9–9.6)

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4. Scope of Section 28

The Court emphasised that:

• Section 28 is a wide charging provision;

• it does not depend on “transfer” as defined in Section 2(47);

• profits may arise in cash or kind;

• the decisive test is real income and commercial realisability.
  (Paras 15–15.3)

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5. Amalgamation and real income

Amalgamation is a statutory substitution. Mere substitution does not automatically create income. However, where:

• stock-in-trade ceases to exist;

• substituted shares have definite and ascertainable market value; and

• such shares are freely tradable,
  the transaction results in commercial realisation.
  (Paras 18–18.6, 24)

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6. Timing

Taxability does not arise:

• on the appointed date, or

• on court sanction of the scheme.

It arises only on allotment of shares, when the assessee acquires a realisable commercial benefit.
(Paras 25, 30)

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7. Capital vs business field

The Court highlighted the legislative distinction:

• Capital assets → protected by Section 47(vii);

• Stock-in-trade → no such protection; governed by Section 28.

Extending Section 47(vii) to stock-in-trade would undermine the business-income tax base.
(Paras 27–27.4)

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8. Result

The High Court’s judgment was affirmed. The legal principle was settled in favour of the Revenue, while factual application was remitted to the Tribunal.

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RATIO DECIDENDI

1. Where shares of an amalgamating company are held as stock-in-trade and are substituted by shares of the amalgamated company pursuant to amalgamation, such substitution constitutes taxable business income under Section 28, provided the substituted shares are realisable in money and capable of definite valuation.

2. Section 47(vii) applies only to capital assets and does not exempt transactions involving stock-in-trade.

3. Taxability under Section 28 arises only upon allotment of the substituted shares, and not on the appointed date or date of sanction of the scheme.

4. The High Court may consider incidental or collateral questions under Section 260A without formally framing them, where such consideration is necessary to decide the appeal and parties have been heard.