These are cross appeals filed by assessee and by revenue, respectively. relevant assessment year is 2001-02. These appeals are directed against order of CIT(A)-XXXI, Mumbai, dated 15-12-2004 and arise out of assessment completed under section 143(3) of Income-tax Act, 1961 ('Act'). 2. assessee is Canadian company. assessee had, over period o f time, acquired 3,88,44,324 shares of Indian company by name Indian Aluminum Co. Ltd. (Indal). shares acquired by assessee-company are of following categories: (i) Shares acquired between 1938 and 1968 in Canadian Dollars (CAD); (ii) Shares acquired in August 1998 in American Dollars (USD); and (iii) Bonus shares allowed between 1944 and 1996. 3. During previous year relevant to assessment year under appeal, t h e assessee-company sold entire Indal shares to another company Hindalco Industries Ltd. shares were sold on at agreed price of Rs. 190 per share. long-term capital gains arising out of above transaction was reported by assessee-company at Rs. 3,17,71,30,910 in its return of income filed for impugned assessment year 2001-02. capital gains tax was computed at Rs. 31,77,13,091 at rate of 10 per cent as provided under section 112, sub-section (1) of Act. 4. assessee-company has furnished detailed particulars in matter of computing long-term capital gains. In case of shares acquired between 1938 and 1968, CAD capital gains were computed under first proviso to section 48 of Act. Thus, in case of shares acquired prior to 1-4-1981, Fair Market Value (FMV) of shares as on 1-4-1981 was adopted by assessee as cost under section 55(2)(b)(i) of Act. FMV was adopted on prevailing Stock Exchange rate. sale consideration pertaining to CAD shares were converted into CAD in pursuance of rule 115A of Income-tax Rules, 1962. Capital gains were thus initially worked out in CAD and thereafter, reconverted into Indian rupees. 5. In respect of USD shares also conversion was made under rule 115A and thus capital gains were computed. 6. In case of bonus shares, capital gains were computed in Indian rupees on basis of cost of acquisition worked out on basis of FMV as on 1-4-1981 in respect of shares allotted before 1-4-1981. Cost of acquisition was taken at nil in respect of bonus shares allotted after 1-4-1981 in terms of section 55(2)(aa)(iiia). 7. While assessing capital gains, Assessing Officer held that in case of shares acquired by assessee prior to 1-4-1981, assessee could not take benefit of FMV provided in section 55(2)(b)(i), thereby, meaning that assessee cannot substitute its cost with FMV as on 1-4-1981. This is because, according to assessing authority, assessee is non-resident and non-residents are required to compute capital gains in terms of foreign currency conversion in terms of first proviso to section 48. In other words, Assessing Officer held that capital gains in case of assessee being non-resident, has to be computed on conversion of foreign currency and simultaneously assessee could not avail benefit of FMV as on 1-4-1981. CIT(A) concurred with view of assessing authority relying on decision of ITAT, Mumbai, in case of Novartis AG Basle v. Asstt. CIT [IT Appeal No. 537 (Mum.) of 2002]. 8. above question is one of points of dispute before us that, whether, assessee-company can avail option of substituting FMV as on 1-4-1981 as cost of acquisition of shares acquired by it before 1-4-1981 in light of section 55(2)(b)(i) and, whether, proviso to section 48 debars assessee from opting FMV for reason that said proviso directs non-resident assessee to compute capital gains on foreign currency conversion rule. 9. We heard Shri S.E. Dastur, learned Sr. Advocate, appearing for assessee; and Shri S.C. Gupta, learned Commissioner of Income-tax, appearing for revenue. 10. While considering above issue, we have to refer to decision of ITAT, Mumbai, in case of Novartis AG Basle (supra). said decision of Tribunal which held that non-resident would not be entitled for benefit of section 55(2)(b)(i) was taken in appeal before Hon'ble Bombay High Court in Income-tax Appeal No. 788/2004. said appeal has been heard and disposed off by Their Lordships through judgment dated 19-9-2006. Hon'ble Bombay High Court observed therein that Tribunal has accepted contention of revenue that non-resident was not entitled to indexation under section 48 of Act and, therefore, was not eligible to rely on section 55(2)(b)(i). In this respect, Hon'ble Bombay High Court considered following two questions:(i) Whether, on facts and in circumstances of case, Tribunal erred in holding that assessee was not entitled to exercise option under section 55(2)(b)(i) of Act to adopt fair market value of shares as on 1-4-1981 as cost of acquisition of such shares when computing capital gain/loss arising on transfer of said shares? (ii) Whether Tribunal erred in holding that first proviso to section 48 of Act was charging section and, therefore, erred in holding that section 55(2)(b)(i) of Act was not available to assessee being non-resident? 11. On considering above two questions, Hon'ble Bombay High Court held that they direct Tribunal to decide liability of appellant independent of section 48 of Act. With said direction, case has been revived before Tribunal. 12. In light of above judgment of Hon'ble Bombay High Court, it is to be seen that decision of Tribunal, Mumbai, in case of Novartis AG Basle (supra) does not hold good any more and consequently substratum of decision arrived at by CIT(A) has been vitiated. Therefore, it is not permissible for us to rely on decision of Tribunal in case of Novartis AG Basle (supra), even though fervent plea was made by learned Commissioner of Income-tax that findings of Tribunal in said decision have to be acted upon as they decided matter in right prospective. 13. We have to still remember that direction of Hon'ble Bombay High Court is to consider issue independent of section 48 of Act. Section 55 deals with meaning of expression 'adjusted', 'cost of improvement' and 'cost of acquisition'. These definitions have been made in section 55 for purpose of sections 48 and 49 of Act. Section 48 deals with mode of computation and section 49 refers to cost with reference to certain modes of acquisition. Therefore, it is to be seen that these provisions are machinery provisions embedded in provisions of statute relating to assessment of capital gains meant for computing capital gains under different circumstances. Therefore, at first instance itself, we have to state that sections 48, 49 and 55 are not charging sections, as tried to explain by lower authorities. 14. Section 55(2) deals with cost of acquisition for purpose of sections 48 and 49. Clause (b) and sub-clause (i) thereof deals with capital asset which became property of assessee before 1-4-1981. In such cases, law provides that cost of acquisition of asset can be taken as t h e FMV of asset as on 1-4-1981 or at actual cost incurred by assessee, at option of assessee. This option is really given to assessee to come out of unfair situation. That is, in respect of assets acquired in old past, if reasonable value is not assigned to it as cost of acquisition, cost would be always historical cost for which assets were acquired, which would be having no relevance at all in contemporary computation of capital gains. Therefore, to bring out such assets acquired long back in past, law has provided assessee to opt for FMV as on 1- 4-1981 if it is beneficial to it so that said value would be more reasonable and realistic. This option is independent provision provided by statute in section 55. It is independent of section 48. Section 48 deals with mode of computation. Section 55 deals with meaning of cost of acquisition which is only one limb in computation. difference is obvious. It is only after working out cost of acquisition within meaning of section 55 that capital gains could be computed under section 48. That must be reason why Hon'ble Bombay High Court has directed Tribunal to consider issue independent of section 48 while disposing matter in case of Novartis AG Basle (supra). 15. First proviso to section 48 permits non-resident to compute capital gains after converting concerned variables into foreign currency in which shares were first acquired. This facility of conversion is provided for reason that conversion rate difference between Indian currency and foreign currency is different from currency to currency and fluctuate from time to time and not stable and also not comparable. Therefore, if no conversion is made and capital gain is computed in Indian currency, computation will not reflect 'real capital gains'. If facility of currency conversion is not available and if capital gains are computed throughout in Indian currency, computation would be distorted and unrealistic. It is rule of income taxation that what is to be taxed is real income. For that matter, capital gain is also treated as income. Accordingly, it is necessary that what is assessed is real capital gains. It is for that purpose proviso to section 48 is provided in that section. said proviso does not restrict or undo option available to assessee under section 55(2)(b)(i). They are operating in two different realms. 16. Not only that, plain reading of language of provision contained in section 55, nowhere make said section 55 subservient to section 48. In fact, section 55 defines value of variables necessary for computing capital gains as provided in section 48. 17. In facts and circumstances of case, we find that assessee is entitled to for benefit of option available under section 55(2)(b)(i) of Act. Therefore, assessing authority is directed to compute capital gains attributable to shares acquired by assessee-company before 1-4-1981, after giving benefit of FMV as on 1-4-1981. 18. This issue is decided in favour of assessee. 19. Assessing Officer has further determined capital gains tax at rate of 20 per cent, whereas, assessee claimed rate of 10 per cent under section 112(1) of Act. CIT(A) also has held that rate of tax should be 20 per cent. Authority for Advance Ruling (AAR) in case of University Superannuation Scheme Ltd., In re [2005] 275 ITR 434, has considered and held in favour of assessee in stating that assessee is entitled to concessional rate of tax at 10 per cent. Therefore, this issue is also decided in favour of assessee and direct assessing authority to levy tax at rate of 10 per cent. 20. next issue to be considered in this appeal is regarding cost of acquisition of bonus shares allotted to assessee prior to 1-4-1981. This issue was considered by ITAT, Mumbai, in case of Heinrich De Fries GMBH v. Joint CIT [2006] 281 ITR (AT) 18. Tribunal has held that in case of bonus shares issued prior to 1-4-1981, assessee has option to take cost of acquisition at FMV as on 1-4-1981. This decision has been taken by Tribunal in light of section 55(2)(aa)(iiia). Following above decision, we hold that in case of bonus shares acquired by assessee prior to 1-4- 1981, assessee's contention for adopting FMV as on 1-4-1981 as cost of acquisition should be accepted. We direct assessing authority accordingly. 21. In case of bonus shares acquired after 1-4-1981, cost of acquisition shall be nil. 22. appeal filed by assessee is allowed to above extent. 23. Next we will consider appeal filed by revenue. 24. only ground raised by revenue is that, CIT(A) has erred in holding that assessee is not liable to interest under section 324B of Act as income was liable to deduction of tax at source. 25. As dispute relating to computation of capital gains has been decided by us on merit, we find that this ground raised by revenue has become infructuous. 26. In result, appeal filed by assessee is allowed and appeal filed by revenue is dismissed. *** ALCAN INC. v. DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)