https://www.taxtmi.com/caselaws?id=200794 Bonus shares issued out of capitalised profits are not treated as gratuitous accretions, because shareholders give up a distributable entitlement in exchange for fully paid shares. For capital gains computation, the cost of acquisition of such bonus shares cannot be taken as nil, nor determined by averaging the original and bonus share costs or by market value at issue. The proper basis is the face value of the bonus shares, so only the excess realised on sale over that face value is taxable as capital gains under section 12B of the Indian Income-tax Act, 1922. en-us Tue, 12 Nov 1963 00:00:00 +0530 Mon, 23 Apr 2018 18:03:16 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=200794 Bonus shares issued out of capitalised profits are not treated as gratuitous accretions, because shareholders give up a distributable entitlement in exchange for fully paid shares. For capital gains computation, the cost of acquisition of such bonus shares cannot be taken as nil, nor determined by averaging the original and bonus share costs or by market value at issue. The proper basis is the face value of the bonus shares, so only the excess realised on sale over that face value is taxable as capital gains under section 12B of the Indian Income-tax Act, 1922. Case-Laws Income Tax Tue, 12 Nov 1963 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=200794