https://www.taxtmi.com/caselaws?id=276285 Bonus shares issued by capitalising undistributed profits are not acquired at nil cost, because the shareholder gives consideration through the appropriation of dividend or bonus to pay for the issue. The shareholder is treated as taking the bonus shares at their face value as reflected in the company's books, so the cost cannot be ignored in computing gain on sale. On that footing, the sale of the full shareholding did not produce a taxable profit under the computation adopted by the revenue, and the nil-cost method was rejected. The reference was answered in favour of the assessee. en-us Mon, 28 Nov 1960 00:00:00 +0530 Mon, 05 Nov 2018 11:35:31 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=276285 Bonus shares issued by capitalising undistributed profits are not acquired at nil cost, because the shareholder gives consideration through the appropriation of dividend or bonus to pay for the issue. The shareholder is treated as taking the bonus shares at their face value as reflected in the company's books, so the cost cannot be ignored in computing gain on sale. On that footing, the sale of the full shareholding did not produce a taxable profit under the computation adopted by the revenue, and the nil-cost method was rejected. The reference was answered in favour of the assessee. Case-Laws Income Tax Mon, 28 Nov 1960 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=276285