https://www.taxtmi.com/caselaws?id=753720 The ITAT Chennai held that bonus shares received by an equity shareholder cannot be treated as dividend under Section 2(22)(b) or taxed under Section 56(2)(viia). The AO incorrectly treated bonus shares as dividend, but the CIT(A) correctly distinguished that Section 2(22)(b) covers bonus shares only for preference shareholders, not equity shareholders. The tribunal relied on SC precedents establishing that bonus share issuance merely converts reserves to capital without releasing profits to shareholders or increasing company funds. Since bonus shares don't result in income inflow or asset value increase for the recipient, no tax liability arises. Decision favored the assessee against revenue. en-us Mon, 03 Jun 2024 00:00:00 +0530 Fri, 07 Jun 2024 10:33:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=753720 The ITAT Chennai held that bonus shares received by an equity shareholder cannot be treated as dividend under Section 2(22)(b) or taxed under Section 56(2)(viia). The AO incorrectly treated bonus shares as dividend, but the CIT(A) correctly distinguished that Section 2(22)(b) covers bonus shares only for preference shareholders, not equity shareholders. The tribunal relied on SC precedents establishing that bonus share issuance merely converts reserves to capital without releasing profits to shareholders or increasing company funds. Since bonus shares don't result in income inflow or asset value increase for the recipient, no tax liability arises. Decision favored the assessee against revenue. Case-Laws Income Tax Mon, 03 Jun 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=753720