AI Drafter 
TaxTMI 
TaxTMI 
2024 (5) TMI 1287
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....f the Act for bonus shares received. 3. Briefly stated the facts of the case are that the assessee filed his return of income electronically on 30.09.2015 declaring total income of Rs. 8,83,90,720/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. The gross total income of the assessee comprised of following income: "The assessee has shown the following income which is reproduced below: Income from salary : Rs. 13,67,742/- Income from House property : Rs. 20,72,106/- Income from Business : Rs. 1,38,05,530/- Income from Capital gain : Rs. 5,08,88,378/- Income from other sources : Rs. 2,02,66,967/- 4. The assessee has earne....
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....Bonus 18.12.2014 32,04,304,956 - - 10.248 (sale price as on 19.12.2014 as per historical NAV) 3,28,37,717 Bonus 18.12.2014 80,10,762,391 - - 10.248 (Sale price as on 19.12.2014 as per historical NAV) 8,20,94,292 Total 36,10,63,656 6.1 The addition was challenged before the CIT(A). It was vehemently contended that the provision of section 56(2)(vii)(c) of the Act not applied on bonus shares. The strong reliance was placed on various judicial decisions. After considering the facts and the submissions, the CIT(A) was convinced with the contention of the assessee and deleted the impugned addition. The relevant finding ....
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....e been provided for non applicability of the provisions of section 55(2)(aa)(i) with respect to Issuance of bonus shares to the transactions referred in section 56(2) of the Act. The AO himself accepted on page 35 of the Assessment Order that the overall wealth of a person post bonus or pre-bonus remains the same. The AO incorrectly ignored the fact that an assessee "receives" no additional benefit or income on allotment of bonus shares because it is only a case of split of his total rights in the wealth of a company which remains the same even after bonus issue. In fact, such bonus sharen are capitalization of profits or reserves of the company which ever prior to such issue vested with him through his original holding. The Assessing Offic....
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....ptable, the Bench cannot go beyond the plaint and the issue before the Bench is very simple whether the provision of section 56(2)(vii)(c) of the Act applied on the facts of the case. The answer lies in the order of the Tribunal in the case of the wife of the assessee Smt. Aruna Chandhok whose assessment was also done by the same Assessing Officer, Mr. Rohit Anand, and in whose case also, the addition has been made on identical set of facts on the sale of shares of the same company. This Tribunal in ITA No. 387/Del/2021 order dated 05.09.2023 held as under: 6. We hold that the bonus shares are issued only out of capitalization of existing reserves in the company. In the instant case, the Id. AO had not disputed the fact that the ov....
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....er Rule 11U and Rule 11UA of the Income Tax Rules can be considered as income from other sources as per Section 56(2)(vii) of the Act. A careful scrutiny of Section 56(2)(vii) of the Act contemplates two contingencies firstly, where the property is received without consideration and secondly, where it is received for consideration less than the fair market value. The issue of bonus shares by capitalization of reserves is merely a reallocation of the companies funds. There is no inflow of fresh funds or increase in the capital employed, which remains the same. The total funds available with the company remains the same and issue of bonus shares does not result in any change in respect of capital structure of the company. [See: 'GENERAL I....