« Top Headlines » Open DEMAT Account in 24 hrs  ITAT Cuts ?4.85 Lakh Penalty After ?14.02 Lakh Interest Income Was Missed in ITR  ITR filed under old regime, tax calculated under new regime; Delhi ITAT gives taxpayer relief  ITAT Delhi Quashes Tax Notice on AMU PG Student’s ?18.34 Lakh Stipend, Declares It Tax-Free Under Section 10(16)  Advance tax deadline September 15: What happens if you missed the previous instalment payment?  How much gold jewellery can you keep at home? Nagpur ITAT explains rules on ownership, gifts, taxability  ?5.31 lakh TDS refund allowed by ITAT Delhi: Why absence of an original ITR did not block the taxpayer  Missed the ITR Filing Deadline? How to Claim Your Income Tax Refund and Correct Mistakes Before December 31, 2026  GST Return Preparation & ITC Analysis with TallyPrime (Hinglish Session)  GST Return Preparation & ITC Analysis with TallyPrime (Hinglish Session)  GST Return Preparation & ITC Analysis with TallyPrime (Hinglish Session)  Income-Tax Department Moves to Bring Greater Certainty to International Tax Cases «  33 cos opt for large taxpayer unit scheme in Bangalore... Tax collections may exceed targets... » Expenses on bonus shares non taxable, says SC September, 30th 2006 Issue of bonus shares does not result in inflow of fresh funds or increase in the capital employed The Supreme Court on Thursday resolved a prolonged legal controversy over the nature of expenses incurred by a company in issuing bonus shares, ruling that it cant be taxed. The court agreed with the earlier rulings of Bombay and Calcutta high courts on the same issue and held that the views of Gujarat and Andhra Pradesh high courts were erroneous. The judgment is a fall out of a dispute between General Insurance Corporation and Commissioner of Income Tax, Mumbai, over the on whether the expenditure incurred in issuing bonus shares is entitled to tax relief. GIC, which has four subsidiaries, filed a return on income of over Rs. 58.52 crore for 1991-92. The Income Tax department disallowed a few expenses incurred as revenue expenditure, one of them being over Rs. 1.4crore incurred towards the stamp duty and registration fees, paid in connection with the increase in authorized share capital. GIC had, during the accounting year, incurred expenditure separately for the increase of its authorised share capital and the issue of bonus shares. According to the IT Department , the expenses incurred were towards a capital asset of a durable nature for the acquisition of a capital asset and, therefore could only be attributable towards the capital expenditure. The GIC challenged this. A Bench of Justices Ashok Bhan and Markandey Katju observed that issuance of bonus shares does not result in any inflow of fresh funds or increase in the capital employed, the capital employed remains the same. Issuance of bonus shares by capitalisation of reserves is merely a reallocation of companys fund, they said, while giving an illustration indicating that bonus shares leaves the capital employed untouched before and after issuance of bonus shares. Issue of bonus shares doesnt add to inflow of fresh funds or increase in the capital employed, the bench said. Rakesh Bhatnagar