9911796707
TMI Blog2024 (5) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... efly 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 earned long term capital gain on sale of shares of M/s Micro Precision Prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the CIT(A) read as under: 9.11 Hence, the addition made by the AO is not sustainable in view of the judicial opinion as discussed above. This decision has covered and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 Officer misread the judgment of Hon'ble ITAT, Bangalore in the case of Dr. Rajanpai in this regard as discussed supra. 9.14 It is also settled law that arranging one's own affairs in a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 overall wealth of a shareholder post bonus or pre bonus remains the same. Having held so, it is wrong on his part to invoke the provisions of section 56(2)(vii)(c) of the Act on the ground that there is an double b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 INSURANCE CORPORATION supra). Thus, there is no addition or alteration to the profit making apparatus and the total funds available with the company remain the same. In substance, when a shareholder gets a bonus shares, the value o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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