Deeming provisions prescribed u/s 56(2)(vii) couldn’t be applied on issue of bonus shares

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Deeming provisions prescribed u/s 56(2)(vii) couldn’t be applied on issue of bonus shares

 

[2021] 124 taxmann.com 241 (Karnataka)

 

HIGH COURT OF KARNATAKA

 

Short Overview :

 

Section 56 of the Income-tax Act, 1961

 

Income from other sources

 

Chargeable as (Gift)

 

Assessment year 2012-13

 

Whether when there is an issue of bonus shares, money remains with company and nothing comes to shareholders as there is no transfer of property and provisions of section under section 56(2)(vii)(c) are not attracted

 

Held, yes

 

Conclusions :

 

Deeming provisions prescribed u/s 56(2)(vii) couldn’t be applied on issue of bonus shares

 

When there is an issue of bonus shares, money remains with company and nothing comes to shareholders as there is no transfer of property, and thus, provisions of section 56(2)(vii)(c) are not attracted

 

When there is an issue of bonus shares, money remains with company and nothing comes to shareholders as there is no transfer of property, and thus, provisions of section 56(2)(vii)(c) are not attracted

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