Commissioner of Income Tax, Mumbai vs M/s General Insurance Corporation

 Commissioner of Income Tax, Mumbai vs M/s General Insurance Corporation - Supreme Court Case Summary of Leading Case - 


On 25th September, 2006, a two Judge Bench in Commissioner of Income Tax, Mumbai vs M/s General Insurance Corporation [Civil Appeal No. 4422 of 2001] held that the expenditure incurred in connection with the issuance of bonus shares is in the nature of revenue expenditure. The Bench said “the issue of bonus shares by capitalization of reserves is merely a reallocation of company’s funds. There is no inflow of fresh funds or increase in the capital employed, which remains the same. If that be so, then it cannot be held that the Company has acquired a benefit or advantage of enduring nature. The total funds available with the company will remain the same and the issue of bonus shares will not result in any change in the capital structure of the company. Issue of bonus shares does not result in the expansion of capital base of the company.”



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