Bonus Shares Need Not Inherit ‘Stock-in-Trade’ Character- Bangalore ITAT Treats Infosys Bonus Shares as Exempt LTCG

ITO Vs Goldflag Holdings Private Limited (ITAT Bangalore) The Bangalore ITAT held that bonus shares received on shares held as stock-in-trade do not automatically become stock-in-trade themselves, and can be independently treated as capital assets depending upon the assessee’s intention and accounting treatment. Accordingly, the Tribunal upheld the assessee’s claim that gains arising on sale of bonus shares of Infosys Ltd. were taxable as exempt long-term capital gains and not as business income. The assessee, engaged in stock and commodity trading, had originally held Infosys shares as st...