Bonus shares

This query is : Resolved

Guest

Guest (Querist)

30 November 2009 Whether we should consider the Bonus shares issued by the company as a revenue expenditure or capital expenditure of the company? I read many case laws all giving contradictory answers...so got confused. Please explain in detail.

Jag Bhushan Sharma

Jag Bhushan Sharma (Expert)
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30 November 2009 This issue has been settled by Suprement Court in case of General Insurance Corporation. Court has ruled that issue of Bonus shares by capitalisation of reserves neither increases the capital employed by the company nor confers any enduring benefit to the company. Hence all the expenses (like stamp duty etc.) incurred on this account are of revenue nature.