07 September 2010
i am deling in shares as bussiness and value bonus shares on FIFO bases ie bonus valution wii be zero but Asseesing officer denied the fact that you cannot valued shares on zero you should agreegate the cost of orignal shares in all shares including bonus shares.
please provied any clearification along with relavant case law ,circular
thanku for reply but sir circulr no.768 & section 55(2)related to capital gain but question is inthe refrance of business
07 September 2010
On the Demat provisions being implemented , the identity of the shares is lost and hence, the Borad vide circular no. 768 dtd. June, 24,1998 clarified that the FIFO method will be applied in respect of the dematerilised holdings. Consequently, as per Sec. 55(2)(aa)(iiia) the cost of acquisition of bonus shares or any other financial asset alloted without payment and o the basis of the holding of any other financial asset , shall be taken to be nil.
Your treatment is correct. However, according to me there would not be impact on the capital gain tax even if the cost of acquisition of the shares including the bonus shares is avereged out. Pl. check from your end.
CAclubindia
