As per section 94(8) bonus stripping is applicable when mutual fund allots bonus units, in this section nowhere it is mentioned regarding bonus shares.
My query is whether it is applicable to bonus shares also?
Rohit Gupta (----) 31 July 2013
Section 94 (8) is applicable only for mutual fund units. not for shares
Bhav Bhuti Sharma (Towards Professionalism ) 31 July 2013
However, in respect of bonus stripping, the provisions of section 94(8) apply only to units of mutual funds, and not to shares of companies. One often witnesses assessees resorting to bonus stripping in respect of shares, simultaneously resorting to hedging of the open position in respect of shares through derivatives transactions.
I am not ever heard that any mutual fund issue bonus till now, I think it is not possible by its nature. If some assessee have bonus stripping of equity shares on the ground of section 94(8), then it may be commercial loss because it is only for units and that word not used in equity shares.
CA Bhavin Venugopal (CHARTERED ACCOUNTANT) 01 August 2013