Section 12 - Amendment of section 45 - Finance Act, 1964

12. Amendment of section 45 In the Income-tax Act section 45 shall be re-numbered as sub-section (1) thereof and after sub-section (1) as so re-numbered, the following sub-sections shall be inserted, namely:- '(2) Notwithstanding anything contained in sub-section (1), every equity shareholder to whom any shares are allotted by the company by way of bonus shall, unless such shares are issued wholly out of the share premium account, be chargeable to income-tax under the head Capital gains in respect of such shares on an amount equal to the fair market value of such shares on the date next following the expiry of the period of thirty days from the date of such allotment and such amount shall be deemed to be the income of the previous year in which the date next following the aforesaid period of thirty days falls: Provided that income-tax shall not be chargeable under this sub-section if such shares are included in the stock-in-trade of the assessee or if such shares were allotted before the 1st day of April, 1964: Provided further that nothing contained in section 48 shall apply to the income chargeable under the head Capital gains under this sub-section. Explanation.- For the removal of doubts, it is hereby declared that income chargeable under the head Capital gains under this sub-section shall, for the purposes of this Act, be treated as capital gains relating to capital assets other than short-term capital assets. (3) Where any shares in respect of which an assessee is chargeable to income-tax under the head Capital gains under sub-section (2) are transferred by him before the expiry of the period of thirty days referred to in that sub-section, any profits or gains arising from such transfer shall not be included in his total income. (4) Save as otherwise provided in sub-section (3), nothing contained in sub-section (2) shall be deemed to preclude the inclusion of any profits and gains arising from the transfer of any shares referred to in that sub-section in the total income of the assessee for any previous year in which such shares are transferred by him.'.