COMMISSIONER OF INCOME-TAX, BIHAR vs DALMIA INVESTMENT CO. LTD.

The Supreme Court held that under the Income-tax Act, bonus shares cannot be valued at nil as they represent a real cost to the shareholder, affecting the value of their original holding. The Court clarified that the definition of 'dividend' does not extend to include bonus shares as profits, and thus the method of calculating their cost must reflect their true economic impact. The appellate Tribunal's valuation was overturned, affirming that the bonus shares should be valued appropriately rather than disregarded, leading to the conclusion that the assessee did not incur a loss as claimed.