COMMISSIONER OF INCOME-TAX, U.P. vs M/S. MADAN GOPAL RADHEY LAL

The Supreme Court held that bonus shares received by a dealer in shares are to be treated as capital and not as income under the Income-tax Act, 1922. The Court emphasized that the intention behind the acquisition of such shares must be determined from the conduct and dealings of the acquirer. The Tribunal's finding that the bonus shares were converted into stock-in-trade was upheld, but the High Court's interference with the Tribunal's conclusion was deemed unjustified due to the lack of a proper application under Section 66(1) of the Income-tax Act, 1922.