The cost of acquisition of bonus shares allotted to a shareholder on or after 1.4.2001 is:
AFMV on allotment date
BAverage original cost
CDeemed to be nil
DFace value of shares
Answer & Solution
Correct answer: C. Deemed to be nil
1. Section 55(2)(aa) fixes the cost of bonus shares: nothing is paid for them, so no purchase cost exists.
2. For bonus shares allotted on or after 1.4.2001, the cost of acquisition is taken as Nil.
3. Only bonus shares allotted before 1.4.2001 carry an option to adopt FMV as on 1.4.2001 as cost.
_Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 4 Capital Gains, PDF p. 42_
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