Gift of shares to shareholders to be deemed as payment of dividend in kind which is prohibited

CL : Court cannot sanction a compromise or arrangement which involves declaration of dividend in violation of section 123 of the Companies Act, 2013. Where a company gifts to its shareholders shares held by it in another company, it is in substance distributing a "dividend" within the meaning of section 2(35) of the Companies Act, 2013 as also section 2(22A) of the Income-tax Act, 1961 since company could have sold those shares and distributed the proceeds. Allowing distribution of these shares