Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Summarized Table – Cost of Acquisition of Capital Assets

SL No. Type of Capital Asset Cost of acquisition to the
assessee
Relevant section
applicable
I. Goodwill of a business, trademark or brand name associated with a business, right to manufacture or produce or process any article or thing or right to carry on any business or profession or tenancy rights, state carriage permits or loom hours purchased from previous owner Amount of purchase price (FMV on 1.4.2001 not allowed even if acquired before 1.4.2001) Section 55(2)(a)(i)
2. Same assets as above but self-generated Nil (FMV on 1.4.2001 not allowed) Section 55(2)(a)(ii)  
3. (a) Allotment of additional financial asset. i.e., share or security Amount actually paid Section 55(2) (aa)
(b) Financial asset allotted without any payment Nil

(But if acquired before 1.4.2001 F.M.V. as on 1.4.2001 allowed)

Section 55(2) (aa)
4. (a) Equity share(s) allotted to a shareholder on demutualisation or corporatisation of stock exchanges Cost of acquisition of his original membership of the stock exchange Section 55(2) (ab)
(b) Trading or clearing rights, acquired by shareholder mentioned in clause (a) above Nil Proviso to section 55(2) (ab)
5. Long-term capital asset, being an equity share in a company or a unit of an equity-oriented fund or a unit of a business trust referred to in section 112A, acquired by the assessee before 1.2.2018 It shall be higher of —

(i) the actual cost of acquisition of such asset: and

(ii) the lower of—

(a) the fair market value of such asset and

(b) the full value of
consideration received or accruing as a result of the transfer of the capital asset.

Section 55(2) (ac)
6. Any other asset becoming the property of the assessee before 1.4.2001 Cost of acquisition to the assessee or its F.M.V. as on 1.4.2001 at the option of the assessee Section 55(2)(b)(i)
7. Capital asset becoming the property of the assessee in any of the modes specified in section 49(1) and it became the property of the previous owner before 1.4.2001. Cost of acquisition to the previous owner or its F.M.V. as on 1.4.2001 at the option of the assessee Section 55(2)(b)(ii)
8. Capital asset becoming the property of the
assessee on distribution by the company on liquidation provided capital gain tax has been assessed under section 46(2)
F.M.V. of the asset on date of distribution Section 55(2)(b)(iii)  
9. Share or stock of company becoming assessee’s property by consolidation, conversion, etc., of shares or stock Cost of acquisition calculated with reference to cost of acquisition of shares or stock from which asset is derived. Section 55(2)(b)(v)

Cost of Acquisition included Deemed Cost of Acquisition.

Summarized Table – Deemed Cost of Acquisition:

SI. No. Mode of acquisition of
Capital Asset
Cost of acquisition
to the assessee
Relevant
Sections
1. (a) Distribution of assets on total or partial partition of HUF. or Cost of acquisition to the
previous owner
Section 49(1)
(b) Gift or will, or
(c) Succession, inheritance or devolution, or
(d) distribution of assets on liquidation of the company, or
(e) transfer to a revocable, or irrevocable trust, or
(f) transfer by holding company to wholly owned subsidiary company or vice versa, or
(g) transfer in a scheme of amalgamation of

(i)   two Indian Companies

(ii)  two foreign companies subject to certain conditions, or

(h) conversion of self-acquired individual property with HUF property
(i) succession by the company of a firm or a sole proprietary firm
(j) conversion of company into Limited Liability Partnership
(k) conversion of self-acquired individual property to I1UF property
2. Allotment of shares in the amalgamated company in the scheme of amalgamation Cost of acquisition in the amalgamating company Section 49(2)
3. Shares or debentures acquired on conversion of debentures or debenture stock or deposit certificate or notified debentures bought by the non-resident in foreign currency Cost of corresponding debentures or debentures stock or deposit certificate Section 49(2A)
4. Cost of acquisition of specified security or sweat equity shares FMV which has been taken into account for valuation of such perquisite Section
49(2AA)
5. Cost of acquisition of right of partner on conversion of company to a limited liability partnership Cost of acquisition of shares in the company immediately before conversion Section
49(2AAA)
6. Cost of acquisition of a unit or units in a
consolidated scheme of a mutual fund,
which became the property of the assessee
in consideration of a transfer referred to in section 47(xviii)
It shall be deemed to be the
cost of acquisition to him of
the unit or Units in the
consolidating scheme of the mutual fund.
Section
49(2AD)
7. Cost of acquisition of equity share on conversion of preference share into equity share It shall be deemed to be that part of the cost of the reference share in relation to which such asset is acquired by the assessee Section
49(2AE)
8. Cost of acquisition of the units in the consolidated plan of mutual fund scheme It shall be deemed to be the cost of acquisition to him of the unit or Units in the consolidating plan of the scheme of the mutual fund. Section
49(2AF)
9. Cost of acquisition of shares in the resulting company/co-operative bank allotted due to demerger Cost of acquisition of shares held by the assessee in the demerged company Net book value of the assets transferred in a demerger
Net worth of the
demerged company
immediately before
demerger
Section 49(2C)
10. Cost of acquisition of original shares of demerged company/co-operative bank Original cost of acquisition minus the value arrived at point No. 5 above Section 49(2D)
11. Cost of acquisition of property received without consideration or for inadequate consideration The value which has been
taken into account for taxation of income under the head income from other sources as per section 56(2)(vii) or (viia)
Section 49(4)
12. Cost of acquisition of an asset declared under the Income Declaration Scheme, 2016 The fair market value of the asset which has been taken into account for the purposes of the said Scheme Section 49(5)
13. Cost of acquisition of the share in the project being land and building in a joint development agreement referred in section 45(5A) It shall be the stamp duty value, on the date of issue of the said certificate, of his share. being land or building or both in the project. as increased by the consideration received in cash, if any, shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset Section 49(7)
14. Cost of acquisition of the capital asset where the inventory has been converted into or treated as capital asset It shall be deemed to be the fair market value of inventory as on the date on which it is converted into, or treated as, a capital asset determined in the prescribed manner Section 49(9)
See also  Capital Gains under Income Tax Act. 1961 - LTCG & STCG
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