Cost with reference to certain modes of acquisition is explained hereunder:
1. Where the capital asset is originally purchased by the Seller himself.
The cost of acquisition is the price which is paid or incurred to acquire the asset. This also includes the expenses incurred in completing the title of the asset acquired.
2. Where the capital asset became the property of the assessee.
(i) By way of distribution of assets on the total or partial partition of a Hindu Undivided Family;
(ii) Under a gift or will;
(iii) By succession, inheritance or devolution;
(iv) On any distribution of assets on the liquidation of a company;
(v) Under a transfer to a revocable or an irrevocable trust;
(vi) By way of transfer of assets by Individual to his HUF towards common pool of assets.
The cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired (the person who originally purchased the property), as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.
3. Where the capital asset is a Share of an amalgamated Indian company, became the property of the assessee in consideration of Shares of Amalgamating Company.
The cost of acquisition of the asset shall be the cost of acquisition to him of the share or shares in the amalgamating company.
4. Where the capital asset, being a share or debenture of a company, which are converted from bonds or debentures, or debenture-stock or deposit certificates.
The cost of acquisition of the asset to the assessee shall be deemed to be that part of the cost of debenture, debenture-stock, bond or deposit certificate in relation to which such asset is acquired by the assessee.
5. Where the capital gain arises from the transfer of Employees Stock Option (ESOP) or Sweat Equity Shares (SES).
The cost of acquisition of such security or shares shall be the fair market value as considered at the time of providing same.
6. Where the capital asset, being share of LLP which is converted from Company to LLP, where Seller was Share holder in same proportion.
The cost of acquisition of the asset shall be the cost of acquisition of the share or shares in the company immediately before its conversion to LLP.
7. Where the capital asset, being share of a resulting company in de-merger, where shares where purchased prior to de-merger of company.
The cost of acquisition shall be in proportion to percentage of Net Worth (paid up share capital and general reserves) of de-merged company transferred to resulting company of total cost of acquisition of shares of de-merged company. Also in same way cost of acquisition of original de-merged company will also be recalculated by reducing amount allocated to cost of acquisition of resulting company. Same provisions applies in case of Co-operative Banks.
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