49. Cost with reference
to certain modes of acquisition.- (1) Where the capital
asset became the property of the assessee—
(i) on any distribution of assets on the total or partial
partition of a Hindu undivided family;
(ii) under a gift or will;
(iii) (a) by succession, inheritance or devolution , or
(b) on any distribution of assets on the dissolution of a
firm, body of individuals, or other association of persons,
where such dissolution had taken place at any time before
the 1st day of April, 1987, or
(c) on any distribution of assets on the liquidation of
a company, or
(d) under a transfer to a revocable or an irrevocable trust,
or
(e) under any such transfer as is referred to in clause
(iv) or clause (v) or clause (vi) or clause (via) or clause
(viaa) or clause (vica) or clause (vicb) or clause (xiiib)
of section 47;
(iv) such assessee being a Hindu undivided family, by the
mode referred to in sub-section (2) of section 64 at any time
after the 31st day of December, 1969,
the cost of acquisition of the asset shall be deemed to be
the cost for which the previous owner of the property acquired
it, 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.
Explanation.—In this sub-section the expression “previous
owner of the property” in relation to any capital asset
owned by an assessee means the last previous owner of the
capital asset who acquired it by a mode of acquisition other
than that referred to in clause (i) or clause (ii) or clause
(iii) or clause (iv) of this sub-section.
(2) Where the capital asset being a share or shares in an
amalgamated company which is an Indian company became the
property of the assessee in consideration of a transfer referred
to in clause (vii) of section 47, the cost of acquisition
of the asset shall be deemed to be the cost of acquisition
to him of the share or shares in the amalgamating company.
(2A) Where the capital asset, being a share or debenture
of a company, became the property of the assessee in consideration
of a transfer referred to in clause (x) or clause (xa) of
section 47, 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.
(2AA) Where the capital gain arises from the transfer of
specified security or sweat equity shares referred to in sub-clause
(vi) of clause (2) of section 17, the cost of acquisition
of such security or shares shall be the fair market value
which has been taken into account for the purposes of the
said sub-clause.
(2AAA) Where the capital asset, being rights of a partner
referred to in section 42 of the Limited Liability Partnership
Act, 2008 (6 of 2009), became the property of the assessee
on conversion as referred to in clause (xiiib) of section
47, the cost of acquisition of the asset shall be deemed to
be the cost of acquisition to him of the share or shares in
the company immediately before its conversion.
(2AB) Where the capital gain arises from the transfer of
specified security or sweat equity shares, the cost of acquisition
of such security or shares shall be the fair market value
which has been taken into account while computing the value
of fringe benefits under clause (ba) of sub-section (1) of
section 115WC.
(2B) Omitted
(2C) The cost of acquisition of the shares in the resulting
company shall be the amount which bears to the cost of acquisition
of shares held by the assessee in the demerged company the
same proportion as the net book value of the assets transferred
in a demerger bears to the net worth of the demerged company
immediately before such demerger.
(2D) The cost of acquisition of the original shares held
by the shareholder in the demerged company shall be deemed
to have been reduced by the amount as so arrived at under
sub-section (2C).
(2E) The provisions of sub-section (2), sub-section (2C)
and sub-section (2D) shall, as far as may be, also apply in
relation to business reorganisation of a co-operative bank
as referred to in section 44DB.
Explanation.—For the purposes of this section, “net
worth” shall mean the aggregate of the paid up share
capital and general reserves as appearing in the books of
account of the demerged company immediately before the demerger.
(3) Notwithstanding anything contained in sub-section (1),
where the capital gain arising from the transfer of a capital
asset referred to in clause (iv) or, as the case may be, clause
(v) of section 47 is deemed to be income chargeable under
the head “Capital gains” by virtue of the provisions
contained in section 47A, the cost of acquisition of such
asset to the transferee-company shall be the cost for which
such asset was acquired by it.
(4) Where the capital gain arises from the transfer of a
property, the value of which has been subject to income-tax
under clause (vii) or clause (viia) of sub-section (2) of
section 56, the cost of acquisition of such property shall
be deemed to be the value which has been taken into account
for the purposes of the said clause (vii) or clause (viia).
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