Income Tax Act

Official PDF pages 141–145

SOURCE PDF PAGE 141
Sl. No.   Description of the capital asset   Cost of acquisition
A   B   C
12.   Capital asset being original units held
by the unit holder in the main portfolio.
The cost of acquisition of such
original units as reduced by the
amount as so arrived at under
serial number 11.
13.   Capital asset, being shares as referred
to in section 70(1)( zl ) which became
the property of the assessee.
The cost of acquisition to it of
the interest in the joint venture
referred to in the said clause.
14.   Shares in the resulting company as a
result of demerger.
Computed as per the following
formula:—
X =  
A × B  
,
C
where,—
X = cost of acquisition of shares
in the resulting company;
A = cost of acquisition of shares
in demerged company;
B = net book value of assets
transferred in demerger; and
C = net worth of demerged
company immediately before
demerger.
15.   Original shares held by the shareholder
in the demerged company.
The cost of acquisition of such
original shares as reduced by
the amount so arrived at under
serial number 14.
16.   Capital asset deemed to be chargeable
to tax according to the provisions of
section 71(1).
Cost for which such asset was
acquired   by   the   transferee
company.
17.   Capital asset being property, where the
capital gain arises from the transfer
of such property the value of which
has been subject to income-tax under
section 92(2)( m ).
The value taken into account
under section 92(2)( m ).
18.   Capital asset declared under the Income
Declaration Scheme, 2016, where the
tax, surcharge and penalty have been
paid as per the provisions of such
Scheme on the fair market value as
on the date of the commencement of
that Scheme.
The fair market value of the
asset taken into account for the
purposes of the said Scheme.

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SOURCE PDF PAGE 142
Sl. No.   Description of the capital asset   Cost of acquisition
A   B   C
19.   Specified   capital   asset   referred   to
in clause ( c ) of the   Explanation   to
section   10( 37A )   of   the   Income-tax
Act, 1961 (43 of 1961), which has
been transferred after the expiry of
two years from the end of the tax
year in which the possession of such
asset was handed over to the assessee.
The stamp duty value as on the
last day of the second tax year
after the end of the tax year in
which the possession of the
said specified capital asset was
handed over to the assessee.
20.   Capital asset, being share in the project,
in the form of land or building, or both,
under section 67(14), not being a capital
asset referred to in section 67(16).
The amount deemed as full
value of consideration   under
section 67(14).
21.   Capital asset, being the asset held by
a trust or an institution in respect
of which accreted income has been
computed and tax paid thereon as per
section 352.
The fair market value of the
asset considered for compu-
tation of accreted income as
on specified date as per section
352(2).
22.   Capital asset referred to in section
26(2)( j ).
The   fair   market   value   for
section 26(2)( j ).
23.   Capital asset, being an Electronic Gold
Receipt issued by a Vault Manager,
which became the property of the
person as consideration of a transfer,
as referred to in section 70(1)( y ).
The cost of gold for the person
in whose name Electronic Gold
Receipt is issued.
24.   Capital asset being gold released against
an Electronic Gold Receipt, which
became the property of the person as
consideration for a transfer as referred
to in section 70(1)( y ).
The cost of the Electronic Gold
Receipt for such person.
(2) For the purposes of the Table in sub-section (1), in respect of the entries against—
( a )   serial number 1, “previous owner of the property” for 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
column B thereof;
( b )   serial numbers 11 and 12, “main portfolio”, “segregated portfolio” and
“total portfolio” shall have the same meanings as respectively assigned
to them in the Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160, dated
the 28th December, 2018, issued by the Securities and Exchange Board
of India;
( c )   serial numbers 14 and 15, “net worth” means the total of the paid-up
share capital and general reserves as appearing in the books of account
of the demerged company immediately before the demerger;

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SOURCE PDF PAGE 143
( d )   serial numbers 2, 14 and 15, the provisions as contained therein, shall,
as far as may be, also apply in relation to business reorganisation of a
co-operative bank as referred to in section 64.
Special provision for computation of capital gains in case of depreciable
assets.
74.   (1) Irrespective of anything contained in section 2( 101 ), for a capital asset
forming part of a block of assets on which depreciation has been allowed under
the Indian Income-tax Act, 1922 (11 of 1922) or under the Income-tax Act, 1961 (43
of 1961) or under this Act, the provisions of sections 72 and 73 shall be subject to
the provisions of sub-sections (2) and (3).
(2) If, during the tax year, the full value of consideration received or accruing for the
transfer of one or more assets in a block of assets exceeds the total of the following:—
( a )   expenditure incurred wholly and exclusively in connection with such
transfer;
( b )   the written down value of the block of assets at the start of the tax year;
and
( c )   the actual cost of any asset falling within the block of assets acquired
during the tax year,
such excess shall be deemed to be capital gains arising from the transfer of short-
term capital assets.
(3) If any block of assets ceases to exist for the reason that all the assets in that block
are transferred during the tax year, then,—
( a )   the cost of acquisition of the block of assets shall be the written down
value of the block of assets at the beginning of the tax year, as increased
by the actual cost of any asset falling within that block of assets, acquired
by the assessee during the tax year; and
( b )   the income received or accruing as a result of such transfer or transfers
shall be deemed to be capital gains arising from the transfer of short-
term capital assets.
Special provision for cost of acquisition in case of depreciable asset.
75.   If depreciation has been obtained under section 33(2)for a capital asset in any
tax year, the provisions of sections 72 and 73 shall apply subject to the
modification that the written down value, as defined in section 41, of the asset, as
adjusted, shall be taken as the cost of acquisition of the asset.
Special provision for computation of capital gains in case of Market Linked
Debenture.
76.   (1) Irrespective of anything contained in section 2( 101 ) or section 72, the
gains on the transfer or redemption or maturity, of a capital asset as mentioned
in sub-section (2) shall be treated as short-term capital gains and shall be computed
as per sub-section (3).
(2) For the purposes of sub-section (1), the capital asset shall be—
( a )   a unit of a Specified Mutual Fund acquired on or after the 1st April, 2023
or a Market Linked Debenture; or

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SOURCE PDF PAGE 144
( b )   an unlisted bond or an unlisted debenture which is transferred or
redeemed or matures on or after the 23rd July, 2024.
(3) For the purposes of sub-section (1), the short-term capital gains shall be computed
as per the following formula:—
X = A – B – C,
where,—
X = short-term capital gains;
A = full value of consideration received or accruing as a result of
the transfer or redemption or maturity of the debenture or unit or
bond;
B = the cost of acquisition of the debenture or unit or bond; and
C = the expenditure incurred wholly and exclusively in connection
with such transfer or redemption or maturity.
(4) In computing capital gains under sub-section (3), no deduction shall be allowed
for any sum paid as securities transaction tax as per Chapter VII of the Finance
(No. 2) Act, 2004 (23 of 2004).
(5) For the purposes of this section,—
( a )   “Market Linked Debenture” means a security, by whatever name called,
which has an underlying principal component in the form of a debt
security and where the returns are linked to market returns on other
underlying securities or indices, and include any security classified or
regulated as a market linked debenture by the Securities and Exchange
Board of India;
( b )   “Specified Mutual Fund” means a Mutual Fund, by whatever name
called, which invests more than 65% of its total proceeds in debt and
money market instruments or a fund which invests 65% or more of its
total proceeds in units of such Mutual Fund, subject to the following:—
( i )   the percentage of investment in debt and money market instruments
or in units of a fund shall be computed with reference to the annual
average of the daily closing figures;
( ii )   “debt and money market instruments” shall include any securities,
by whatever name called, classified or regulated as debt and money
market instruments by the Securities and Exchange Board of India.
Special provision for computation of capital gains in case of slump sale.
77.   (1) Any profits or gains arising from the slump sale effected in the tax year
shall be chargeable to income-tax as long-term capital gains and shall be
deemed to be the income of the tax year in which the transfer took place, subject
to the provisions of sub-section (2).
(2) The profits and gains arising from a slump sale involving the transfer of a capital
asset, being one or more undertakings or divisions owned and held by an assessee
for thirty-six months or less, immediately before the date of its transfer, shall be
treated as short-term capital gains.

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SOURCE PDF PAGE 145
(3) In relation to capital assets, being an undertaking or division transferred by
way of slump sale,—
( a )   the “net worth” of the undertaking or division shall be deemed to be the
cost of acquisition and the cost of improvement for sections 72 and 73;
and
( b )   the fair market value of the capital assets on the date of transfer, calcu -
lated in such manner, as may be prescribed, shall be deemed to be the
full value of the consideration received or accruing as a result of such
transfer.
(4) Every assessee, in the case of a slump sale, shall furnish in the prescribed form
a report of an accountant, before the specified date referred to in section 63, and
the report shall—
( a )   include the computation of the net worth of the undertaking or division;
and
( b )   certify that the net worth has been correctly arrived at as per the provi -
sions of this section.
(5) For the purposes of this section,—
( a )   the “net worth” shall be the “aggregate value of total assets” of the under -
taking or division, as reduced by the value of its liabilities as appearing
in the books of account, and for computing net worth, any change in the
value of assets due to revaluation shall be ignored;
( b )   the “aggregate value of total assets” shall,—
( i )   for depreciable assets, be the written down value of the block of
assets determined under section 41(1)( c );
( ii )   for capital asset being goodwill of a business or profession, which
was not acquired by the assessee by purchase from a previous
owner, be   nil ;
( iii )   for capital assets for which the entire expenditure has been allowed
or is allowable as a deduction under section 46, be   nil ; and
( iv )   for other assets, be the book value.
Special provision for full value of consideration in certain cases.
78.   (1) If the consideration received or accruing from the transfer of a capital
asset, being land or building or both, is less than the stamp duty value, then,
for the purposes of section 72, the stamp duty value shall be deemed to be the full
value of the consideration received or accruing as a result of such transfer, subject
to the following:—
( a )   the stamp duty value on the date of agreement may be taken as the full
value of consideration, if—
( i )   the date of the agreement fixing the consideration and the date of
registration for the transfer of the capital asset are not the same;
and