New IT Act 2025 — Knowledge Bank

Cost with reference to certain modes of acquisition

Section 73 — Cost with reference to certain modes of acquisition

Old Act equivalent: Section 49, 55, 55A of IT Act 1961 Sub-part: E.—Capital gains

Statutory Text

  1. If the capital asset became the property The cost for which the previous of the assessee— owner of the property acquired it, as increased by the cost of (a) under a gift or will; or any improvement incurred or (b) by succession, inheritance or borne by the previous owner devolution; or or the assessee. (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) being a Hindu undivided family, by the mode referred to in section 99(3) after the 31st December, 1969; or (f) under any such transfer as is referred to in section 70(1)(a), (c), (d), (e), (g), (h), (i), (j), (l), (m), (n), (o), (t), (u), (v), (w), (zd), (ze) or (zf). in an amalgamated company which is of the share or the shares in the an Indian company that became the amalgamating company. property of the assessee in consideration of a transfer referred to in section 70(1)(f). 3. Capital asset being a share or debenture That part of the cost of of a company, which became the debenture, debenture-stock, property of the assessee in consideration bond or deposit certificate in of a transfer referred to in section 70(1) relation to which such asset is (z) or (za). acquired by the assessee. 4. Capital asset, being specified security Fair market value taken into or sweat equity shares, referred to in account for the purposes of the section 17(1)(d). said clause. referred to in section 42 of the Limited of the share or shares in the Liability Partnership Act, 2008 (6 of company immediately before 2009), which became the property of its conversion. the assessee on conversion as referred to in section 70(1)(ze). 6. Capital asset, being share or shares of The price of the said share a company acquired by a non-resident or shares prevailing on any assessee on redemption of Global recognised stock exchange on Depository Receipts referred to in the date on which a request for by such assessee. trust, which became the property of the of the share referred to in the assessee in consideration of a transfer said clause. as referred to in section 70(1)(zi). a consolidated scheme of a mutual him of the unit or units in the fund, which became the property of the consolidating scheme of the assessee in consideration of a transfer mutual fund. referred to in section 70(1)(zj). 9. Capital asset, being equity share of a That part of the cost of the company, which became the property preference shares in relation of the assessee in consideration to which such asset is acquired. of a transfer referred to in section 70(1)(zb). a consolidated plan of a mutual fund him of the unit or units in scheme, which became the property the consolidating plan of the of the assessee in consideration scheme of the mutual fund. of a transfer referred to in section 70(1)(zk). 11. Capital asset being a unit or units in Computed as per the following the segregated portfolio. formula:— A × B X = , C where,— unit or units in segregated portfolio; or units in the total portfolio; B = Net Asset Value of the asset transferred to the segregated portfolio; and C = Net Asset Value of the total portfolio immediately before segregation of portfolios. by the unit holder in the main portfolio. original units as reduced by the amount as so arrived at under serial number 11. to in section 70(1)(zl) which became the interest in the joint venture the property of the assessee. referred to in the said clause. 14. Shares in the resulting company as a Computed as per the following result of demerger. formula:— A × B X = , C where,— in the resulting company; in demerged company; B = net book value of assets transferred in demerger; and C = net worth of demerged company immediately before demerger. in the demerged company. original shares as reduced by the amount so arrived at under serial number 14. 16. Capital asset deemed to be chargeable Cost for which such asset was to tax according to the provisions of acquired by the transferee section 71(1). company. 17. Capital asset being property, where the The value taken into account capital gain arises from the transfer under section 92(2)(m). of such property the value of which has been subject to income-tax under section 92(2)(m). 18. Capital asset declared under the Income The fair market value of the Declaration Scheme, 2016, where the asset taken into account for the tax, surcharge and penalty have been purposes of the said Scheme. paid as per the provisions of such Scheme on the fair market value as on the date of the commencement of that Scheme. 19. Specified capital asset referred to The stamp duty value as on the in clause (c) of the Explanation to last day of the second tax year section 10(37A) of the Income-tax after the end of the tax year in Act, 1961 (43 of 1961), which has which the possession of the been transferred after the expiry of said specified capital asset was two years from the end of the tax handed over to the assessee. year in which the possession of such asset was handed over to the assessee. 20. Capital asset, being share in the project, The amount deemed as full in the form of land or building, or both, value of consideration under under section 67(14), not being a capital section 67(14). asset referred to in section 67(16). 21. Capital asset, being the asset held by The fair market value of the a trust or an institution in respect asset considered for compuof which accreted income has been tation of accreted income as computed and tax paid thereon as per on specified date as per section section 352. 352(2). 22. Capital asset referred to in section The fair market value for 26(2)(j). section 26(2)(j). 23. Capital asset, being an Electronic Gold The cost of gold for the person Receipt issued by a Vault Manager, in whose name Electronic Gold which became the property of the Receipt is issued. person as consideration of a transfer, as referred to in section 70(1)(y). 24. Capital asset being gold released against The cost of the Electronic Gold an Electronic Gold Receipt, which Receipt for such person. became the property of the person as consideration for a transfer as referred to in section 70(1)(y). (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; (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.

Sub-sections

None extracted from PDF.

Provisos

None.

Explanations

None.

Tables

Table 1:

(1) In the case of a capital asset specified in column B of the Table below,

Table 2:

the cost of acquisition of the asset shall be deemed to be the cost as mentioned

Table 3:

in column C of the said Table.

Table 4:

TABLE

Table 5:

Sl. No. Description of the capital asset Cost of acquisition

Table 6:

A B C

Table 7:

2. Capital asset, being a share or shares The cost of acquisition to him

Table 8:

5. Capital asset, being rights of a partner The cost of acquisition to him

Table 9:

Sl. No. Description of the capital asset Cost of acquisition

Table 10:

A B C

Table 11:

section 209(1) (Table: Sl. No. 2) held redemption was made.

Table 12:

7. Capital asset, being a unit of a business The cost of acquisition to him

Table 13:

8. Capital asset, being a unit or units in The cost of acquisition to

Table 14:

10. Capital asset, being a unit or units in The cost of acquisition to

Table 15:

X = cost of acquisition of the

Table 16:

A = cost of acquisition of unit

Table 17:

Sl. No. Description of the capital asset Cost of acquisition

Table 18:

A B C

Table 19:

12. Capital asset being original units held The cost of acquisition of such

Table 20:

13. Capital asset, being shares as referred The cost of acquisition to it of

Table 21:

X = cost of acquisition of shares

Table 22:

A = cost of acquisition of shares

Table 23:

15. Original shares held by the shareholder The cost of acquisition of such

Table 24:

Sl. No. Description of the capital asset Cost of acquisition

Table 25:

A B C

Table 26:

(2) For the purposes of the Table in sub-section (1), in respect of the entries against—

Key Structure

  • Applies to: All assessees who have acquired capital assets through specific modes listed in the Table (24 serial numbers), including gifts, wills, succession, inheritance, amalgamation, demerger, conversion of company to LLP, business reorganisation, and various exempt transfers under section 70.
  • Asset type: Wide range of capital assets: property acquired by gift, will, succession, or devolution; shares in amalgamated companies; shares or debentures from bond conversion; specified securities and sweat equity shares; rights of partners on LLP conversion; GDR redemption shares; business trust units; mutual fund units (consolidation); preference-to-equity conversion shares; segregated portfolio units; demerger shares; assets under section 71(1); property taxed under section 92(2)(m); assets under Income Declaration Scheme 2016; specified capital assets under old section 10(37A); project shares under section 67(14); trust assets with accreted income under section 352; Electronic Gold Receipts and gold released against them.
  • Conditions: Cost of acquisition is deemed to be the cost specified in Column C of the Table for each mode of acquisition listed in Column B; for serial number 1, cost is the cost to the previous owner plus cost of improvement; “previous owner” means the last owner who acquired by a mode other than those in Column B.
  • Time limits: None specified in this section.
  • Monetary limits: None specified in this section.
  • Exceptions: For demerger (serial numbers 14-15), net worth computed as paid-up share capital plus general reserves from books immediately before demerger; for segregated portfolio (serial numbers 11-12), cost allocated by formula based on NAV ratios; provisions for amalgamation, demerger, and related entries also apply to business reorganisation of co-operative banks under section 64.

Cross-References

  • s067-charging — section 67(14) and 67(16) referenced for cost of project-form capital assets (serial number 20).
  • s070-exempt-transfers — section 70(1) referenced extensively for exempt transfer modes triggering deemed cost rules: clauses (a), (c), (d), (e), (f), (g), (h), (i), (j), (l), (m), (n), (o), (t), (u), (v), (w), (y), (z), (za), (zb), (zd), (ze), (zf), (zi), (zj), (zk), (zl).
  • s071-withdrawal — section 71(1) referenced for deemed transfer of capital asset (serial number 16).
  • s072-computation — sections 72 and 73 work in tandem for capital gains computation.
  • Section 17(1)(d) (not yet ingested) — specified security or sweat equity shares (serial number 4).
  • Section 26(2)(j) (not yet ingested) — capital asset with fair market value as cost (serial number 22).
  • Section 33(2) (not yet ingested) — depreciation provision cross-referenced.
  • Section 41 (not yet ingested) — written down value definition.
  • Section 42 of the LLP Act, 2008 — conversion of company to LLP (serial number 5).
  • Section 64 (not yet ingested) — business reorganisation of co-operative banks.
  • Section 92(2)(m) (not yet ingested) — property value subject to income-tax (serial number 17).
  • Section 99(3) (not yet ingested) — HUF acquisition mode (serial number 1(e)).
  • Section 209(1) (not yet ingested) — GDR redemption (serial number 6).
  • Section 352 (not yet ingested) — accreted income of trusts (serial number 21).

Amendment Notes

None noted from the extracted pages.

Practical Notes

Graph View

Backlinks