Cost of acquisition and improvement
1. In case of
- goodwill of Business or profession
- trademark or brand name associates with a business or profession
- right to manufacture, produce, process any article or thing like patent & copyright
- right to carry on aby business or profession
- tenancy right
- loom hours
- routine permits
In the above cases
– For Self generated= Nil
– Purchased = Purchase price
2. Benefit of FMV as on 01/04/2001 not available in case of above assets.
3. Capital gain on transfer of self generated goodwill or a profession or self generated trade mark or brand name associated with a profession, is not chargeable to tax up to the AY 20-21.
Bonus shares/securities
1. cost of acquisition of bonus shares or securities is
- If acquired before 01/04/2001 the cost of acquisition is FMV as on 01/04/2001
- If acquired on or after 01/04/2001 then cost of acquisition is NIL.
2. Period of holding of shares or securities is from allotment date to transfer date.
Right Shares or security
if shares acquired by shareholder the cost of acquisition is amount to the company. And period of holding is applicable from the date of allotment date.
Renouncement of right then capital gain applicable
| Fair value of consideration= | Renouncement Price |
| Less: Cost of Acquisition | NIL |
| Short Term Capital Gain | xxxxx |
period of holding is from offer date to renouncement date
Immovable property
In case of immovable properties if SDV as on 01.04.2001 available then FMV as on date 01/04/2001 should not be more then STAMP DUTY VALUE as on 01/04/2001.
EXAMPLE-1
Mr Santosh acquired a house property on 22.04.1993 for Rs 8,00,000. FMV as on 01/04/2001 is Rs 10,00,000 and stamp duty value is 9,10,000. So in this case cost of acquisition of property is Rs 9,10,000.
EXAMPLE-2
Mr Santosh acquired a house property on 22.04.1993 for Rs 50,000. FMV as on 01/04/2001 is Rs 1,00,000 and stamp duty value is 2,10,000. So in this case cost of acquisition of property is Rs 1,00,000.
Cost of improvement
- In case of goodwill of business, patent, copyright, right to carry on any business or profession always NIL.
- In case of other assets is capital expenses which is spent as improvement.
- Improvement done before 01/04/2001 should be ignored in all cases.
