Section 49:
Cost with reference to certain modes of acquisition.
1
(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
2
(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) 3
or clause (v) 4
or clause (vi) 5
or
clause (via) 6or clause (viaa) or clause (viab) or clause (vib) 7or clause (vic) or clause (vica) or
clause (vicb) or clause (vicc)
8or clause (xiii) or clause (xiiib) or clause (xiv) of section 47;
9(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.
10
Explanation.In this 11
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 12
clause (ii) or clause (iii) or
clause (iv) of this 11
sub-section.
13
(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.
14
(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, debenturestock, bond or deposit certificate in relation to which such asset is acquired by the assessee.
15
(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.
16
(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.
17
(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.
18
(2ABB) Where the capital asset, being share or shares of a company, is acquired by a non-resident
assessee on redemption of Global Depository Receipts referred to in clause (b) of sub-section (1) of
section 115AC held by such assessee, the cost of acquisition of the share or shares shall be the price of
such share or shares prevailing on any recognised stock exchange on the date on which a request for such
redemption was made.
Explanation.For the purposes of this sub-section, recognised stock exchange shall have the
meaning assigned to it in clause (ii) of the Explanation 1 to sub-section (5) of section 43.
19(2AC) Where the capital asset, being a unit of a business trust, became the property of the assessee
in consideration of a transfer as referred to in clause (xvii) of section 47, the cost of acquisition of the
asset shall be deemed to be the cost of acquisition to him of the share referred to in the said clause.
18
(2AD) Where the capital asset, being a unit or units in a consolidated scheme of a mutual fund,
became the property of the assessee in consideration of a transfer referred to in clause (xviii) of
section 47, the cost of acquisition of the asset shall be deemed to be the cost of acquisition to him of the
unit or units in the consolidating scheme of the mutual fund.
20
(2AE) Where the capital asset, being equity share of a company, became the property of the assessee in
consideration of a transfer referred to in clause (xb) of section 47, the cost of acquisition of the asset shall be
deemed to be that part of the cost of the preference share in relation to which such asset is acquired by the
assessee.
21
(2AF) Where the capital asset, being a unit or units in a consolidated plan of a mutual fund scheme,
became the property of the assessee in consideration of a transfer referred to in clause (xix) of section 47,
the cost of acquisition of the asset shall be deemed to be the cost of acquisition to him of the unit or units in
the consolidating plan of the scheme of the mutual fund.
22
* * * * *
23
(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).
24
(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.
25
(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.
26
(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) 27
or clause (viia) 21
or clause (x) 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) 27
or clause (viia) 21
or clause (x).
28
(5) Where the capital gain arises from the transfer of an asset declared under the Income Declaration
Scheme, 2016, and the tax, surcharge and penalty have been paid in accordance with the provisions of the
Scheme on the fair market value of the asset as on the date of commencement of the Scheme, the cost of
acquisition of the asset shall be deemed to be the fair market value of the asset which has been taken into
account for the purposes of the said Scheme.
29
(6) Where the capital gain arises from the transfer of a specified capital asset referred to in clause (c) of
the Explanation to clause (37A) of section 10, which has been transferred after the expiry of two years from
the end of the financial year in which the possession of such asset was handed over to the assessee, the cost of
acquisition of such specified capital asset shall be deemed to be its stamp duty value as on the last day of the
second financial year after the end of the financial year in which the possession of the said specified capital
asset was handed over to the assessee.
Explanation.––For the purposes of this sub-section, “stamp duty value” means the value adopted or
assessed or assessable by any authority of the State Government for the purpose of payment of stamp duty
in respect of an immovable property.
(7) Where the capital gain arises from the transfer of a capital asset, being share in the project, in the
form of land or building or both, referred to in sub-section (5A) of section 45, not being the capital asset
referred to in the proviso to the said sub-section, the cost of acquisition of such asset, shall be the amount
which is deemed as full value of consideration in that sub-section;
30
(8) Where the capital gain arises from the transfer of an asset, being the asset held by a trust or an
institution in respect of which accreted income has been computed and the tax has been paid thereon in
accordance with the provisions of Chapter XII-EB, the cost of acquisition of such asset shall be deemed to
be the fair market value of the asset which has been taken into account for computation of accreted
income as on the specified date referred to in sub-section (2) of section 115TD.”.
31
(9) Where the capital gain arises from the transfer of a capital asset referred to in clause (via) of
section 28, the cost of acquisition of such asset shall be deemed to be the fair market value which has
been taken into account for the purposes of the said clause.
Notes:
1. Section 49 re-numbered as sub-section (1) thereof by Act 20 of 1967, s. 20 (w.e.f. 1-4-1967).
2. Subs. by Act 11 of 1987, s. 16, for sub-clause (b) (w.e.f. 1-4-1988).
3. Ins. by Act 10 of 1965, s. 16 (w.e.f. 1-4-1965).
4. Ins. by Act 20 of 1967, s. 20 (w.e.f. 1-4-1967).
5. Ins. by Act 18 of 1992, s. 25 (w.e.f. 1-4-1993).
6. Subs. by Act 20 of 2015, s. 15, for or clause (viaa) or clause (vica) or clause (vicb) (w.e.f. 1-4-2016).
7. Ins. by Act 7 of 2017, s. 25 (w.e.f. 1-4-2018).
8. Subs. by Act 23 of 2012, s. 16, for clause (xiiib) of section 47 (w.e.f. 1-4-1999).
9.. Ins. by Act 41 of 1975, s. 12 (w.e.f. 1-4-1976).
10. Ins. by Act 10 of 1965, s. 16 (w.e.f. 1-4-1965).
11. Subs. by Act 20 of 1967, s. 20, for section (w.e.f. 1-4-1967).
12. Subs. by Act 41 of 1975, s. 12, for clause (ii) or clause (iii) (w.e.f. 1-4-1976).
13. Ins. by Act 20 of 1967, s. 20 (w.e.f. 1-4-1967).
14. Subs. by Act 18 of 2008, s. 15, for sub-section (2A) (w.e.f. 1-4-2008).
15. Subs. by Act 33 of 2009, s. 23, for sub-section (2AA) (w.e.f. 1-4-2010).
16. Ins. by Act 14 of 2010, s. 20 (w.e.f. 1-4-2011).
17. Ins. by Act 22 of 2007, s. 17 (w.e.f 1-4-2008).
18. Ins. by Act 20 of 2015, s. 15 (w.e.f. 1-4-2015).
19. Ins. by Act 25 of 2014, s. 20 (w.e.f. 1-4-2015).
20. Ins. by Act 7 of 2017, s. 25 (w.e.f. 1-4-2018).
21. Ins. by s. 25, ibid. (w.e.f. 1-4-2017).
22. Sub-section (2B) omitted by Act 10 of 2000, s. 23 (w.e.f. 1-4-2000).
23. Ins. by Act 27 of 1999, s. 35 (w.e.f. 1-4-2000).
24. Ins. by Act 22 of 2007, s. 17 (w.e.f. 1-4-2008).
25. Ins. by Act 67 of 1984, s. 14 (w.e.f. 1-4-1985).
26. Ins. by Act 33 of 2009, s. 23 (w.e.f. 1-10-2009).
27. Ins. by Act 14 of 2010, s. 20 (w.e.f. 1-6-2010).
28. Ins. by Act 28 of 2016, s. 30 (w.e.f. 1-4-2017).
29. Ins. by Act 7 of 2017, s. 25 (w.e.f. 1-4-2018).
30. Ins. by s. 25, ibid. (w.e.f. 1-6-2016).
31. Ins. by Act 13 of 2018, s. 19 (w.e.f. 1-4-2019).