• Deemed Cost of Acquisition  

A.       Where the Capital asset became the property of the assessee in any of the below mentioned cases then cost to the previous owner shall be the deemed Cost of Acquisition for the purpose of computation of Capital gains:

1. On distribution of assets on total/ partial partition of Hindu Undivided Family;

2. Under a Gift/ Will;

3. By succession, inheritance, or devolution;

4. On distribution of assets on liquidation of the company;

5. Under a transfer to a revocable or irrevocable trust;

6. On transfer by a wholly owned subsidiary company to its holding company or vice versa;

7. On conversion of self acquired property of a member of a HUF to the Joint Family property;

8. On any transfer in a scheme of amalgamation of two Indian companies subject to conditions specified U/s 47(vi);

9. On any transfer in a scheme of amalgamation of two foreign companies subject to certain conditions;

10. On any transfer of a Capital asset by the banking company to the banking institution in a scheme of amalgamation.

B.       Cost of Acquisition in the case of shares/ debentures acquired on conversion of Debentures [Section 49(2A)]:

i.   The cost of acquisition of the shares/ debentures on such conversion shall be deemed to be that part of the cost of the debenture / debenture stock/ deposit certificate, in relation to which such an asset is acquired by the assessee.

a.  For ex. Y subscribed to 15 partly convertible debentures of Rs. 100 each of U Ltd. in 2008, On 10th December 2009 he receives 5 shares of Rs. 10 each in lieu of each debenture, hence the cost of 5 shares received will be the cost of 5 debentures converted into shares i.e., Rs. 50/-

ii.  The period of holding of such converted shares/ debentures will be from the date of conversion of such Debenture bonds into shares/ debentures till the actual date of transfer. 

C.       Stock or Shares becoming property of the assessee on consolidation, conversion etc.:

1. Deemed acquisition cost is the cost of such stock or shares from which asset is derived.