Cost of acquisition of an asset is the value for which it was acquired by the assessee. Expenses of capital nature for completing or acquiring the title to the property are includible in the cost of acquisition.

Where a shareholder in the liquidation of a company receives any money or other assets from the company, he shall be chargeable to income-tax under the head “Income from Capital Gains”, in respect of the money so received or the market value of the other assets on the date of distribution, as reduced by the amount assessed as dividend and the sum so arrived at shall be deemed to be the full value of the consideration.

Where the full capital asset, being a share or a stock of a company, became the property of the assessee on –

• the consolidation and division of all or any of the share capital of the company into shares of larger amount than its existing shares.
• the conversion of any shares of the company into stock.
• the re-conversion of any stock of the company into shares,
• the sub-division of any of the shares of the company into shares of smaller amount, or
• the conversion of one kind of shares of the company into another kind, then in above cases, the cost of acquisition of the asset will be calculated with reference to the cost of acquisition of the shares or stock from which such asset is derived.

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