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Capital
Gains
Special
provision of capital gains
Provisions
relating to depreciable assets
In
section 50 and 50A of the Income Tax Act special provisions have
been made to determine the cost of acquisition in case of a depreciable
asset. Where the capital asset forms part of a block of asset in
respect of which depreciation has been allowed under the Income
Tax Act, the cost of acquisition is calculated as under:-
i)
where the full value of consideration received in respect of the
capital asset transferred together with the full value of consideration
received in respect of any other capital asset falling within the
same block of asset during the previous year exceeds the total of
the three sums listed below, the difference is taxable as short
term capital gain. The sums are:-
- written
down value of the block of asset at the beginning of the previous
year.
- actual
cost of any new asset falling within the same block of asset and
which was acquired during the previous year.
- the
expenditure incurred wholly and exclusively in connection with
such transfer or transfers.
ii) If
all the assets in the block of assets are transferred the cost of
acquisition of the block of assets is taken as the aggregate of the
written down value of the block of assets as at the beginning of the
previous year plus the actual cost of any asset falling in the block
of assets acquired during the previous year.
It
has been provided in the Act that in case of any asset on which
the assessee has claimed depreciation in any previous year, the
cost of acquisition of such asset shall always be the written down
value of the asset. Where any capital asset was subject to negotiations
for transfer and the assessee had received any advance or other
money in respect of such negotiations, the written down value of
the asset shall be reduced by the advance money or sum received
and retained by the assessee. 
Cost
of acquisition if advance money is retained
Where
any capital asset was subject to negotiations for transfer and the
assessee had received any advance or other money in respect of such
negotiations, the cost of acquisition of asset or the written down
value or the fair market value of the asset shall be reduced by
the advance money or sum received and retained by the assessee.
Cost
of
acquisition in case of certain securities
Where
any person had any beneficial interest in any securities during
the previous year covered by the provisions of the Depositories
Act ,1996, then the profit and loss on transfer of such securities
shall be covered under the provisions of capital gains in the hands
of the beneficiary owner and not in the hands of the registered
owner or the depository. In such cases the cost of acquisition and
the period of holding of any security is determinable on the basis
of first-in-first-out method.
Capital
gains in special cases of compulsory acquisition
Where
in respect of a transfer of a capital asset on account of compulsory
acquisition under any law or in respect of a transfer whose consideration
is determined or approved by the Central Government or by the Reserve
Bank of India and in which case the consideration is enhanced or
further enhanced by any court, tribunal or authority, the capital
gains is dealt in the manner below:-
i)
With reference to the compensation awarded in the first instance
as the capital gains of the previous year in which such compensation
or part thereof was first received.
ii)
the subsequently enhanced compensation or consideration shall be
deemed to be income chargeable as capital gain of the previous year
in which such income is received by the assessee and in such cases
the cost of acquisition and the cost of improvement shall be taken
as nil.
In
case of the death of the transferor or if for any reason the enhanced
compensation or consideration is received by any other person then
the capital gains will be attributed to such other person.
Reference
to valuation officer
In
the case of transfer of the capital assets ,the capital assets can
be referred to the Valuation Cell of the Department in order to
ascertain the fair market value in the following cases:-
i)
where the assessee furnishes a value of an asset in accordance with
the estimate made by a registered valuer and where the assessing
officer is of the opinion that the value declared is less than the
fair market value.
ii)
where the assessing officer is of the opinion that the fair market
value of the asset exceeds the value of the asset by more than Rupees
25000 or 15% of the value claimed by the assessee, whichever is
less.
iii)
where the assessing officer is of the opinion that having regard
to the nature of the asset and in view of the relevant circumstances,
it is necessary to do so.
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