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51. Deduction for cost of acquisition etc
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51. Deduction for cost of acquisition etc.—(1) The deductions for the purposes of computation of income from the transfer of an investment asset shall be the following, namely :—
(i) the cost of acquisition, if any, of the asset ;
(ii) the cost of improvement, if any, of the asset ; and
(iii) the amount of expenditure, if any, incurred wholly and exclusively in connection with the transfer of the asset.
(2) In the case of transfer of an investment asset, being an equity share in a company or a unit of an equity oriented fund and such transfer is chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004,—
(a) where the asset is held for a period of more than one year,
(i) if the income computed after giving effect to sub-section (1) is a positive income, a deduction amounting to hundred per cent. of the income so arrived at shall be allowed ;
(ii) if the income computed after giving effect to sub-section (1) is a negative income, hundred per cent. of the income so arrived at shall be reduced from such income.
(b) where the asset is held for a period of one year or less,
(i) if the income computed after giving effect to sub-section (1) is a positive income, a deduction amounting to fifty per cent. of the income so arrived at shall be allowed ;
(ii) if the income computed after giving effect to sub-section (1) is a negative income, fifty per cent. of the income so arrived at shall be reduced from such income.
(3) If an investment asset, other than that referred to in sub-section (2) of the section or sub-section (5) of section 53, is transferred at any time after one year from the end of the financial year in which the asset is acquired by the person, the deductions for the purposes of computation of income from the transfer of such asset shall be the following, namely :—
(i) the indexed cost of acquisition, if any, of the asset ;
(ii) the indexed cost of improvement, if any, of the asset ;
(iii) the amount of expenditure, if any, incurred wholly and exclusively in connection with the transfer of the asset ; and
(iv) the amount of relief for rollover of the asset, as determined under section 55.
Clause 51 relates to deduction for cost of acquisition of an investment asset. Sub-clause (1) of the said clause provides that for the purpose of computation of income from transfer of an investment asset, the cost of acquisition of an investment asset, the cost of improvement of such asset and the amount of expenditure incurred wholly and exclusively in connection with the transfer of such asset, shall be allowed as deduction.
Sub-clause (2) of the said clause provides that in the case of an equity share in a company or a unit of an equity oriented fund, transferred at any time after one year from the date on which such asset is acquired and such transaction is chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004, if the income computed after giving effect to sub-clause (1) is a positive income, a deduction amounting to hundred per cent. of the income so arrived at shall be allowed and if the income computed after giving effect to sub-clause (1) is a negative income, hundred per cent. of the income so arrived at shall be reduced from such income.
Sub-clause (3) of the said clause provides that if an investment asset, not being an equity share or a unit of an equity oriented fund referred to in sub-clause (2) or referred to in sub-clause (5) of clause (53) is transferred at any time after one year from the end of the financial year in which the asset is acquired by the persons, the following deductions shall be allowed for the purposes of computation of income from the transfer of such asset :—
(i) the indexed cost of acquisition, if any, of the asset ;
(ii) the indexed cost of improvement, if any, of the asset ;
(iii) the amount of expenditure, if any, incurred wholly and exclusively in connection with the transfer of the asset ; and
(iv) the amount of relief for rollover of the asset, as determined under clause 55.
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