16/02/2019
Cost of acquisition :-
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.
One should keep in mind the following prepositions taken from judicial rulings :-
• Ground rent cannot be said to be expenditure incurred by the assessee for the acquisition of the capital asset and it cannot, therefore, be included in computing the actual cost to the assessee of the capltal asset - CIT v. Mizhlesh Kumari [1973] 92 ITR 9 (Delhi).
• Interest on moneys borrowed to purchase asset is part of actual cost of asset.
• Expenses on suits for amending articles of association are of a capital nature and are a part of the cost of shares-CITV. Bengal Assam Investors Ltd. [1969] 72 ITR 319 (cal.)
• Litigation expenses incurred for compelling the company to register the shares in the name of the assessee would be of capital nature, forming a part of the cost of acquisition of the shares-Bengal Assam Investors Ltd. (supra).
• Estate duty paid in respect of inherited property can neither be treated as a part of the cost of acquisition of property nor as cost of improvement - S.Valliammai v. CIT[1981] 127 ITR 713 (Mad).
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