When an assessee acquires capital asset in the form of shares or stock of a company on :
(a) Consolidation and division of the share capital of the company into shares of large denomination than its existing shares.
(b) Conversion of any shares into stock,
(c) Re-conversion of any stock into shares,
(d) Sub-division of any of the shares of the company into shares of smaller amount, or
(e) Conversion of one kind of shares into another kind.
The cost of acquisition if these cases means the cost of acquisition of the asset calculated with reference to the cost of acquisition of the shares or stock from which such asset has been derived.
When Cost can not be Ascertained [Section 55 (3)] in Computing Capital Gain
Where the cost of particular asset, for which the previous owner had acquired the asset, cannot be ascertained, the cost of acquisition to the owner means the fair market value of the asset on the date on which it becomes the property of such owner.
Cost of bonus shares.
The Finance Act 1995 has made a major change in determining the cost of bonus shares to be called “financial asset.” As per new amendment the cost of financial assets allotted to the assessee without any payment and on the basis of holding of any other financial asset, shall be taken as NIL. This amendment has come into effect from assessment year 1996-97. The cost of bonus shares allotted before 1-4-81 is their fair market value as on 1-4-81.