When a person transfers his capital asset to a firm, AOP or body of Individuals in which he is or becomes partner or member by contributing capital or otherwise, profit or gain from such transfer shall be chargeable to tax as his income of the previous year in which such transfer takes place and for computation of capital gain, the amount recorded in the books of firm, AOP or body of individuals as the value of capital asset shall be deemed as full consideration for transferor. This provision has come into effect from 1-4-88 i.e. assessment year 1988-89.
The amount recorded in the books of firm, BOl or AOP, shall become sale price. The cost at which it was acquired by the person shall be treated as cost of acquisition.