Deduction for cost of acquisition etc.
51. (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.
