Section 43C of Income Tax Act, 1961: Special provision for computation of cost of acquisition

(1) If an asset acquired by an amalgamated company under a scheme of amalgamation is sold by the amalgamated company after the 29th day of February 1988 as stock-in-trade of the business it is engaged in, the cost of acquisition of the said asset to the amalgamated company in determining the profits and gains from the sale of such asset shall be the cost of acquisition of the said asset to the cost of acquisition of the asset to the amalgamated company, as increased by the cost, if any, of any improvements made thereto, and the cost, if any, of any expenditure incurred, wholly and exclusively in connection with such transfer by the amalgamated company, shall be used by the amalgamated company in computing the profits and gains from the sale of such asset.

(2) When an asset—not one covered by subsection (2) of section 45—becomes the assessee’s property as a result of the complete or partial division of a Hindu undivided family, as a result of a gift, a will, or an irrevocable trust, or when it is sold by the assessee as stock in trade of the enterprise he operates after February 29, 1988, the assessee’s cost of acquisition of the said asset shall be considered when calculating the profits and gains the cost of acquisition of the asset to the transferor or donor, as the case may be, increased by the cost of any improvements made thereto, and the expenditure, if any, incurred, wholly and exclusively in connection with such transfer (by way of completing the partition, accepting the gift, obtaining probate in relation to the will, or creating the trust), including the payment of gift-tax, if any, incurred.