India - Income Tax Act 2010 - Saarc

1.313 CH. IV - COMPUTATION OF INCOME FROM CAPITAL GAINS S. 4811[Mode of computation.1248. The income chargeable under the head “Capital gains” shall be computed,by deducting from the full value of the consideration 13 received or accruingas a result of the transfer of the capital asset the following amounts, namely :—(i) expenditure incurred wholly and exclusively in connection with suchtransfer 14 ;(ii) the cost of acquisition of the asset and the cost of any improvement 14thereto:15Provided that in the case of an assessee, who is a non-resident, capital gainsarising from the transfer of a capital asset being shares in, or debentures of, anIndian company shall be computed by converting the cost of acquisition,expenditure incurred wholly and exclusively in connection with such transferand the full value of the consideration received or accruing as a result of thetransfer of the capital asset into the same foreign currency as was initially utilisedin the purchase of the shares or debentures, and the capital gains so computedin such foreign currency shall be reconverted into Indian currency, so, however,that the aforesaid manner of computation of capital gains shall be applicable inrespect of capital gains accruing or arising from every reinvestment thereafterin, and sale of, shares in, or debentures of, an Indian company :Provided further that where long-term capital gain arises from the transfer ofa long-term capital asset, other than capital gain arising to a non-resident fromthe transfer of shares in, or debentures of, an Indian company referred to in thefirst proviso, the provisions of clause (ii) shall have effect as if for the words “costof acquisition” and “cost of any improvement”, the words “indexed cost ofacquisition” and “indexed cost of any improvement” had respectively beensubstituted :16[Provided also that nothing contained in the second proviso shall apply tothe long-term capital gain arising from the transfer of a long-term capital assetbeing bond or debenture other than capital indexed bonds issued by theGovernment :]11. Substituted by the Finance Act, 1992, w.e.f. 1-4-1993. Prior to substitution, section 48 wasamended by the Finance Act, 1987, w.e.f. 1-4-1988, the Direct Tax Laws (Second Amendment)Act, 1989, w.e.f. 1-4-1990, the Finance Act, 1989, w.e.f. 1-4-1990 and the Finance(No. 2) Act, 1991, w.e.f. 1-4-1992.12. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.13. For the meaning of the terms/expressions “consideration”, “full value of the consideration”,see Taxmann’s Direct Taxes Manual, Vol. 3.14. For the meaning of the terms/expressions “in connection with such transfer”, “expenditureincurred wholly and exclusively . . . transfer” and “improvement”, see Taxmann’sDirect Taxes Manual, Vol. 3.15. See rule 115A.16. Inserted by the Finance Act, 1997, w.e.f. 1-4-1998.