Cost of Acquisition of capital assets of entities in case of levy of tax on accreted income under section 115TD which related with special provisions relating to tax on accreted income of certain trusts and institutions.

Fair market value shall be deemed to be cost of Acquisition of capital assets in case of accreted income arises on conversion, merger, and dissolution under specified conditions of trust and institution registered under section 12AA.

The existing provisions of the section 49 of the Act provides for computation of cost with reference to certain modes of acquisition of capital asset.

Budget 2017 proposed to amend said section so as to provide that where the capital gain arises from the transfer of an asset, being the asset held by a trust or an institution in respect of which accreted income has been computed, and the tax has been paid thereon in accordance with the provisions of Chapter XII-EB (special provisions relating to tax onaccreted income of certain trusts and institutions), the cost of acquisition of such asset shall be deemed to be the fair market value of the asset which has been taken into account for computation of accreted income as on the specified date referred to in sub-section (2) of section 115TD.

The proposed amendment is consequential in nature.

This amendment will take effect retrospectively from 1st June, 2016 and will, accordingly, apply in relation to the assessment year  2016-17 and subsequent years.