As per S. 49(1) of the Act , where a capital asset is acquired with or without paying any consideration for the same, then Cost of Acquisition of such asset shall be taken as the cost as was in the hands of the previous owner.
where the asset has been inherited by the assessee or gifted to the assessee, the cost of acquisition of the asset for which the previous owner acquired it, shall be deemed to be the cost of acquisition of the asset as increased by the cost of improvement of the assets if any, incurred or borne by the previous owner or the assessee as the case may be.
In a case, where the capital asset became the property of the assessee in the circumstances specified in section 49(1) of the Act and capital asset became the property of the previous owner before April 1, 1981, the assessee has the option to take actual cost or the fair market value of the asset (other than a depreciable asset), as on April 1, 1981 as the cost of acquisition. In such a situation, the period of holding shall be determined u/s 2(42A) of the Act by including period for which such an asset was held by the previous owner.
Where the capital asset, being a share or debenture in a company became the property of the assessee in consideration of a transfer by way of conversion of bonds or debentures, debenture-stock or deposit certificates in any form, the cost of acquisition of the asset to the assessee shall be deemed to be that part of the cost of debenture, debenture- stock or deposit certificates in relation to which such asset is acquired by the assessee.
S. 2 (42A), 47(iv), 48 & 49(1)(iii)(e) of IT Act, 1961—Capital gain—S. 45 specifies that capital gains tax is leviable on any profit and gains arising out of the transfer of capital asset. S. 47(iv) specifies that nothing contained in S. 45 would apply to the transfer as specified in S. 47(iv), therefore, in these circumstances, whether there is a consideration or non consideration, no transfer of a capital asset by a company to its subsidiary company if it falls within the provisions of S. 47(iv) shall be considered as transfer and the provisions of S. 45 would not apply. Therefore, transfer of trademarks being of capital gains asset, gains arising therefrom are chargeable to capital gain tax and cost of acquisition being indeterminable long-term capital gains is not liable to any tax—Trent Brands Ltd. vs. ITO  127 TTJ 65* (ITAT-Del F)(UO)
S. 46(2), 49(1)(iii)(c) & 55(2)(b)(iii) of IT Act, 1961—Capital gain—S. 46(2) provides that when a shareholder receives money or any other asset from a company on it liquidation, then such shareholder shall be charged to capital gains tax. This capital gain is an account of transfer of shares effected by extinguishment of rights in shares. Therefore, for the purpose of computation of capital gains in respect of sale of capital asset which became the property of the assessee on distribution of assets by the company on liquidation, cost of acquisition of assets has to be taken as cost of previous owner, namely, the company, in terms of S. 49(1)(iii)(c) of the Act—ACIT vs. T. R. Srinivasan (2010) 131 TTJ (UO) 49 (ITAT-Chennai)
S. 45, 47(iii), 49(1)(ii) of IT Act, 1961—Interpretation of taxing statue—The definition in S. 2(xii) or in S. 4(1) of the Gift-tax Act, 1958 cannot be imported for the purpose of construing the word “gift” occurring in S. 47(iii) of IT Act, 1961, since the scope of the two Act are different—M. Suseela vs. ITO  2 ITR (Trib) 760 (ITAT-VISHAKHAPATNAM)
As Per Section 49(1), of the Income Tax Act, 1961-
Cost with reference to certain modes of acquisition under section 49(1)
Where the capital asset became the property of the assessee—
(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;
(ii) under a gift or will;
(iii) (a) by succession, inheritance or devolution, or
(b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or
(c) on any distribution of assets on the liquidation of a company, or
(d) under a transfer to a revocable or an irrevocable trust, or
(e) under any such transfer as is referred to in clause (iv) [or clause (v)][or clause (vi)][or clause (via)][or clause (viaa)][or clause (vica) or [clause (vicb)] or [clause (xiii) or clause (xiiib) or clause (xiv) of section 47];
[(iv) such assessee being a Hindu undivided family, by the mode referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969,]
the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.
[Explanation.—In this [sub-section] the expression “previous owner of the property” in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) [or clause (iv)] of this [sub-section].]