Section 55 - Cost of Improvement (COI) of a Capital Asset

Section 55 prescribes provisions regarding determination of cost of improvement of a capital asset for the purpose of computing capital gains u/s 48:

1. In relation to the following capital asset, the cost of improvement shall be taken as NIL:

• Goodwill of a business.

• Right to manufacture, produce or process any article or thing.

• Right to carry on any business or profession.

2.            2. In relation to any other capital asset

• The cost of improvement which is in the nature of any capital expenditure, incurred before 01.04.2001 shall be ignored for the purpose of computing capital gains.

• Any capital expenditure, incurred on or after 01.04.2001 by the assessee or previous owner shall be taken into consideration for the purpose of computing capital gains.