hough the term “Notional Cost of Acquisition” is not explicitly defined in the Income Tax Act, it is judicially and administratively recognised in cases where:

No actual purchase price exists, and the cost of acquisition has to be deemed or inferred by law, for the purpose of computing capital gains.

We can take the reference of the below sections:

Section 49(1):

Where the capital asset becomes the property of the assessee under a gift or will, the cost of acquisition shall be deemed to be the cost for which the previous owner acquired it.

Section 55(2)(a):

In the case of goodwill, trademark, brand name, tenancy rights, loom hours, right to manufacture/produce, etc., the cost of acquisition shall be taken as Nil, if self-generated.

Section 55(2)(b):

For assets acquired before 01.04.2001, the assessee has the option to take:

“the cost of acquisition shall, at the option of the assessee, be the fair market value of the asset as on 1st day of April, 2001.”

Summary:

Practical Scenarios of Notional Cost: