## Cost of Acquisition (COA)
### Normal Case
COA = Purchase Price + All expenses related to purchase (registration, brokerage on purchase, legal fees on purchase) — except STT (which is never deductible).
### Special Cases
#### (i) Asset acquired through transactions not regarded as transfer
Where asset is received via gift, will, partition of HUF, etc. (not regarded as transfer u/s 47):
COA = Purchase price of previous owner.
#### (ii) Goodwill, brand name, trademark, right to manufacture, stage permit, loom hours, other intangible assets
- Self-generated → COA = Nil
- Purchased → COA = Purchase Price
#### (iii) Bonus Shares
| When allotted | COA |
|---|---|
| Before 1.4.2001 | FMV as on 1.4.2001 |
| On or after 1.4.2001 | Nil |
Note: If Section 112A applies (listed equity LTCG) and bonus shares were allotted before 31.1.2018, COA = FMV as on 31.1.2018 (grandfathering).
#### (iv) Sweat Equity Shares (ESOP)
COA = FMV on the date the option is exercised (this is the same value that was taxed earlier as perquisite under salary head).
#### (v) Right Shares
- If subscribed by the assessee → COA = Purchase Price (issue price paid to company)
- If right offer is renounced/sold to a third party → COA = Nil, and the entire renouncement price = STCG to the renouncer
- For the purchaser who acquires from renouncer: COA = Amount paid to company + Renouncement Price paid
#### (vi) Depreciable Asset
COA = WDV (Written Down Value) of the block as on 1st April of the year of transfer (Section 50).
#### (vii) Asset acquired before 1.4.2001
COA = Higher of:
- FMV as on 1.4.2001, OR
- Actual Purchase Price of assessee / previous owner
Special rule for Land & Building: FMV as on 1.4.2001 cannot exceed SDV as on 1.4.2001. So:
- If FMV > SDV on 1.4.2001 → FMV is capped at SDV → COA = Higher of (SDV, Purchase Price)
#### (viii) Shares received under Demerger (from Resulting Company)
COA of Resulting Co. shares = COA of shares in Demerged Co. × (Net Book Value of Assets transferred to Resulting Co. ÷ Net Worth of Demerged Co.)
Correspondingly, COA of original shares in demerged company is reduced by the same amount.