Cost of acquisition rules clarify treatment of shares and securities under transfer and demerger provisions.

Rules specify the cost of acquisition for shares and securities arising from amalgamation, demerger and related transactions: shares received on amalgamation take the assessee's original cost; shares in the resulting company receive a proportionate cost based on net book value to net worth ratio; original shares in the demerged company are adjusted by the amount allocated under the demerger rule. Rights, subscriptions, purchases of entitlements, sweat equity, demutualisation and share restructuring have designated valuation or nil-cost treatments.

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