The cost of acquisition of self-generated goodwill of a business, for computing capital gains on its transfer, is:
AFMV as on 1.4.2001
BDeemed to be nil
CBook value recorded
DValue on transfer date
Answer & Solution
Correct answer: B. Deemed to be nil
1. Section 55(2)(a) prescribes the cost of acquisition of goodwill of a business and similar self-generated intangibles.
2. Where the asset was not purchased, no cost was actually incurred, so the cost of acquisition is taken as Nil.
3. The FMV-on-1.4.2001 option available to other old assets is not available for self-generated goodwill; only purchased goodwill takes its purchase price as cost.
_Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 4 Capital Gains, PDF p. 40_
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