Sunil Kumar Yadav, J.M.: This appeal by assessee is directed against order of CIT(A) on ground that CIT(A) has erred in upholding addition of Rs. 5,08,500 on account of short-term capital gains. We have heard rival submissions and carefully perused orders of authorities below and documents placed on record. Briefly stated, during year under account, assessee sold warrants of Reliance Petroleum Ltd., which he acquired by virtue of his holding of bonds. As per scheme for issue of bonds, each of bond-holder was entitled to two warrants. These warrants entail assessee to subscribe for shares of Reliance Petroleum Ltd. Accordingly, assessee was entitled for 1,82,200 s u c h warrants. Out of these, assessee acquired 50,000 warrants by purchasing 25,000 bonds-cum-rights from market @ Rs. 31.50 each. assessee sold all warrants during year for Rs. 2,64,504. For purpose of working capital gain from lot of 50,000, he adopted cost of acquisition on notional basis at Rs. 10.17 each, spreading over purchase of bonds @ Rs. 31 each and considering yield from those from date of acquisition, i.e., 2nd Nov., 1994. By this way, assessee arrived at cost of 50,000 warrants at Rs. 5,08,500. By reducing this amount from sale price of Rs. 2,64,504, he arrived at loss of Rs. 2,43,996. assessee has also claimed that at time of purchase of bonds, interest and principal value was fixed and determinate value of bonds were enhanced only due to fact that holder was to receive two warrants each. He further contended that this offer was given to make scheme more lucrative. claim of assessee was examined by AO and he opined that where assessee becomes entitled to any additional financial asset without payment and if he renounces such entitlements, cost has to be taken at nil as per sub-s. (2)(aa) of s. 55 of IT Act (hereinafter called as Act). This is in consonance with sub-s. (2)(aa) because person who acquires such renounced rights from assessee by payment of price, it would be part of cost of acquisition in his hands, when he sells financial assets (shares) subscribed to by him. Hence statutorily w.e.f. 1st April, 1996, cost of acquisition of such warrants in hands of assessee would be nil. method followed by assessee pursuant to this judgment in case of CIT vs. Dalmia Investment Ltd. (1964) 52 ITR 567 (SC) and Miss Dhun Dadabhoy Kapadia vs. CIT (1967) 63 ITR 651 (SC) was not proper and cost of acquisition should be worked out as per amendments by Finance Act, 1995, according to which cost of additional benefits would be at nil. AO accordingly recomputed short-term capital gain at Rs. 2,64,504. assessee preferred appeal before CIT(A) with submissions that value of detachable warrants should be worked out in light of judgment of apex Court in case of Dalmia Investment Ltd. (supra) and Miss Dhun Dadabhoy Kapadia (supra), but AO did not follow same. CIT(A) re-examined issue in light of amended provisions and confirmed order of AO. Now assessee has preferred appeal before Tribunal and reiterated its contentions, whereas on other hand, learned Departmental Representative has placed heavy reliance on order of CIT(A). Having carefully examined rival submissions in light of amended provisions, we find that under s. 55, amendment was brought by Finance Act, 1995 w.e.f. 1st April, 1996. Prior to amendment, additional financial assets were to be valued as per average method in view of judgment of apex Court in case of Miss Dhun Dadabhoy Kapadia vs. CIT (supra) in which it has been held that as result of issue of rights shares, value of original shares get depressed and extent of depression would represent cost of acquisition of right to subscribe to shares and such cost would be liable to be deducted in computing capital gains arising on renouncing right to subscribe to shares. This decision was repeatedly followed by several High Courts in various cases. To nullify effect of judgment of apex Court, cl. (aa) was inserted in s. 55(2) by Finance Act, 1995 w.e.f. 1st April, 1996 in which shares or securities within meaning of cl. (h) of s. 2 of Securities Contracts (Regulation) Act, 1956 have been referred to as "financial asset" and it has been laid down that in case where by virtue of holding capital asset, being financial asset, assessee becomes entitled to subscribe to any additional financial asset, cost of acquisition in relation to original receipt, additional receipt, right to renounce, etc. would be as follows: (i) in relation to original financial asset, cost of acquisition would be amount actually paid for acquiring said asset; (ii) in relation to any right to renounce said entitlement to subscribe to financial asset, when such right is renounced by assessee in favour of any person cost of acquisition shall be taken at nil; (iii) in relation to additional financial asset acquired on basis of said entitlement, cost of acquisition would be actual amount paid by him for acquiring such asset; (iv) in relation to any financial asset purchased by any person in whose favour right to subscribe to such asset has been renounced, cost of acquisition would mean aggregate of amount of purchase price paid by him to person renouncing such right and amount paid by him to company or institution, as case may be, for acquiring such financial asset. simple illustration would explain provisions in sub-cls. (i) to (iv) of cl. (aa) of s. 55(2). Suppose "A" purchases 10 shares of company for Rs. 150 at rate of Rs. 15 per share and subsequently company offers, what is known as "rights shares" to him and on account of this, "A" becomes entitled to subscribe to these shares of company at rate of Rs. 12 per share when market rate is Rs. 20 per share. There would be no change in cost of acquisition of original financial asset, viz. original 10 shares; cost of acquisition would continue to be Rs. 150 [vide sub-cl. (i)]. If "A" accepts offer and subscribes to 10 shares by paying Rs. 12 per share cost of acquisition in relation to this additional financial asset, viz. addition to shares, would be Rs. 120 [vide sub-cl. (iii)]. If "A" renounces entitlement to subscribe to shares in favour of "B" for consideration of Rs. 7 per share, cost of acquisition to "A" in relation to entitlement to subscribe to shares (which by itself is capital asset) would be nil with result that entire consideration of Rs. 70 received by him for transfer of said capital asset would represent capital gains [vide sub-cl. (iii)] and as far as "B" is concerned, cost of acquisition in relation to 10 shares acquired by him in above process would be Rs. 19 per share, i.e., aggregate of Rs. 7 and Rs. 12 [vide sub-cl. (iv)]. Keeping in view aforesaid legal position after amendment, we have examined facts of instant case and we find that assessee has acquired TOCD of Reliance Petroleum Ltd. by virtue of original holding of shares. As such, in view of amended provisions, original cost of shares cannot be spread over for working capital gain of sales. We, therefore, find no infirmity in computation of short-term capital gain done by AO. Accordingly, order of CIT(A) is confirmed. In result, appeal of assessee is dismissed. *** BHARAT S SHAH v. JOINT COMMISSIONER OF INCOME TAX