Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

[Section 43(1)] – Notional Actual Cost of Assets – for Computing Profits and Gains of Business or Professions

[Section 43(1)] - Notional Actual Cost of Assets - for Computing Profits and Gains of Business or Professions
[Section 43(1)] – Notional Actual Cost of Assets – for Computing Profits and Gains of Business or Professions
Sl.  No.  Situation Notional Actual Cost
1. Asset used in business after it  ceases to be used for Scientific  Research Actual cost of the asset minus the amount of  deduction allowed u/s 35 i.e. it will be ‘Nil’
2. A capital asset referred to  section 28(via) (i.e. inventory  is converted into/or treated as  capital asset) is used for the  purposes of business or  profession Actual cost of such assets to the assessee  shall be the fair market value which has  been taken into account for the purposes of  the said clause.
3. Asset acquired by way of gift  or inheritance Actual cost to the previous owner minus the  depreciation allowable on that asset  assuming it is the only asset in the relevant  block
4. Asset transferred to reduce tax  liability by claiming  depreciation at enhanced cost Actual cost as determined by Assessing  Officer with approval of Joint  Commissioner. Genuine cases not covered
5. Asset earlier transferred  reacquired by the assessee (a)           original actual cost minus the  depreciation allowable to him assuming it is  the only asset in the relevant block, or

(b)          actual price for which reacquired,

 

whichever is less   

6. Asset previously used by any  person and on which  depreciation allowed to him,  acquired by another person but  leased back to the seller Actual cost in the hands of the person who  has leased back the asset shall be same as  the W.D.V. of the said asset to the seller at  the time of transfer thereof
7. Buildings brought into use for  business purpose subsequent  to its acquisition Actual cost of the building minus all  depreciation that would have been allowable  had the building been used for business  since its acquisition
8. Assets transferred by holding  company to 100% subsidiary  or vice versa where transferee  company is an Indian company Actual cost to the transferee company shall  be same as would have been to transferor  company, if it continued to hold it
9. Assets transferred under a  scheme of amalgamation Actual cost to the amalgamated company  shall be same as would have been to the  amalgamating company, if it continued to  hold it
10. Asset transferred to the  resulting company in case of  demerger Same as would have been to demerged  company, if it continued to hold the asset
11. Interest pertaining to post  acquisition period Interest on money borrowed for the purpose  of acquiring a capital asset, pertaining to the  period after the asset is put to use is to be  claimed as a revenue expenditure u/s  36(1)(iii)
12. Actual cost of cenvatable asset Actual cost minus duty of excise/ customs  for which credit of cenvat has been taken
13. Asset acquired where portion  of cost met by some other  person Actual cost minus cost met by some other  person
14. Asset acquired by non-resident  outside India but brought by  him to India for the purpose of  business and profession Actual cost minus depreciation that would  have been allowable in India since the date  of its acquisition
15. Assets acquired by a company  under a scheme for  corporatisation of a recognised  stock exchange in India. Actual cost to the company shall be the  amount which would have been regarded as  actual cost had there been no such  corporatisation.
16. Capital asset on which  deduction has been allowed or  allowable to the assessee u/s  35AD Nil

 

See also  Modes of Deposit / Investment available to Public Trusts as per Section 11(5)
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