Definitions of certain terms relevant to income from profits and gains of business or profession In sections 28 to 41 and in this section, unless the context otherwise requires-
1 actual cost means the actual cost of the assets to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly by any other person or authority 1. Substituted for in such business of the Central Government by the Finance Act, 1981, w. e. f. 1- 4- 1981 2. The word and omitted by the Finance Act, 1981, w. e. f. 1- 4- 1981 3. Inserted by the Finance Act, 1981, w. e. f. 1- 4- 1981 4. Ibid. Provided that where the actual cost of an asset, being a motor car which is acquired by the assessee after the 31st day of March, 1967 , but before the 1st day of March, 1975 , and is used otherwise than in a business of running it on hire for tourists, exceeds twenty- five thousand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty- five thousand rupees. Explanation 1-Where an asset is used in the business after it ceases to be used for scientific research related to that business and a deduction has to be made under clause ii of sub- section 1 of section 32 in respect of that asset, the actual cost of the asset to the assessee shall be the actual cost to the assessee as reduced by the amount of any deduction allowed under clause iv of sub- section 1 of section 35 or under any corresponding provision of the Indian Income- tax Act, 1922 11 of 1922 . Explanation 2.- Where an asset is acquired by the assessee by way of gift or inheritance, the actual cost of the asset to the assessee shall be the actual cost to the previous owner, as reduced by- a the amount of depreciation actually allowed under this Act and the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988 and b the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after- the 1st day of April, 1988 , as if the asset was the only asset in the relevant block of assets. Explanation 3.- Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the Assessing Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to income- tax by claiming depreciation with reference to an enhanced cost , the actual cost to the assessee shall be such an amount as the Assessing Officer may, with the previous approval of the Deputy Commissioner, determine having regard to all the circumstances of the case. 1. Substituted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1968. Earlier, the proviso was inserted by the Finance Act, 1966, w. e. f. 1- 4- 1966. 2. Inserted by the Finance Act, 1975, w. e. f. 1- 4- 1975. 3. Substituted for clause i , clause ii or clause iii of sub- section 1 or sub- section IA by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. The italicised words were inserted by the Taxation Laws Amendment Act, 1970, w. e. f. 1- 4- 1971 4. Substituted by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 2 read as under Explanation 2.- Where an asset is acquired by the assessee by way of gift or inheritance, the actual cost of the asset to the assessee shall be the written down value thereof as in the case of the previous owner for the previous year in which the asset is so acquired or the market value thereof on the date of such acquisition, which is the less. 5. Substituted for Income- tax by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1988. 6. bid. 7. Substituted for Inspecting Assistant, ibid. Explanation 4.- Where any asset which had once belonged to the assessee and had been used by him for the purposes of his business or profession and thereafter ceased to be his property by reason of transfer or otherwise, is re- acquired by him, the actual cost to the assessee shall be- i the actual cost to him when he first acquired the asset as reduced by- a the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988 and b the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988 , as if the asset was the only asset in the relevant block of assets or ii the actual price for which the asset is re- acquired by him, whichever is less. Explanation 5.- Where a building previously the property of the assessee is brought into use for the purpose of the business or profession after the 28th day of February, 1946 , the actual cost to the assessee shall be the actual cost of the building to the assessee, as reduced by an amount equal to the depreciation calculated at the rate in force on that date that would have been allowable had the building been used for the aforesaid purposes since the date of its acquisition by the assessee. Explanation 6.- When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied, the actual cost of the transferred capital asset to the transferee- company shall be taken to be the same as it would have been if the transferor- company had continued to hold the capital asset for the purposes of its business. Explanation 7.- Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated 1. Substituted by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 4, as amended by the Taxation Laws Amendment Act, 1970, w. e. f. 1- 4- 1971, read as under Explanation 4.- Where assets which had once belonged to the assessee and had been used by him for the purposes of his business or profession and thereafter ceased to be his property by reason of transfer or otherwise, are re- acquired by him, the actual cost to the assessee shall be the actual cost to him when he first acquired the assets less the depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , diminished by any loss deducted, or as the case may be, increased by any profit assessed, under the provisions of clause iii of sub- section 1 or clause ii of sub- section 1A of section 32 or subsection 2 or sub- section 2A of section 41 of this Act, or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , or the actual price for which the asset is re- acquired by him, whichever is the less. 2. Substituted by the Finance Act, 1965, w. e. f. 1- 4- 1965. 3. Inserted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1967. company and the amalgamated company is an Indian company, the actual cost of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its own business. Explanation 8.- For the removal of doubts, it is hereby declared that where any amount is paid or is payable as interest in connection with the acquisition of an asset, so much of such amount as is relatable to any period after such asset is first put to use shall not be included, and shall be deemed never to have been included, in the actual cost of such asset
Substituted for Explanations 2 and 2A by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 2, as substituted by the Finance Act, 1965, w. e. f. 1- 4- 1965 and Explanation 2A, as inserted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1967, read as under Explanation 2.- When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied, the written down value of the transferred capital asset to the transferee company shall be taken to be the same as it would have been if the transferor company had continued to hold the capital asset for the purposes of its business. Explanation 2A.- Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated company, and the amalgamated company is an Indian company, the written down value of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its business.
a the amount of depreciation actually allowed under this Act and the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988 and
b the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after- the 1st day of April, 1988 , as if the asset was the only asset in the relevant block of assets. Explanation 3.- Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the Assessing Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, was the reduction of a liability to income- tax by claiming depreciation with reference to an enhanced cost , the actual cost to the assessee shall be such an amount as the Assessing Officer may, with the previous approval of the Deputy Commissioner, determine having regard to all the circumstances of the case. 1. Substituted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1968. Earlier, the proviso was inserted by the Finance Act, 1966, w. e. f. 1- 4- 1966. 2. Inserted by the Finance Act, 1975, w. e. f. 1- 4- 1975. 3. Substituted for clause i , clause ii or clause iii of sub- section 1 or sub- section IA by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. The italicised words were inserted by the Taxation Laws Amendment Act, 1970, w. e. f. 1- 4- 1971 4. Substituted by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 2 read as under Explanation 2.- Where an asset is acquired by the assessee by way of gift or inheritance, the actual cost of the asset to the assessee shall be the written down value thereof as in the case of the previous owner for the previous year in which the asset is so acquired or the market value thereof on the date of such acquisition, which is the less. 5. Substituted for Income- tax by the Direct Tax Laws Amendment Act, 1987, w. e. f. 1- 4- 1988. 6. bid. 7. Substituted for Inspecting Assistant, ibid. Explanation 4.- Where any asset which had once belonged to the assessee and had been used by him for the purposes of his business or profession and thereafter ceased to be his property by reason of transfer or otherwise, is re- acquired by him, the actual cost to the assessee shall be- i the actual cost to him when he first acquired the asset as reduced by- a the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988 and b the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988 , as if the asset was the only asset in the relevant block of assets or ii the actual price for which the asset is re- acquired by him, whichever is less. Explanation 5.- Where a building previously the property of the assessee is brought into use for the purpose of the business or profession after the 28th day of February, 1946 , the actual cost to the assessee shall be the actual cost of the building to the assessee, as reduced by an amount equal to the depreciation calculated at the rate in force on that date that would have been allowable had the building been used for the aforesaid purposes since the date of its acquisition by the assessee. Explanation 6.- When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied, the actual cost of the transferred capital asset to the transferee- company shall be taken to be the same as it would have been if the transferor- company had continued to hold the capital asset for the purposes of its business. Explanation 7.- Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated 1. Substituted by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 4, as amended by the Taxation Laws Amendment Act, 1970, w. e. f. 1- 4- 1971, read as under Explanation 4.- Where assets which had once belonged to the assessee and had been used by him for the purposes of his business or profession and thereafter ceased to be his property by reason of transfer or otherwise, are re- acquired by him, the actual cost to the assessee shall be the actual cost to him when he first acquired the assets less the depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , diminished by any loss deducted, or as the case may be, increased by any profit assessed, under the provisions of clause iii of sub- section 1 or clause ii of sub- section 1A of section 32 or subsection 2 or sub- section 2A of section 41 of this Act, or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , or the actual price for which the asset is re- acquired by him, whichever is the less. 2. Substituted by the Finance Act, 1965, w. e. f. 1- 4- 1965. 3. Inserted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1967. company and the amalgamated company is an Indian company, the actual cost of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its own business. Explanation 8.- For the removal of doubts, it is hereby declared that where any amount is paid or is payable as interest in connection with the acquisition of an asset, so much of such amount as is relatable to any period after such asset is first put to use shall not be included, and shall be deemed never to have been included, in the actual cost of such asset
the actual cost to him when he first acquired the asset as reduced by- a the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988 and b the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988 , as if the asset was the only asset in the relevant block of assets or
a the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988 and
b the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988 , as if the asset was the only asset in the relevant block of assets or
the actual price for which the asset is re- acquired by him, whichever is less. Explanation 5.- Where a building previously the property of the assessee is brought into use for the purpose of the business or profession after the 28th day of February, 1946 , the actual cost to the assessee shall be the actual cost of the building to the assessee, as reduced by an amount equal to the depreciation calculated at the rate in force on that date that would have been allowable had the building been used for the aforesaid purposes since the date of its acquisition by the assessee. Explanation 6.- When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied, the actual cost of the transferred capital asset to the transferee- company shall be taken to be the same as it would have been if the transferor- company had continued to hold the capital asset for the purposes of its business. Explanation 7.- Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated 1. Substituted by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 4, as amended by the Taxation Laws Amendment Act, 1970, w. e. f. 1- 4- 1971, read as under Explanation 4.- Where assets which had once belonged to the assessee and had been used by him for the purposes of his business or profession and thereafter ceased to be his property by reason of transfer or otherwise, are re- acquired by him, the actual cost to the assessee shall be the actual cost to him when he first acquired the assets less the depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , diminished by any loss deducted, or as the case may be, increased by any profit assessed, under the provisions of clause iii of sub- section 1 or clause ii of sub- section 1A of section 32 or subsection 2 or sub- section 2A of section 41 of this Act, or under the corresponding provisions of the Indian Income- tax Act, 1922 11 of 1922 , or the actual price for which the asset is re- acquired by him, whichever is the less. 2. Substituted by the Finance Act, 1965, w. e. f. 1- 4- 1965. 3. Inserted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1967. company and the amalgamated company is an Indian company, the actual cost of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its own business. Explanation 8.- For the removal of doubts, it is hereby declared that where any amount is paid or is payable as interest in connection with the acquisition of an asset, so much of such amount as is relatable to any period after such asset is first put to use shall not be included, and shall be deemed never to have been included, in the actual cost of such asset
2 paid means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under the head Profits and gains of business or profession
3 plant includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession but does not include tea bushes or livestock
4 i scientific research means any activities for the extension of knowledge in the fields of natural or applied science including agriculture, animal husbandry or fisheries ii references to expenditure incurred on scientific research include all expenditure incurred for the prosecution, or the provision of facilities for the prosecution, of scientific research, but do not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research iii references to scientific research related to a business or class of business include- 1. Inserted by the Finance Act, 1986, w. r. e. f. 1- 4- 1974, 2. Inserted by the Finance Act, 1995, w. r. e. f. 1- 4- 1962. a any scientific research which may lead to or facilitate an extension of that business or, as the case may be, all businesses of that class b any scientific research of a medical nature which has a special relation to the welfare of workers employed in that business or, as the case may be, all businesses of that class
references to expenditure incurred on scientific research include all expenditure incurred for the prosecution, or the provision of facilities for the prosecution, of scientific research, but do not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research
references to scientific research related to a business or class of business include- 1. Inserted by the Finance Act, 1986, w. r. e. f. 1- 4- 1974, 2. Inserted by the Finance Act, 1995, w. r. e. f. 1- 4- 1962. a any scientific research which may lead to or facilitate an extension of that business or, as the case may be, all businesses of that class b any scientific research of a medical nature which has a special relation to the welfare of workers employed in that business or, as the case may be, all businesses of that class
a any scientific research which may lead to or facilitate an extension of that business or, as the case may be, all businesses of that class
b any scientific research of a medical nature which has a special relation to the welfare of workers employed in that business or, as the case may be, all businesses of that class
5 speculative transaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips Provided that for the purposes of this clause- a a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him or b a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations or c a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member shall not be deemed to be a speculative transaction
a a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him or
b a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations or
c a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member shall not be deemed to be a speculative transaction
6 written down value means- a in the case of assets acquired in the previous year, the actual cost to the assessee b in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under this Act, or under the Indian Income- tax Act, 1922 11 of 1922 , or any Act repealed by that Act, or under any executive orders issued when the Indian Income- tax Act, 1886 2 of 1886 , was in force Provided that in determining the written down value in respect of buildings, machinery or plant for the purposes of clause ii of sub- section 1 of section 32, depreciation actually allowed shall not include depreciation allowed under sub- clauses a , b and c of clause vi of sub- section 2 of section 10 of the Indian Income- tax Act, 1922 11 of 1922 , where such depreciation was not deductible in determining the written down value for the purposes of the said clause vi c in the case of any block of assets,- 2. Inserted by the Finance No. 2 Act, 1965, w. r. e. f. 1- 4- 1962. 3. Inserted by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. i in respect of any previous year relevant to the assessment year commencing on the 1st day of April, 1988 , the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted,- A by the increase by the actual cost of any asset falling within that block, acquired during the previous year and B by the reduction of the moneys payable in respect of any asset failing within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased and ii in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989 , the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item i . Explanation 1-When in a case of succession in business or profession, an assessment is made on the successor under sub- section 2 of section 170 the written down value of any asset or any block of assets shall be the amount which would have been taken as its written down value if the assessment had been made directly on the person succeeded to. Explanation 2.- Where in any previous year, any block of assets is transferred,- a by a holding company to its subsidiary company or by a subsidiary company to its holding company and the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied or 1. Substituted for any asset by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. 2. Substituted for Explanations 2 and 2A by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 2, as substituted by the Finance Act, 1965, w. e. f. 1- 4- 1965 and Explanation 2A, as inserted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1967, read as under Explanation 2.- When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied, the written down value of the transferred capital asset to the transferee company shall be taken to be the same as it would have been if the transferor company had continued to hold the capital asset for the purposes of its business. Explanation 2A.- Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated company, and the amalgamated company is an Indian company, the written down value of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its business. b by the amalgamating company to the amalgamated company in a scheme of amalgamation, and the amalgamated company is an Indian company, then, notwithstanding anything contained in clause 1 , the actual cost of the block of assets in the case of the transferee- company or the amalgamated company, as the case may be, shall be the written down value of the block of assets as in the case of the transferor- company or the amalgamating company for the immediately preceding previous year as reduced by the amount of depreciation actually allowed in relation to the said preceding previous year. Explanation 3.- Any allowance in respect of any depreciation carried forward under sub- section 2 of section 32 shall be deemed to be depreciation actually allowed. Explanation 4.- For the purposes of this clause, the expressions moneys payable and sold shall have the same meanings as in the Explanation below sub- section 4 of section 41
a in the case of assets acquired in the previous year, the actual cost to the assessee
b in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under this Act, or under the Indian Income- tax Act, 1922 11 of 1922 , or any Act repealed by that Act, or under any executive orders issued when the Indian Income- tax Act, 1886 2 of 1886 , was in force Provided that in determining the written down value in respect of buildings, machinery or plant for the purposes of clause ii of sub- section 1 of section 32, depreciation actually allowed shall not include depreciation allowed under sub- clauses a , b and c of clause vi of sub- section 2 of section 10 of the Indian Income- tax Act, 1922 11 of 1922 , where such depreciation was not deductible in determining the written down value for the purposes of the said clause vi
c in the case of any block of assets,- 2. Inserted by the Finance No. 2 Act, 1965, w. r. e. f. 1- 4- 1962. 3. Inserted by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. i in respect of any previous year relevant to the assessment year commencing on the 1st day of April, 1988 , the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted,- A by the increase by the actual cost of any asset falling within that block, acquired during the previous year and B by the reduction of the moneys payable in respect of any asset failing within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased and ii in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989 , the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item i . Explanation 1-When in a case of succession in business or profession, an assessment is made on the successor under sub- section 2 of section 170 the written down value of any asset or any block of assets shall be the amount which would have been taken as its written down value if the assessment had been made directly on the person succeeded to. Explanation 2.- Where in any previous year, any block of assets is transferred,- a by a holding company to its subsidiary company or by a subsidiary company to its holding company and the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied or 1. Substituted for any asset by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. 2. Substituted for Explanations 2 and 2A by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 2, as substituted by the Finance Act, 1965, w. e. f. 1- 4- 1965 and Explanation 2A, as inserted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1967, read as under Explanation 2.- When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied, the written down value of the transferred capital asset to the transferee company shall be taken to be the same as it would have been if the transferor company had continued to hold the capital asset for the purposes of its business. Explanation 2A.- Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated company, and the amalgamated company is an Indian company, the written down value of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its business. b by the amalgamating company to the amalgamated company in a scheme of amalgamation, and the amalgamated company is an Indian company, then, notwithstanding anything contained in clause 1 , the actual cost of the block of assets in the case of the transferee- company or the amalgamated company, as the case may be, shall be the written down value of the block of assets as in the case of the transferor- company or the amalgamating company for the immediately preceding previous year as reduced by the amount of depreciation actually allowed in relation to the said preceding previous year. Explanation 3.- Any allowance in respect of any depreciation carried forward under sub- section 2 of section 32 shall be deemed to be depreciation actually allowed. Explanation 4.- For the purposes of this clause, the expressions moneys payable and sold shall have the same meanings as in the Explanation below sub- section 4 of section 41
in respect of any previous year relevant to the assessment year commencing on the 1st day of April, 1988 , the aggregate of the written down values of all the assets falling within that block of assets at the beginning of the previous year and adjusted,- A by the increase by the actual cost of any asset falling within that block, acquired during the previous year and B by the reduction of the moneys payable in respect of any asset failing within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased and
A by the increase by the actual cost of any asset falling within that block, acquired during the previous year and
B by the reduction of the moneys payable in respect of any asset failing within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so, however, that the amount of such reduction does not exceed the written down value as so increased and
in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989 , the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by the increase or the reduction referred to in item i . Explanation 1-When in a case of succession in business or profession, an assessment is made on the successor under sub- section 2 of section 170 the written down value of any asset or any block of assets shall be the amount which would have been taken as its written down value if the assessment had been made directly on the person succeeded to. Explanation 2.- Where in any previous year, any block of assets is transferred,- a by a holding company to its subsidiary company or by a subsidiary company to its holding company and the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied or 1. Substituted for any asset by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. 2. Substituted for Explanations 2 and 2A by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 2, as substituted by the Finance Act, 1965, w. e. f. 1- 4- 1965 and Explanation 2A, as inserted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1967, read as under Explanation 2.- When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied, the written down value of the transferred capital asset to the transferee company shall be taken to be the same as it would have been if the transferor company had continued to hold the capital asset for the purposes of its business. Explanation 2A.- Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated company, and the amalgamated company is an Indian company, the written down value of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its business. b by the amalgamating company to the amalgamated company in a scheme of amalgamation, and the amalgamated company is an Indian company, then, notwithstanding anything contained in clause 1 , the actual cost of the block of assets in the case of the transferee- company or the amalgamated company, as the case may be, shall be the written down value of the block of assets as in the case of the transferor- company or the amalgamating company for the immediately preceding previous year as reduced by the amount of depreciation actually allowed in relation to the said preceding previous year. Explanation 3.- Any allowance in respect of any depreciation carried forward under sub- section 2 of section 32 shall be deemed to be depreciation actually allowed. Explanation 4.- For the purposes of this clause, the expressions moneys payable and sold shall have the same meanings as in the Explanation below sub- section 4 of section 41
a by a holding company to its subsidiary company or by a subsidiary company to its holding company and the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied or 1. Substituted for any asset by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. 2. Substituted for Explanations 2 and 2A by the Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, w. e. f. 1- 4- 1988. Prior to the substitution, Explanation 2, as substituted by the Finance Act, 1965, w. e. f. 1- 4- 1965 and Explanation 2A, as inserted by the Finance No. 2 Act, 1967, w. e. f. 1- 4- 1967, read as under Explanation 2.- When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause iv or, as the case may be, of clause v of section 47 are satisfied, the written down value of the transferred capital asset to the transferee company shall be taken to be the same as it would have been if the transferor company had continued to hold the capital asset for the purposes of its business. Explanation 2A.- Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated company, and the amalgamated company is an Indian company, the written down value of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its business.
b by the amalgamating company to the amalgamated company in a scheme of amalgamation, and the amalgamated company is an Indian company, then, notwithstanding anything contained in clause 1 , the actual cost of the block of assets in the case of the transferee- company or the amalgamated company, as the case may be, shall be the written down value of the block of assets as in the case of the transferor- company or the amalgamating company for the immediately preceding previous year as reduced by the amount of depreciation actually allowed in relation to the said preceding previous year. Explanation 3.- Any allowance in respect of any depreciation carried forward under sub- section 2 of section 32 shall be deemed to be depreciation actually allowed. Explanation 4.- For the purposes of this clause, the expressions moneys payable and sold shall have the same meanings as in the Explanation below sub- section 4 of section 41