Meaning of actual cost.
44. (1) The actual cost of a business capital asset to the person shall be computed in accordance with the formula-
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A-[B+(C x A/D)] |
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Where A = |
cost of the business capital asset to the person including the interest paid on the capital borrowed for acquiring the asset if such interest is relatable to the period before the asset is put to use; |
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B = |
the amount of additional duty leviable under section 3 of the Customs Tariff Act, 1975 or the amount of duty of excise, in respect of which a claim of credit has been made and allowed under the Central Excise Rules, 1944; |
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C= |
the amount of subsidy, grant or reimbursement (by
whatever name called) received by the assessee, directly or indirectly, from the Central Government, a State Government, any authority established under any law |
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for the time being in force or by any other person in
respect of, or with reference to, any assets including |
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the relevant asset; |
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D = |
cost of all the assets in respect of or with reference to which the amount 'C' is so received.
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(2) The Assessing Officer may, notwithstanding anything contained in sub-section (1), determine, with the prior approval of the Joint Commissioner, the actual cost if
(a) the assets were business assets at any time before the date of acquisition by the person; and
(b) the Assessing Officer is satisfied that the main purpose of the transfer of the assets, directly or indirectly to the person, was the reduction of a liability to income-tax (by claiming depreciation with reference to an enhanced cost).
(3) The actual cost of the business capital asset to the person shall be the deemed written down value, if —
(a) the asset is acquired by the person by way of gift or inheritance; or
(b) the asset is converted by the person into a business capital asset in any financial year; or
(c) the person is transferee holding company or a transferee subsidiary company in respect of transfer of the asset by subsidiary comapny or the holding company respectively.
(4) The actual cost of a business capital asset to the person shall, in a case of sale and buy back transaction of the asset, be the lower of the following, namely:—
(a) the actual price for which the asset is re-acquired by him; or
(b) the deemed written down value.
(5) Where a business capital asset is acquired by the person and subsequently it is transferred back to the transferor by way of lease, hire or otherwise, the actual cost of the asset in the hands of the person shall be the written down value of the asset in the hands of the transferor at the beginning of the financial year in which the acquisition of the asset by the person has taken place.
(6) Where the person is a non-resident and a business capital asset,having been acquired by him outside India, is brought by him to India, the actual cost of the asset for the person shall be the cost of acquisition of the asset by him, as reduced by an amount equal to the amount of depreciation which would have been allowable, had the asset been used in India for the purpose of the business of the person since the date of such acquisition.
(7) The actual cost of an asset shall be treated as "nil", if—
(a) deduction in respect of the cost of the asset has been allowed or is allowable to the person under the Eleventh Schedule or the Twelfth Schedule or the Thirteenth Schedule; or
(b) deduction in respect of the cost of the asset has been allowed or is allowable under any of the aforesaid Schedules to any other person and the person has acquired or received the asset by any of the "special modes of acquisition".
(8) The Board may, for the purposes of determining the actual cost of a business capital asset, prescribe—
(a) any other cost which may be included in determining the actual cost; and
(b) the method of determining the actual cost in the circumstances which are not provided for in this section.
(9) In this section, deemed written down value of a business asset shall be the actual cost to the person or the previous owner, as the case may be, when he first acquired the asset as reduced by the aggregate amount of depreciation that would have been allowable to the person or the previous owner, as the case may be, for the preceding financial year as if the asset was the only asset in the relevant block of assets.
