Amendment of section 43.
12. In section 43 of the Income-tax Act, in clause (1), in the second proviso, for the words “bank account”, the words “bank account or through such other electronic mode as may be prescribed” shall be substituted with effect from the 1st day of April, 2020.
Notes on Clauses:
Clause 12 of the Bill seeks to amend section 43 of the Incometax Act relating to definitions of certain terms relevant to income from profits and gains of business or profession.
Sub-section (1) of the said section defines the term “actual cost” to mean 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.
The second proviso to sub-section (1) of the said section provides that where the assessee incurs any expenditure for acquisition of any asset or part thereof in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account, exceeds ten thousand rupees, such expenditure shall be ignored for the purposes of determination of actual cost.
It is proposed to amend the said second proviso so as to empower the Board to make rules to provide that payment made through such electronic mode as may be prescribed shall not be ignored for the purposes of determination of actual cost.
This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-2021 and subsequent assessment years.
