TMI BlogDefinitions of certain terms relevant to income from profits and gains of business or professionX X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 52 [ bank account or through such other electronic mode as may be prescribed ] , exceeds ten thousand rupees, such expenditure shall be ignored for the purposes of determination of actual cost. ] 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 3 [ 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). 50 [ Explanation 1A . -Where a capital asset referred to in clause (via) of section 28 is used for the purposes of business or profession, the actual cost of such asset to the assessee shall be the fair market value which has been taken into account for the purposes of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee (hereinafter referred to as the first mentioned person), the assets were at any time used by any other person (hereinafter referred to as the second mentioned person) for the purposes of his business or profession and depreciation allowance has been claimed in respect of such assets in the case of the second mentioned person and such person acquires on lease, hire or otherwise assets from the first mentioned person, then, notwithstanding anything contained in Explanation 3, the actual cost of the transferred assets, in the case of first mentioned person, shall be the same as the written down value of the said assets at the time of transfer thereof by the second mentioned person. ] 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee : Provided that where such subsidy or grant or reimbursement is of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee .] 16 [ Explanation 11 .- Where an asset which was acquired outside India by an assessee, being a non-resident, is brought by him to India and used for the purposes of his business or profession, the actual cost of the asset to the assessee shall be the actual cost to the assessee, as reduced by an amount equal to the amount of depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; ] (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- (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 busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der any Act referred to in sub-clause (A) and permanent account number allotted under this Act; (ii) recognised stock exchange means a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose; ] 46 [ Explanation 2 .- For the purposes of clause (e), the expressions- (i) commodity derivative shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013; (ii) eligible transaction means any transaction,- (A) carried out electronically on screen-based systems through member or an intermediary, registered under the bye-laws, rules and regulations of the + for trading in commodity derivative in accordance with the provisions of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and the rules, regulations or bye-laws made or directions issued under that Act on a 53 [ recognised stock exchange ] ; and (B) which is supported by a time stamped contract note issued by such member or intermediary to every client indicating in the contract note, the unique c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed 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) by 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, so, however, that the amount of such decrease does not exceed the written down value; ] (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 55 [ as further adjusted by,- (A) the increase or the reduction referred to in item (i), not being increase on account of acquisition of goodwill of a business or profession; (B) the reduction by an amount which is equal to the actual cost of the goodwill falling within that block as decreased by- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained in clause (1), the written down value of the block of assets of the demerged company for the immediately preceding previous year shall be reduced by the 31 [ written down value of the assets ] transferred to the resulting company pursuant to the demerger. Explanation 2B .- Where in a previous year, any asset forming part of a block of assets is transferred by a demerged company to the resulting company, then, notwithstanding anything contained in clause (1), the written down value of the block of assets in the case of the resulting company shall be the 32 [ written down value of the transferred assets 33 [ *** ] of the demerged company immediately before the demerger. 41 [ Explanation 2C .-Where in any previous year, any block of assets is transferred by a private company or unlisted public company to a limited liability partnership and the conditions specified in the proviso to clause (xiiib) of section 47 are satisfied, then, notwithstanding anything contained in clause (1), the actual cost of the block of assets in the case of the limited liability partnership shall be the written down value of the block of assets as in the case of the said compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputed shall be deemed to be the depreciation actually allowed under this Act. ] ******************** Notes :- 1 . Substituted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. Original 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 (1A) by the Taxation Laws (Amendment Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Italicised words were inserted by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971. 4. Substituted by the Taxation Laws (Amendment Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. 5. Substituted for Income-tax by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 6. Substituted for Income-tax by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 7. Substituted for Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f. 1-4-2000. 28. Substituted for any asset by the Taxation Laws (Amendment Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. 29. Substituted for Explanation 2 and Explanation 2A by the Taxation Laws (Amendment Miscellaneous Provisions) Act, 1986, w.e.f. 1-4-1988. Prior to their substitution, Explanation 2 was substituted by the Finance Act, 1965, w.e.f. 1-4-1965 and Explanation 2A was inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. 30. Explanation 2A, Explanation 2B and proviso thereof inserted by the Finance Act, 1999, w.e.f. 1-4-2000. 31. Substituted for book value of the assets by the Finance Act, 2000, w.e.f. 1-4-2000. 32. Substituted for value of the assets as appearing in the books of account by the Finance Act, 2000, w.e.f. 1-4-2000. 33. Words as appearing in the books of account omitted by the Finance Act, 2003, w.e.f. 1-4-2004. 34. Omitted by the Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THE FINANCE ACT, 2017 w.e.f. 1st day of April, 2018 50. Inserted vide THE FINANCE ACT, 2018 w.e.f. 1st day of April, 2019 51. Inserted vide THE FINANCE ACT, 2018 w.e.f. 1st day of April, 2019 52. Substituted vide FINANCE (NO. 2) ACT, 2019 w.e.f. 01-04-2020 before it was read as bank account 53. Substituted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2020 before it was read as recognised association 54. Substituted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2020 before it was read as (iii) recognised association means a recognised association as referred to in clause (j) of section 2 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and which fulfils such conditions as may be prescribed and is notified by the Central Government for this purpose. 55. Substituted vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021 before it was read as as further adjusted by the increase or the reduction referred to in item ( i ) - - statute, statutory provisions legislation, law, enactm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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