(1) The actual cost of an asset used for the purposes of the business or profession shall be the actual cost to the assessee, as reduced by the following amounts:— (a) part of cost of asset, if any, met by any other person or authority, directly or indirectly; (b) goods and services tax paid in respect of which credit of input tax has been claimed and allowed under the relevant law; (c) duty of excise or additional duty leviable under section 3 of the Customs Tariff Act, 1975 in respect of which a claim of credit has been made and allowed under the Central Excise Rules, 1944; (d) subsidy, grant or reimbursement, by whatever name called, if any, relatable to the acquisition of the asset, received, directly or indirectly, by the assessee from— (i) the Central Government; (ii) a State Government; (iii) any authority established under any law; or (iv) any other person. (2) The payment or aggregate of payments exceeding ₹10000 in a day for acquisition of an asset or part thereof, made to a person in a mode otherwise than by specified banking or online mode, shall be excluded from the actual cost of that asset. (3) In a case where the subsidy, grant or reimbursement referred to in sub-section (1)(d) is not directly relatable to the asset acquired, the amount of reduction under sub-section (1)(d) shall be determined as under: 𝐵 𝐴×( ) 𝐶 where,— A = total amount of subsidy, grant or reimbursement not directly relatable to the asset; B = cost of the asset acquired for which actual cost is to be determined; C = cost of all the assets in respect of or in reference to which the subsidy or grant or reimbursement is so received. (4) In circumstances specified under column B of the Table below, the actual cost of the asset shall be as specified in column C thereof.
Table Sl. Specified circumstances Determination of actual cost No. A B C 1. Where capital asset is Actual cost to amalgamated transferred by an company shall be the same as it amalgamating company to an would have been if the amalgamated company being amalgamating company had an Indian company in a continued to hold such capital asset scheme of amalgamation. for the purpose of its own business. 2. Where capital asset is Actual cost to resulting company transferred by a demerged shall be the same as it would have company to a resulting been, if the demerged company had company being an Indian continued to hold such asset for the company in a demerger. purpose of its own business, which shall not exceed the written down value of such capital asset in the hands of demerged company. 3. Where inventory is Fair Market Value of such converted into or treated as inventory as on date of conversion, a capital asset. as determined in the manner as may be prescribed. 4. Where asset is acquired Actual cost to the previous owner by the assessee by way of as reduced by— gift or inheritance. (a) depreciation actually allowed in respect of tax year commencing on 1st April, 1986 or any earlier tax year; and (b) depreciation allowable for tax year commencing on or after 1st April,1987 under this Act or under the Income-tax Act, 1961(43 of 1961), as if such asset was the only asset in the relevant block of asset. 5. Where a building, being Actual cost of the building as the property of the assessee, is reduced by the depreciation— put to use for the purpose of (a) that would have been business or profession during
CH. IV D.- PROFITS AND GAINS OF BUSINESS OR PROFESSION [Sec 26-66] Sl. Specified circumstances Determination of actual cost No. A B C the tax year. allowable had the building been used for the purpose of business or profession from the date of acquisition; and (b) calculated at the rate in force on the date on which such asset was put to use for the purpose of business or profession. 6. Where capital asset is Actual cost to the transferee transferred by— company shall be the same as it would have been, if the transferor (a) a holding company to company had continued to hold such its subsidiary company; or asset for the purpose of its own (b) a subsidiary company business. to its holding company, and the conditions of section 70(1)(c) and (d), as the case may be, are satisfied. 7. Where an asset, which (a) Actual cost of the asset in the previously belonged to the hands of assessee, when it was first assessee and had been used by acquired, as reduced by— him for the purpose of his (i) depreciation actually business or profession, is allowed in respect of tax year reacquired by the assessee. commencing on 1st April,1986 or any earlier tax year; and (ii) depreciation allowable for tax year commencing on or after 1st April, 1987 under this Act or under the Income-tax Act, 1961(43 of 1961), as if such asset was the only asset in the relevant block of asset; or (b) actual price for which such asset is reacquired by the assessee, whichever is lower.