Notional Actual Cost of Assets [Section 43(1)] – for Computing Profits and Gains of Business or Professions
Situation Actual Cost
Asset previously used for Scientific Research now brought in to regular Business Actual cost of the asset minus the amount of deduction allowed u/s 35 i.e. it will be 'Nil'
Asset which used as inventory and now its converted in to capital asset whcih is used for Business or profession Actual cost of such assets to the assessee shall be the Fair Market Value as on the date of conversion
Asset acquired by way of gift or will or inheritance Actual cost to the previous owner minus the depreciation allowable on that asset which is claimed by previous owner.
Asset acquired with an intention to claim higher depreciation Actual cost as determined by Assessing Officer with approval of Joint Commissioner. Genuine cases not covered
Asset earlier transferred reacquired by the assessee. A) WDV at the time of sale (or)
B) Re-acquisition Cost of asset
Whichever is Lower
Asset previously used by any person and on which depreciation allowed to him, acquired by another person but leased back to the seller Actual cost in the hands of the person who has leased back the asset shall be same as the W.D.V. of the said asset to the seller at the time of transfer thereof
Buildings brought into use for business purpose subsequent to its acquisition Actual cost of the building minus all depreciation that would have been allowable had the building been used for business since its acquisition
Assets transferred by holding company to 100% subsidiary or vice versa where transferee company is an Indian company Actual cost to the transferee company shall be same as would have been to transferor company, if it continued to hold it
Assets transferred under a scheme of amalgamation Actual cost to the amalgamated company shall be same as would have been to the amalgamating company, if it continued to hold it
Asset transferred to the resulting company in case of demerger Same as would have been to demerged company, if it continued to hold the asset
Interest pertaining to post acquisition period Interest on money borrowed for the purpose of acquiring a capital asset, pertaining to the period after the asset is put to use is to be claimed as a revenue expenditure u/s 36(1)(iii)
Actual cost of cenvatable asset Actual cost minus duty of excise/ customs for which credit of cenvat has been taken
Asset acquired where portion of cost met by some other person Actual cost minus cost met by some other person
Capital asset on which deduction has been allowed or allowable to the assessee u/s 35AD Actual cost is Nil
