Notional Actual Cost of Assets [Section 43(1)] - for Computing Profits and Gains of Business or Professions

Sl.  No. 

Situation

Notional Actual Cost

1.

Asset used in business after it  ceases to be used for Scientific  Research

Actual cost of the asset minus the amount of  deduction allowed u/s 35 i.e. it will be 'Nil'

2.

A capital asset referred to  section 28(via) (i.e. inventory  is converted into/or treated as  capital asset) is used for the  purposes of business or  profession

Actual cost of such assets to the assessee  shall be the fair market value which has  been taken into account for the purposes of  the said clause.

3.

Asset acquired by way of gift  or inheritance

Actual cost to the previous owner minus the  depreciation allowable on that asset  assuming it is the only asset in the relevant  block

4.

Asset transferred to reduce tax  liability by claiming  depreciation at enhanced cost

Actual cost as determined by Assessing  Officer with approval of Joint  Commissioner. Genuine cases not covered

5.

Asset earlier transferred  reacquired by the assessee.

(a)           original actual cost minus the  depreciation allowable to him assuming it is  the only asset in the relevant block, or 

(b)          actual price for which reacquired, 

whichever is less   

6.

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

7.

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

8.

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

9.

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

10.

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

11.

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)

12.

Actual cost of cenvatable asset

Actual cost minus duty of excise/ customs  for which credit of cenvat has been taken

13.

Asset acquired where portion  of cost met by some other  person

Actual cost minus cost met by some other  person

14.

Asset acquired by non-resident  outside India but brought by  him to India for the purpose of  business and profession

Actual cost minus depreciation that would  have been allowable in India since the date  of its acquisition

15.

Assets acquired by a company  under a scheme for  corporatisation of a recognised  stock exchange in India.

Actual cost to the company shall be the  amount which would have been regarded as  actual cost had there been no such  corporatisation.

16.

Capital asset on which  deduction has been allowed or  allowable to the assessee u/s  35AD

Nil