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Profits and Gains of Business or Profession

 

Computation of actual cost

 39.(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, 1975in respect of which a claim of credit has been made and allowed under the Central Excise Rules, 1944;

(d)subsidy, grant or reimbursement, by whatevername 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 assetor part thereof,made to a personin a mode otherwise thanbyspecified banking or online mode, shall be excluded from the actual cost of thatasset.

(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:

 A× B

      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 isto 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.

No.

Specified circumstances

Determination of actual cost

A

B

C

1.

Where capital asset is transferred by an amalgamating company to an amalgamated company being an Indian company in a scheme of amalgamation. Actual cost to amalgamated company shall be the same as it would have been if the amalgamating company had continued to hold such capital asset for the purpose of its own business.

 

2. Where capital asset is transferred by a demerged company to a resulting company being an Indian company in a demerger. Actual cost to resulting company shall be the same as it would have been, if the demerged company had continued to hold such asset for the purpose of its own business, which shall not exceed the written down value of such capital asset in the hands of demerged company.

Actual cost to amalgamated company shall be the same as it would have been if the amalgamating company had continued to hold such capital asset for the purpose of its own business.

 

 

 

 

 

Actual cost to resulting company shall be the same as it would have been, if the demerged company had continued to hold such asset for the purpose of its own business, which shall not exceed the written down value of such capital asset in

2.

Where inventory is converted into or treated as acapital asset.

Fair Market Value of such inventory as on date of conversion, as determined in the manneras may beprescribed.

3