Section 43(1) - 'Actual Cost', Section 43(2) - 'Paid', Section 43(3) - 'Plant'

Actual Cost definition shapes asset valuation and depreciation under income tax, including cash payment exclusions and input credit adjustments.

Section 43(1) defines Actual Cost as the assessee's cost reduced by amounts met by others, excludes expenditure paid by certain non-account-payee modes from actual cost, and bars inclusion of duties or credits claimed as input credits and of post use interest on borrowed funds. Special rules set actual cost in cases of conversion of stock, gifts, inheritance, reacquisition, lease backs, building use change, inter company transfers on amalgamation or demerger, import by non residents, subsidised acquisition and assets with prior capital allowances, often by reference to fair market value or written down value of the transferor. Section 43(2) defines Paid by reference to accounting method; Section 43(3) specifies Plant inclusions and exclusions.