TaxTMI 
TaxTMI 
Definitions of certain terms relevant to income from profits and gains of business or profession
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....yment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a ^52[bank account or through such other electronic mode as may be prescribed], exceeds ten thousand rupees, such expenditure shall be ignored for the purposes of determination of actual cost. ] Explanation 1.-Where an asset is used in the business after it ceases to be used for scientific research related to that business and a deduction has to be made under ^3[clause (ii) of sub-section (1)] of section 32 in respect of that asset, the actual cost of the asset to the assessee shall be the actual cost to the assessee as reduced by the amount of any deduction allowed under clause (iv) of sub-section (1) of section 35 or under any corresponding provision of the Indian Income-tax Act, 1922 (11 of 1922). ^50[Explanation 1A.-Where a capital asset referred to in clause (via) of section 28 is used for the purposes of business or profession, the actual cost of such asset to the assessee shall be the fair market value which has been taken into account for the purposes of the said clau....
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....quisition by the assessee (hereinafter referred to as the first mentioned person), the assets were at any time used by any other person (hereinafter referred to as the second mentioned person) for the purposes of his business or profession and depreciation allowance has been claimed in respect of such assets in the case of the second mentioned person and such person acquires on lease, hire or otherwise assets from the first mentioned person, then, notwithstanding anything contained in Explanation 3, the actual cost of the transferred assets, in the case of first mentioned person, shall be the same as the written down value of the said assets at the time of transfer thereof by the second mentioned person.] Explanation 5.-Where a building previously the property of the assessee is brought into use for the purpose of the business or profession after the 28th day of February, 1946, the actual cost to the assessee shall be the actual cost of the building to the assessee, as reduced by an amount equal to the depreciation calculated at the rate in force on that date that would have been allowable had the building been used for the aforesaid purposes since the date of its acquisit....
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....cquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee : Provided that where such subsidy or grant or reimbursement is of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee.] ^16[Explanation 11.-Where an asset which was acquired outside India by an assessee, being a non-resident, is brought by him to India and used for the purposes of his business or profession, the actual cost of the asset to the assessee shall be the actual cost to the assessee, as reduced by an amount equal to the amount of deprec....
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....husbandry or fisheries;] (ii) references to expenditure incurred on scientific research include all expenditure incurred for the prosecution, or the provision of facilities for the prosecution, of scientific research, but do not include any expenditure incurred in the acquisition of rights in, or arising out of, scientific research; (iii) references to scientific research related to a business or class of business include- (a) any scientific research which may lead to or facilitate an extension of that business or, as the case may be, all businesses of that class; (b) any scientific research of a medical nature which has a special relation to the welfare of workers employed in that business or, as the case may be, all businesses of that class; (5) "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips: Provided that for the purposes of this clause- (a) a contract in respect of raw materials or merchandise entered in....
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....y client indicating in the contract note the unique client identity number allotted under any Act referred to in sub-clause (A) and permanent account number allotted under this Act; (ii) "recognised stock exchange" means a recognised stock exchange as referred to in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as may be prescribed and notified by the Central Government for this purpose;] ^46[Explanation 2.- For the purposes of clause (e), the expressions- (i) "commodity derivative" shall have the meaning as assigned to it in Chapter VII of the Finance Act, 2013; (ii) "eligible transaction" means any transaction,- (A) carried out electronically on screen-based systems through member or an intermediary, registered under the bye-laws, rules and regulations of the recognised stock exchange for trading in commodity derivative in accordance with the provisions of the Forward Contracts (Regulation) Act, 1952 (74 of 1952) and the rules, regulations or bye-laws made or directions issued under that Act on a ^53[recognised stock exchange]; and (B) which is su....
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....and ^27[(C) in the case of a slump sale, decrease by the actual cost of the asset falling within that block as reduced- (a) by the amount of depreciation actually allowed to him under this Act or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922) in respect of any previous year relevant to the assessment year commencing before the 1st day of April, 1988; and (b) by the amount of depreciation that would have been allowable to the assessee for any assessment year commencing on or after the 1st day of April, 1988 as if the asset was the only asset in the relevant block of assets, so, however, that the amount of such decrease does not exceed the written down value;] (ii) in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989, the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and ^55[as further adjusted by,- (A) the increase or the reduction referred to in item (i), not ....
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....relation to the said preceding previous year.] ^30[Explanation 2A.-Where in any previous year, any asset forming part of a block of assets is transferred by a demerged company to the resulting company, then, notwithstanding anything contained in clause (1), the written down value of the block of assets of the demerged company for the immediately preceding previous year shall be reduced by the ^31[written down value of the assets] transferred to the resulting company pursuant to the demerger. Explanation 2B.-Where in a previous year, any asset forming part of a block of assets is transferred by a demerged company to the resulting company, then, notwithstanding anything contained in clause (1), the written down value of the block of assets in the case of the resulting company shall be the ^32[written down value of the transferred assets ^33[****]] of the demerged company immediately before the demerger. ^41[Explanation 2C.-Where in any previous year, any block of assets is transferred by a private company or unlisted public company to a limited liability partnership and the conditions specified in the proviso to clause (xiiib) of section 47 are satisfied, t....
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....ts acquired before the previous year, the total amount of depreciation shall be computed as if the entire income is derived from the business of the assessee under the head "Profits and gains of business or profession" and the depreciation so computed shall be deemed to be the depreciation actually allowed under this Act.] ****************** NOTES:- 1. Substituted vide Third Schedule of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1968 before it was read as, "Provided that where the actual cost of an asset, being a motor car acquired by the assessee after the 28th day of February, 1966, exceeds twenty-five thousand rupees, the excess of the actual cost over such amount shall be ignored, and the actual cost thereof shall be taken to be twenty-five thousand rupees." Earlier, Inserted vide Section 12 of the Finance Act, 1966 w.e.f. 01-04-1966 2. Inserted vide Section 7 of the Finance Act, 1975 w.e.f. 01-04-1975 3. Substituted vide Section 8 of the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1986 w.e.f. 01-04-1988 before it was read as, "clause (i), clau....
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....lier, Amended vide Section 12 of the Taxation Laws (Amendment) Act, 1970 w.e.f. 01-04-1971 9. Inserted vide Section 17 of the Finance (No. 2) Act, 1996 w.e.f. 01-10-1996 10. Substituted vide Section 14 of the Finance Act, 1965 w.e.f. 01-04-1965 before it was read as, "Explanation 6.-When any capital asset is transferred by a company to its subsidiary company, then, if the conditions of clause (iv) of section 47 are satisfied, the actual cost of the transferred capital asset to the subsidiary company shall be taken to be the same as it would have been If the parent company had continued to hold the capital asset for the purposes of its business;" 11. Inserted vide Section 16 of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1967 12. Inserted vide Section 26 of the Finance Act, 1999 w.e.f. 01-04-2000 13. Inserted vide Section 9 of the Finance Act, 1986 w.e.f. 01-04-1974 14. Inserted vide Section 18 of the Finance (No. 2) Act, 1998 w.e.f. 01-04-1994 15. Inserted vide Section 18 of the Finance (No. 2) Act, 1998 w.e.f. 01-04-1999 16. Inserted vide Sec....
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....ue of the transferred capital asset to the amalgamated company shall be taken to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its business." Earlier, Substituted vide Section 14 of the Finance Act, 1965 w.e.f. 01-04-1965 before it was read as, "Explanation 2.-When any capital asset is transferred by a company to its subsidiary company, then, if the conditions of clause (iv) of section 47 are satisfied, the written down value of the transferred capital asset to the subsidiary company shall be taken to be the same as it would have been if the parent company had continued to hold the capital asset for the purposes of its business." And was Amended vide Section 16 of the Finance (No. 2) Act, 1967 w.e.f. 01-04-1967 30. Inserted vide Section 26 of the Finance Act, 1999 w.e.f. 01-04-2000 31. Substituted vide Section 19 of the Finance Act, 2000 w.e.f. 01-04-2000 before it was read as, "book value of the assets" 32. Substituted vide Section 19 of the Finance Act, 2000 w.e.f. 01-04-2000 before it was read as, ....