TaxTMI 
TaxTMI 
2025 (7) TMI 1059
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....9.01.1983. The two erstwhile partners JKK Sundararajah and JKS Manickam had 37.5% share each and assessee had 25% share in the firm. On 31.03.1984, a dissolution deed was executed by three partners, by which, the assessee took over the entire asset and liability of the firm as per the balance sheet figures as on 31.03.1984. The dissolution deed also provides for payment of compensation to other two partners within one year of the date of dissolution. Therefore, with effect from 01.04.1984, assessee had taken over the entire business of the erstwhile partnership firm. 3. For the year ending 31.03.1985, pertaining to assessment year 1985-86, assessee filed its return along with balance sheet and profit and loss account. Assessee claimed depreciation at the taken over cost of assets from the erstwhile firm. That cost was the actual cost paid to the erstwhile partners of the firm. 4. The value of the assets was on the basis of a valuation that was done in April, 1982 when the original partnership, which had five partners, was re-constituted. Originally there were five partners, three of whom retired and only the two partners, who retired in 1984, continued as the partners. 5. ....
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....rposes 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 clause. Explanation 2.-Where an asset is acquired by the assessee by way of gift or inheritance, the actual cost of the asset to the assessee shall be the actual cost to the previous owner, as reduced by- (a) the amount of depreciation actually allowed under this Act and 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) 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. Explanation 3.-Where, before the date of acquisition by the assessee, the assets were at any time used by any other person for the purposes of his business or profession and the Assessing Officer is satisfied that the main purpose of the transfer of such assets, directly or indirectly to the assessee, wa....
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....he 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 acquisition by the assessee. Explanation 6.-When any capital asset is transferred by a holding company to its subsidiary company or by a subsidiary company to its holding company, then, if the conditions of clause (iv) or, as the case may be, of clause (v) of section 47 are satisfied, the actual cost of the transferred capital asset to the transferee-company shall be taken to be the same as it would have been if the transferor-company had continued to hold the capital asset for the purposes of its business. Explanation 7.-Where, in a scheme of amalgamation, any capital asset is transferred by the amalgamating company to the amalgamated company and the amalgamated company is an Indian company, the actual cost 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 own business. Explanation 7A.-Where, in a demerger, any capital asset is transferred by the demerged company to th....
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.... be the actual cost to the assessee, as reduced by an amount equal to the amount of depreciation calculated at the rate in force that would have been allowable had the asset been used in India for the said purposes since the date of its acquisition by the assessee. Explanation 12.-Where any capital asset is acquired by the assessee under a scheme for corporatisation of a recognised stock exchange in India, approved by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the actual cost of the asset shall be deemed to be the amount which would have been regarded as actual cost had there been no such corporatization. Explanation 13.-The actual cost of any capital asset on which deduction has been allowed or is allowable to the assessee under section 35AD, shall be treated as 'nil',- (a) in the case of such assessee; and (b) in any other case if the capital asset is acquired or received,- (i) by way of gift or will or an irrevocable trust; (ii) on any distribution on liquidation of the company; and (iii) by such mode of transfer....