Comparison of Section 40 "Special provision for computation of cost of acquisition of certain assets" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....ll, irrevocable trust, or HUF partition, and to tax authorities assessing business profits on such disposals. Effective date or decision date: Not stated in the document. Background & Scope Statutory hook: Clause 40 is located within the Part addressing "Profits and gains of business or profession" of the Income Tax Bill, 2025 - Old Version. The clause sets out a special provision for computation of cost of acquisition of assets in limited transfer scenarios. Context: It governs the basis for computing cost of acquisition for the purpose of determining income under the head "Profits and gains of business or profession" when such assets are sold as stock-in-trade. Definitions or explanatory glosses: Not stated in the document. Statutory P....

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.... and transfer-related expenditures in the transferee's cost. The text indicates an intent to aggregate the original cost and subsequent improvement/transfer costs into a composite cost of acquisition for the transferee. Exceptions/Provisos Clause 40(2) excludes assets referenced in section 67(6) from its application. No further provisos, thresholds, or conditions are provided in the clause as reproduced. Illustrations * Example 1: An amalgamating company acquired machinery at a cost of X. After amalgamation, the amalgamated company sells the machinery as stock-in-trade. Under Clause 40, the cost of acquisition for computing profit would include X plus any cost of improvement and any expenditure incurred by the amalgamating compan....

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....g phrase in clause (iii): Document 1 reads "any expenditure incurred by the amalgamating company or transferor or donor, as the case may be, wholly and exclusively in connection with such transfer." Document 2 reads "any expenditure incurred by the amalgamating company or transferor or donor wholly and exclusively in connection with such transfer." Practical impact: syntactic only; meaning unchanged. * Designation: Document 1 is presented as "Section 40" in the Income-tax Act, 2025; Document 2 is "Clause 40" of the Income Tax Bill, 2025 (Old Version). Practical impact: Document 2 is a pre-enactment draft; Document 1 reflects the enacted numbering and presentation. If both texts are identical substantively, practical effect for taxpayers....