Comparison of Section 41 "Written down value of depreciable asset" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....equences of revaluation and agricultural income. It matters to taxpayers, transferor/transferee companies, LLPs, demerged/resulting companies, and tax administrators. Effective date or decision date: Not stated in the document. Background & Scope Statutory hook: Clause 41 (Bill) concerns computation of WDV for purposes of computing income under the head "Profits and gains of business or profession". The clause supplies a Table of circumstances and the corresponding WDV treatment. Definitions and explanations included in the clause: "Actual cost", "written down value", the block computation formula [(A-D)+B-C]-E with constituent parameters A, B, C, D, E defined in the note; special provisions for intra-group transfers, amalgamation, demerg....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tent and interpretive principles indicated: The clause aims to provide clear, rule-based computation methods for WDV to ensure uniformity across ordinary acquisitions, block computations and corporate restructurings. By providing explicit formulas and mapping treatments for transfers (holding/subsidiary, amalgamation, demerger, LLP conversion, corporatisation), the provision intends to preserve continuity of WDV in specified corporate events and to prevent artificial creation or erosion of depreciation pools. The deeming of carried-forward depreciation as "actually allowed" indicates a policy to give effect to prior accounting of depreciation even if tax was not computed earlier. The agricultural/business rule indicates intent to treat asse....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... with other provisions: Clause 41 explicitly references section 70 (transfer conditions for holding/subsidiary, LLC conversion), section 33(11) (carried-forward depreciation), section 38(6)(a) (definition of "sold"), and section 313 (succession in business). No other Rules/Notifications/Circulars are mentioned in the clause. How the clause should be applied in conjunction with section 39 (cost of acquisition) is not directly discussed in this Bill text other than the statement that WDV in transferee is the same as in transferor at the beginning of the tax year; any express "irrespective of section 39" qualification is Not stated in the document. Differences between Section 41 of the Income-tax Act, 2025 and Clause 41 of the Incom....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ale asset cost (E). Tax computation for slump sales could change depending on which vintage of depreciation is brought into account; taxpayers and practitioners must reconcile which years are eligible under each text. * Transfers between holding and subsidiary companies and treatment of actual cost / WDV: Bill: For transfers (holding to subsidiary and vice versa, where section 70(1)(c)/(d) satisfied) and amalgamation to Indian company, the WDV in the hands of transferee is the same as WDV in hands of transferor "at the beginning of the tax year in which such transfer took place." Act: Provides that the actual cost of the block in the hands of transferee shall be the same as the WDV of the block in the hands of transferor in the immedi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....evaluation/depreciation adjustments as subsection (3); Act uses (9) and (10) for related matters). Practical impact: No substantive divergence apparent except where the Act includes explicit cross-reference language ("irrespective of anything contained in section 39") and the slump-sale depreciation-year specification noted above. * Definition of "sold": Both texts refer to section 38(6)(a) for the meaning of "sold", but Bill places it as sub-section (5) and Act as sub-section (11). Practical impact: No substantive change. Practical Implications * Compliance and risk areas: Taxpayers must maintain clear records of actual cost, depreciation actually allowed, and book revaluation adjustments when earlier years did not require income ....