Comparison of Section 74 "Special provision for computation of capital gains in case of depreciable assets" between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....sets form part of a block of assets on which depreciation has been allowed. The provision affects taxpayers holding depreciable assets and the tax department in the assessment of capital gains. Effective date or decision date: Not stated in the document. Background & Scope Statutory hooks: Clause 74 expressly interacts with section 2(101) and with sections 72 and 73 of the Income-tax law corpus (the document identifies prior Acts: this Act, the Income-tax Act, 1961 and the Indian Income-tax Act, 1922). The clause applies to "a capital asset forming part of a block of assets on which depreciation has been allowed" under the cited Acts. The text establishes that, "Irrespective of anything contained in section 2(101)," the provisions of....

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....o makes cross-reference to depreciation allowances under the present Bill and the prior Acts cited. Interpretation Legislative intent as indicated by the text: The clause intends to treat certain proceeds from transfer of assets that form part of a depreciable block as capital gains of short-term character, rather than allowing ordinary block-set-off or rollover principles u/ss 72 and 73 to wholly neutralise such receipts. The explicit override of section 2(101) suggests a deliberate re-characterisation of qualifying receipts even if the ordinary meaning of "capital asset" would be displaced. The prescriptive arithmetic in sub-section (2) sets out an order of priority-expenses of transfer, opening WDV, and cost of additions-before any exc....

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....t: If sub-section (4) in the Bill contained an additional rule (not present in the Act text provided), its omission from the enacted Section 74 narrows the special overriding regime; however, the documents do not state the content of any sub-section (4). Therefore the practical consequence is that any additional rule intended in the Bill's sub-section (4) does not appear in the Act text as provided. (If that sub-section contained substantive obligations or exceptions, taxpayers and practitioners would need to account for its absence; the documents do not state what that would be.) * Wording differences on expenditure: Clause 74(2)(a) uses the phrase "expenditure incurred wholly and exclusively for such transfer;" Section 74(2)(a) uses....

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....x year exceeds (i) transfer expenditure, (ii) opening WDV of the block, and (iii) cost of any additions in that year. If so, the excess will be treated as short-term capital gains. This creates a compliance necessity to segregate receipts by block and to maintain precise records of WDV and acquisition costs. Failure to apply the deeming rule may lead to incorrect characterisation of income and corresponding assessments or disputes. * Record-keeping/evidence points: The text implies stakeholders should maintain documentary evidence of (a) full value of consideration received or accruing, (b) expenditure wholly and exclusively for the transfer, (c) opening written-down value of the block, and (d) actual cost of assets acquired during the ta....