Income-tax Act, 2025

Written down value of depreciable asset - Section 41

Written down value of depreciable asset.

41. (1) For the purposes of computation of income under the head "Profits and gains of business or profession", written down value means

(a) in case the asset is acquired in the tax year, the actual cost to the assessee;

(b) in case the asset is acquired before the tax year, actual cost to the assessee less depreciation actually allowed under this Act or under the Income-tax Act, 1961 (43 of 1961);

(c) in case of block of assets, the written down value computed in the following manner:

[(A D) + B C] E, where

A = the written down value of the block of assets in the immediately preceding tax year;

B = actual cost of any asset falling within that block, acquired during the tax year;

C = moneys payable together with scrap value, if any, in respect of any asset falling within the block, which is sold, transferred, demolished, destroyed or discarded during the tax year, where "C" shall not exceed (A D) + B;

D = depreciation actually allowed in respect of block of assets in relation to the said immediately preceding tax year;

E = in the case of a slump sale, the actual cost of the asset falling within that block as reduced by

(i) depreciation actually allowed in respect of tax year commencing on 1st April, 1986 or any earlier tax year; and

(ii) depreciation allowable for tax year commencing on or after 1st April, 1987 under this Act or under the Income-tax Act, 1961 (43 of 1961), as if such asset was the only asset in the relevant block of asset.

(2) Where any block of asset is transferred by

(a) a holding company to its subsidiary company and the conditions of section 70(1)(c) are satisfied;

(b) a subsidiary company to its holding company and the conditions of section 70(1)(d) are satisfied; or

(c) amalgamating company to the amalgamated company being an Indian company,

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