Section 74 — Special provision for computation of capital gains in case of depreciable assets
Old Act equivalent: Section 50 of IT Act 1961 Sub-part: E.—Capital gains
Statutory Text
(1) Irrespective of anything contained in section 2(101), for a capital asset forming part of a block of assets on which depreciation has been allowed under the Indian Income-tax Act, 1922 (11 of 1922) or under the Income-tax Act, 1961 (43 of 1961) or under this Act, the provisions of sections 72 and 73 shall be subject to the provisions of sub-sections (2) and (3). (2) If, during the tax year, the full value of consideration received or accruing for the transfer of one or more assets in a block of assets exceeds the total of the following:— (a) expenditure incurred wholly and exclusively in connection with such transfer; (b) the written down value of the block of assets at the start of the tax year; and (c) the actual cost of any asset falling within the block of assets acquired during the tax year, such excess shall be deemed to be capital gains arising from the transfer of shortterm capital assets. (3) If any block of assets ceases to exist for the reason that all the assets in that block are transferred during the tax year, then,— value of the block of assets at the beginning of the tax year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the tax year; and (b) the income received or accruing as a result of such transfer or transfers shall be deemed to be capital gains arising from the transfer of shortterm capital assets.
Sub-sections
Sub-section (1)
Irrespective of anything contained in section 2(101), for a capital asset forming part of a block of assets on which depreciation has been allowed under the Indian Income-tax Act, 1922 (11 of 1922) or under the Income-tax Act, 1961 (43 of 1961) or under this Act, the provisions of sections 72 and 73 shall be subject to the provisions of sub-sections (2) and (3).
Sub-section (2)
If, during the tax year, the full value of consideration received or accruing for the transfer of one or more assets in a block of assets exceeds the total of the following:— (a) expenditure incurred wholly and exclusively in connection with such transfer; (b) the written down value of the block of assets at the start of the tax year; and (c) the actual cost of any asset falling within the block of assets acquired during the tax year, such excess shall be deemed to be capital gains arising from the transfer of shortterm capital assets.
Sub-section (3)
If any block of assets ceases to exist for the reason that all the assets in that block are transferred during the tax year, then,— value of the block of assets at the beginning of the tax year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the tax year; and (b) the income received or accruing as a result of such transfer or transfers shall be deemed to be capital gains arising from the transfer of shortterm capital assets.
Provisos
None.
Explanations
None.
Tables
Table 1:
(a) the cost of acquisition of the block of assets shall be the written down
Table 2:
Special provision for cost of acquisition in case of depreciable asset.
Key Structure
- Applies to: All assessees holding depreciable capital assets forming part of a block of assets on which depreciation has been allowed under the Indian Income-tax Act, 1922, the Income-tax Act, 1961, or the Income Tax Act, 2025.
- Asset type: Capital assets forming part of a block of assets on which depreciation has been allowed.
- Conditions: Sub-section (2): if full value of consideration for transfer exceeds total of (a) transfer expenditure, (b) written down value of block at start of tax year, and (c) actual cost of assets acquired in the block during the year, the excess is deemed short-term capital gains. Sub-section (3): if the entire block ceases to exist (all assets transferred), cost of acquisition is the WDV at beginning of year plus actual cost of assets acquired during the year, and all gains are deemed short-term capital gains.
- Time limits: None specified in this section.
- Monetary limits: None specified in this section.
- Exceptions: Overrides the definition of short-term capital asset in section 2(101); capital gains on depreciable assets are always deemed short-term regardless of holding period; normal computation under sections 72 and 73 is subject to the special rules in sub-sections (2) and (3).
Cross-References
- s072-computation — normal computation of capital gains overridden by this section for depreciable assets.
- s073-cost-acquisition — normal cost of acquisition rules overridden by this section for depreciable assets.
- Section 2(101) (not yet ingested) — definition of short-term capital asset, expressly overridden by sub-section (1).
Amendment Notes
None noted from the extracted pages.