(1) The actual cost of an asset used for the purposes of the business or profession shall be the actual cost to the assessee as, reduced by the following amounts:—
(a) part of cost of asset, if any, met by any other person or authority, directly or indirectly;
(b) goods and services tax paid in respect of which input tax credit has been claimed and allowed under the relevant law;
(c) additional duty leviable under section 3 of the Customs Tariff Act, 1975 in respect of which a claim of credit has been made and allowed under the Central Excise Rules, 1944;
(d) subsidy, grant or reimbursement, by whatever name called, if any, relatable to the acquisition of the asset, received by the assessee from—
(i) the Central Government;
(ii) a State Government;
(iii) any authority established under any law; or
(iv) any other person.
(2) The payment or aggregate of payments exceeding ten thousand rupees in a day for acquisition of an asset, made to a person in a mode otherwise than by specified banking or online mode, shall be excluded from the actual cost of the asset.
(3) In a case where the subsidy, grant or reimbursement referred to in sub-section (1)(d) is not directly relatable to the asset acquired, the amount of Reduction under sub-section (1)(d) shall be determined as under: 𝐴 × ( 𝐵 𝐶 )
Where,—
A = total amount of subsidy, grant or reimbursement not directly relatable to the asset;
B = cost of the asset acquired for which actual cost is to be determined;
C = cost of all the assets in respect of or in reference to which the subsidy or grant or reimbursement is so received.
(4) In circumstances specified under column B of the Table below, the actual cost of the capital asset shall be as specified in column C thereof.
(5) Irrespective of anything contained in sub-section (4), in a case where the asset is acquired by the assessee, its actual cost shall be determined by the Assessing Officer having regard to all circumstances of the case, subject to the following conditions:—
(a) the asset was used by any other person for the purposes of his business, before such acquisition; and
(b) the Assessing Officer is satisfied that the main purpose of the transfer of the asset was to reduce tax liability (by claiming depreciation on enhanced actual cost).
(6) The determination of actual cost under sub-section (5) shall be made with the prior approval of the Joint Commissioner.
(7) In this section, “special modes of acquisition” means acquisition—
(a) by way of a gift or will or an irrevocable trust; or
(b) upon distribution on the liquidation of a company; or
(c) by such mode of transfer as is referred to in section 70(1)(a), (c), (d), (e), (j), (zd), (ze) and (zf)