Section 75 — Special provision for cost of acquisition in case of depreciable asset. Successor to s.50A of the 1961 Act.
Section 75 is in Chapter IV — Computation of Total Income, which runs from section 13 to section 95.
Where depreciation has been obtained under section 33(2) for a capital asset in any tax year, sections 72 and 73 continue to govern the computation of capital gains on that asset, but with one modification: the written down value as defined in section 41, as adjusted, is taken as the cost of acquisition instead of whatever cost those sections would otherwise supply.
An asset whose cost has already been allowed against business profits through depreciation cannot carry that same cost into the capital gains computation, or the deduction would be taken twice. The section substitutes the unrecovered part of the cost — the written down value — for the original cost.
Only the cost input changes; the rest of sections 72 and 73 operates normally. What decides cases is whether depreciation was in fact obtained under section 33(2) for that asset in any tax year — if it was, original cost is unavailable however long ago it was allowed, and if it was not, the section has nothing to say. The words "as adjusted" mean the figure taken is the section 41 written down value after the adjustments that definition carries, not an opening balance lifted from a depreciation schedule.
A company bought plant for Rs 1 crore and has obtained depreciation under section 33(2) that brings its written down value, as defined in section 41, to Rs 62 lakh. On transfer for Rs 80 lakh, the computation under sections 72 and 73 takes Rs 62 lakh as adjusted — not Rs 1 crore — as the cost of acquisition.
You meet it as a substituted cost figure in the capital gains schedule of a return, and in an assessment order recomputing the gain on a depreciated asset; the section itself is rarely quoted at a taxpayer by name.
the written down value, as defined in section 41, of the asset, as adjusted, shall be taken as the cost of acquisition of the asset
See the full 1961 to 2025 concordance.