Chapter IV - Computation of Total Income
Section 75
Section 75: special provision for cost of acquisition in case of depreciable asset
Section 75 is a short but important rule: where depreciation has been claimed on a capital asset under Section 33(2), its written down value (as adjusted, and as defined in Section 41) is treated as the asset's cost of acquisition when computing capital gains under Sections 72 and 73.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
If depreciation has been obtained under section 33(2) for a capital asset in any tax year, the provisions of sections 72 and 73 shall apply subject to the modification that 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.
Introduction
This is a cost substitution for a capital asset that has received Section 33(2) depreciation. Its adjusted written-down value becomes the acquisition cost used under the ordinary capital-gains computation rules.
Key takeaways
Depreciated capital asset
If depreciation was obtained under Section 33(2) for a capital asset, its adjusted written-down value under Section 41 is used as its cost of acquisition for Sections 72 and 73.
Scope of the change
This is a cost-of-acquisition modification for the capital-gains computation, not a general valuation rule for all assets.
What Section 75 says
"If depreciation has been obtained under section 33(2) for a capital asset in any tax year, the provisions of sections 72 and 73 shall apply subject to the modification that 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."
In other words, once an asset has had depreciation claimed on it, its original purchase cost is no longer used for capital gains computation - the adjusted written down value under Section 41 takes its place as the cost of acquisition.
Identify the depreciation history
Confirm that the specific asset received depreciation under Section 33(2) in a tax year. A general book depreciation charge is not enough.
Carry forward its adjusted Section 41 written-down value to the capital-gains cost calculation.
Apply the substituted cost
Use Sections 72 and 73 with the cost modification in this section; retain both the depreciation ledger and transfer documents.
Avoid using the original purchase price after tax depreciation has altered the applicable cost base.
Step-by-step flow for applying Section 75
- 1
Has depreciation been obtained under Section 33(2) for this capital asset in any tax year?
- No: Section 75 does not apply; use the normal cost under Sections 72 and 73.
- Yes: Go to the next step.
- 2
Find the written down value of the asset as defined in Section 41, as adjusted
Use the asset's own adjusted written down value from the tax records, not its original purchase price.
- 3
Use that value as the cost of acquisition
Sections 72 and 73 apply with this one modification.
- 4
Compute the capital gain
Full value of consideration less transfer expenses less the substituted cost.
Practical checklist
Do
- Reconcile Section 33(2) depreciation allowed and Section 41 WDV to the transfer date.
- Show the adjusted WDV as acquisition cost in the gain worksheet.
Avoid
- Do not use unreduced historical cost when this section substitutes adjusted WDV.
Illustrative example
Worked example: selling an asset that received Section 33(2) depreciation
Hypothetical facts (illustration only, not a real taxpayer): A business bought an asset for ₹10,00,000 and obtained depreciation on it under Section 33(2). Its written down value as defined in Section 41, as adjusted, is ₹6,40,000 (assumed figure). The asset is sold for ₹9,00,000 with ₹20,000 of selling expenses.
Substituted cost
Cost of acquisition = ₹6,40,000 (adjusted written down value), not the original ₹10,00,000.
Net consideration
₹9,00,000 − ₹20,000 = ₹8,80,000.
Capital gain
₹8,80,000 − ₹6,40,000 = ₹2,40,000.
Outcome
- Capital gain of ₹2,40,000 is computed under Sections 72 and 73 as modified by Section 75.
- Using the original cost of ₹10,00,000 would wrongly show a loss of ₹1,20,000.
Glossary
- Adjusted written-down value
- The Section 41 tax value after applicable cost and depreciation adjustments, substituted for acquisition cost here.
Frequently asked questions
What is used as the cost of acquisition for an asset on which depreciation was claimed?
The written down value of the asset, as defined and adjusted under Section 41, is used as the cost of acquisition for capital gains purposes under Section 75.
Does Section 75 apply to every depreciated asset?
No. It applies where depreciation has been obtained under Section 33(2) for the capital asset in any tax year. Depreciated assets forming part of a block are dealt with under Section 74.
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Get expert help computing gains on depreciated assetsLast updated 9 October 2026