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.
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.
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.
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