Written down value of depreciable asset
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 41(1) of Income Tax Act 2025
41(1) For the purposes of different provisions for computation of income under the head “Profits and gains of business or profession”, written down value for the tax year shall be as mentioned in column C of the Table below:—
Table
| Sl. No. | Circumstances | Written down value |
|---|---|---|
| A | B | C |
| 1 | In case the asset is acquired in the tax year. | Actual cost to the assessee. |
| 2 | In case the asset is acquired before the tax year. | Actual cost to the assessee less depreciation actually allowed under this Act or the Income-tax Act, 1961. |
| 3 | In case of block of assets. | [(A-D)+ B-C]-E. |
Note:–– In column C,—
- A = the written down value of the block of assets in the immediately preceding tax year;
- B = actual cost of any asset falling within that block, acquired during the tax year;
- C = moneys payable together with scrap value, if any, in respect of any asset falling within the block, which is sold, transferred, demolished, destroyed or discarded during the tax year, where “C” shall not exceed (A-D)+B;
- D = depreciation actually allowed in respect of block of assets in relation to the said immediately preceding tax year;
- E = in the case of a slump sale, the actual cost of the asset falling within that block as reduced by depreciation allowable from the tax year 1988-1989 onwards, as if the asset was the only asset in the relevant block of assets, which shall not exceed [(A-D)+B-C].
| Sl. No. | Circumstances | Written down value |
|---|---|---|
| 4 | Where any block of asset is transferred by— (a)(i) a holding company to its subsidiary company; or (ii) a subsidiary company to its holding company and the conditions of section 70(1)(c) and (d) are satisfied; or (b) amalgamating company to the amalgamated company being an Indian company. | Written down value in the hands of the transferee company or amalgamated company is the same as written down value in the hands of transferor company or amalgamating company, as the case may be, at the beginning of the tax year in which such transfer took place. |
| 5 | Where any asset, forming part of a block of assets is transferred by a demerged company to a resulting company. | Written down value of block of assets–– (a) for demerged company (for the immediately preceding tax year), shall be the written down value in the immediately preceding tax year as reduced by the written down value of the assets transferred to the resulting company pursuant to such demerger; (b) for resulting company, shall be the written down value of the assets transferred from the demerged company immediately before such demerger. |
| 6 | Where any block of assets is transferred by a private company or unlisted public company to a limited liability partnership and the conditions in section 70(1)(ze) are satisfied. | Written down value in the hands of limited liability partnership shall be written down value in the hands of said company as on the date of conversion of the company into limited liability partnership. |
| 7 | Where any asset forming part of the block of assets is transferred to a company under the scheme of corporatisation of a recognised stock exchange in India approved by the Securities and Exchange Board of India. | Written down value of the block of assets in the hands of resulting company, shall be the written down value of the assets transferred immediately before such transfer. |
| 8 | In a case of succession in business or profession under section 313, where an assessment is made in the hands of successor under section 313 (2). | Written down value of any asset or block of assets shall be the amount which would have been taken as its written down value, if the assessment had been made directly on the person succeeded to. |
Section 41(2) of Income Tax Act 2025
41(2) Any allowance in respect of any depreciation carried forward under section 33(11) shall be deemed to be the depreciation actually allowed.
Section 41(3) of Income Tax Act 2025
41(3) Where an assessee was not required to compute his total income for the purposes of this Act for any tax year or tax years preceding the tax year under consideration,—
- (a) the actual cost of an asset shall be adjusted by the amount attributable to the revaluation of such asset, if any, in the books of account;
- (b) the total amount of depreciation on such asset provided in the books of account of the assessee in respect of such tax year or tax years preceding the tax year under consideration shall be deemed to be the depreciation actually allowed under this Act for the purposes of this clause; and
- (c) the depreciation actually allowed under clause (b) shall be adjusted by the amount of depreciation attributable to such revaluation of the asset.
Section 41(4) of Income Tax Act 2025
41(4) For the purposes of this section, where the income of an assessee is derived, in part from agriculture and in part from business chargeable to income-tax under the head “Profits and gains of business or profession”, for computing the written down value of assets acquired before the tax year, the total amount of depreciation shall be computed as if the entire income is derived from the business of the assessee under the head “Profits and gains of business or profession” and the depreciation so computed shall be deemed to be the depreciation actually allowed under this Act or
under the Income-tax Act, 1961.
Section 41(5) of Income Tax Act 2025
41(5) In this section, “sold” shall have the meaning assigned to it in section 38(6)(a).
FAQs on Section 41 of Income Tax Act 2025
Q1. What is ‘Written Down Value’ (WDV) under the Income Tax Act, 2025?
WDV is the depreciated value of a depreciable asset or block of assets, used for computing depreciation and gains/losses on sale under “Profits and Gains of Business or Profession.”
Q2. Why is WDV important for income tax purposes?
It is essential for calculating depreciation and determining capital gains or losses on transfer of assets used in business or profession.
Q3. How is WDV computed if the asset is newly acquired in the tax year?
The WDV shall be the actual cost to the assessee.
Q4. How is WDV determined for assets acquired before the current tax year?
WDV = Actual cost minus depreciation actually allowed under the 2025 Act or earlier under the 1961 Act.
Q5. What is the WDV formula for a block of assets?
WDV = [(A – D) + B – C] – E
Where:
- A = WDV of previous year
- B = Actual cost of assets acquired
- C = Sale/scrap value (limited to [(A – D) + B])
- D = Depreciation allowed last year
- E = Special adjustment in case of slump sale
Q6. When is “E” applicable in the WDV formula?
Only in case of a slump sale, representing reduced cost of assets after allowable depreciation since FY 1988-89.
Q7. What is the WDV in case of transfer from holding to subsidiary company (or vice versa)?
WDV in hands of transferee = WDV in hands of transferor at the beginning of the year of transfer, if section 70(1)(c)/(d) is satisfied.
Q8. How is WDV computed in case of demerger?
- For the demerged company: WDV = Previous WDV – WDV of transferred assets
- For the resulting company: WDV = WDV of transferred assets immediately before demerger
Q9. What is the WDV treatment during conversion of company to LLP?
If section 70(1)(ze) conditions are met, WDV of LLP = WDV of company as on date of conversion.
Q10. What happens to WDV when corporatisation of a recognised stock exchange occurs?
WDV in hands of new company = WDV of transferred assets immediately before transfer.
Q11. What happens to WDV when business is succeeded under Section 313?
The WDV remains the same as it would have been if the successor had originally owned the asset.
Q12. What if depreciation was carried forward under section 33(11)?
Such depreciation is treated as actually allowed and reduces the WDV.
Q13. What happens when books are revalued but no return was filed for prior years?
Then:
- WDV is reduced by revaluation amount
- Depreciation in books = deemed allowed under the Act
- That depreciation is adjusted for revaluation portion
Q14. How is WDV determined if the assessee earns both agricultural and business income?
Depreciation is computed as if entire income is from business, and such amount is deemed allowed under the Act.
Q15. What does ‘sold’ mean for the purpose of WDV under this section?
The term “sold” has the same meaning as defined in Section 38(6)(a).
Section 41 of the Income Tax Act, 2025 provides a comprehensive framework for computing the WDV of depreciable assets under various business scenarios. It ensures continuity and fairness in depreciation calculations across new acquisitions, transfers, mergers, demergers, succession, and conversions.
The section aligns WDV principles with real-world corporate events while preventing tax arbitrage through deemed depreciation and revaluation adjustments. It is a vital tool for accurately determining business income and ensuring consistency in tax treatment over time.
