Section 74 — Special provision for computation of capital gains in case of depreciable assets

(1) Irrespective of anything contained in section 2( 101), for a capital asset
forming part of a block of assets on which depreciation has been allowed under
the Indian Income-tax Act, 1922 (11 of 1922) or under the Income-tax Act, 1961 (43
of 1961) or under this Act, the provisions of sections 72 and 73 shall be subject to
the provisions of sub-sections (2) and (3).
(2) If, during the tax year, the full value of consideration received or accruing for the
transfer of one or more assets in a block of assets exceeds the total of the following:—
( a) expenditure incurred wholly and exclusively in connection with such
transfer;
( b) the written down value of the block of assets at the start of the tax year;
and
( c) the actual cost of any asset falling within the block of assets acquired
during the tax year,
such excess shall be deemed to be capital gains arising from the transfer of short-
term capital assets.
(3) If any block of assets ceases to exist for the reason that all the assets in that block
are transferred during the tax year, then,—
( a) the cost of acquisition of the block of assets shall be the written down
value of the block of assets at the beginning of the tax year, as increased
by the actual cost of any asset falling within that block of assets, acquired
by the assessee during the tax year; and
( b) the income received or accruing as a result of such transfer or transfers
shall be deemed to be capital gains arising from the transfer of short-
term capital assets.