§ 74
Chapter IV — Computation Of Total Income
Short-Term Capital Gains on Depreciable Asset Blocks
Income-tax Act, 2025
When you sell assets that are part of a depreciable block, any amount received above the sum of (a) direct transfer expenses, (b) the block's opening written‑down value, and (c) the cost of any new assets added during the year is treated as short‑term capital gain.
If the entire block is sold, the acquisition cost is taken as the opening written‑down value plus any new asset costs incurred that year, and the proceeds are also classified as short‑term capital gains.
📜 Official text of the section +
74. (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.
Special provision for cost of acquisition in case of depreciable asset.
Plain-language summary — not the official text. Refer to the bare Act and confirm with a professional for your specific case.