The written down value (WDV) of a depreciable asset as per section 43(6) of the Income Tax Act, 1961 is defined as follows:

• In the case of assets acquired in the previous year under income tax act 1961, the actual cost of the asset shall be treated as WDV.
• In the case of assets acquired before the previous year, the WDV shall be the actual cost of the asset less all depreciation actually allowed under the Income Tax Act.

The WDV is used to calculate the depreciation allowance for a depreciable asset in a given year under income tax act 1961. The depreciation allowance is a deduction from the income of the assesses for the year, and it reduces the taxable income.

For example, if an asset is acquired in the previous year for Rs.100,000, and the depreciation rate is 10%, then the depreciation allowance for the first year will be Rs. 10,000. The WDV of the asset for the second year will then be Rs . 90,000.

The WDV of an asset is calculated separately for each block of assets. A block of assets is a group of assets that are similar in nature and are used for the same purpose under income tax act 1961. For example, all the machinery in a factory would be considered to be a single block of assets.

The WDV of a block of assets is calculated by adding the WDVs of all the assets in the block under income tax act, and then subtracting any moneys payable in respect of assets that are sold, discarded, demolished, or destroyed during the previous year.

The WDV of a block of assets is used to calculate the depreciation allowance for all

the assets in the block. The depreciation allowance is then distributed to the individual assets in the block in proportion to their respective WDVs.

WRITTEN DOWN VALUE SEC (43) 6 EXAMPLES :Written down value (WDV) under section 43(6) of the Income Tax Act, 1961 is the actual cost of an asset, less any depreciation actually allowed under the Act. The WDV is used to calculate the depreciation allowance for the current year

WRITTEN DOWN VALUE SEC (36) 

Section 43(6) of the Income Tax Act, 1961, deals with the written down value of a capital asset in the case of amalgamation or demerger. It states that the written down value of the capital asset to the amalgamated or demerged company shall be the same as it would have been if the amalgamating or demerged company had continued to hold the capital asset for the purposes of its business.

Here are some examples of how section 43(6) of the Income Tax Act, 1961, applies to specific states of India:

• Maharashtra: In Maharashtra, section 43(6) of the Income Tax Act, 1961, applies to amalgamations and demergers of companies that are registered in Maharashtra. For example, if a company that is registered in Maharashtra amalgamates with another company that is also registered in Maharashtra, the written down value of the capital assets of the amalgamating company will be the same as it would have been if the amalgamating company had continued to hold the capital assets for the purposes of its business.
• Tamil Nadu: Section 43(6) of the Income Tax Act, 1961, also applies to amalgamations and demergers of companies that are registered in Tamil Nadu. For example, if a company that is registered in Tamil Nadu amalgamates with another company that is also registered in Tamil Nadu, the written down value of the capital assets of the amalgamating company will be the same as it would have been if the amalgamating company had continued to hold the capital assets for the purposes of its business.
• Gujarat: Section 43(6) of the Income Tax Act, 1961, also applies to amalgamations and demergers of companies that are registered in Gujarat. For example, if a company that is registered in Gujarat amalgamates with another company that is also registered in Gujarat, the written down value of the capital assets of the amalgamating company will be the same as it would have been if the amalgamating company had continued to hold the capital assets for the purposes of its business.

CASE LAWS FOR WRITTEN DOWN VALUE SEC43

“Written down value” in relation to any asset, means— (a) where the asset is acquired in the previous year, the actual cost of the asset; (b) where the asset is acquired before the previous year, the actual cost to the assesses less all depreciation actually allowed to him under this Act or under any other law for the time being in force relating to income tax.

In other words, WDV is the amount that remains after the depreciation on an asset has been deducted from its actual cost. The WDV is used to calculate the depreciation for the current year.

Here are some FAQs about WDV under section 43(6)of the Income Tax Act,

• What is the difference between WDV and actual cost under income tax act?

The actual cost is the price that an asset was purchased for. The WDV is the actual cost minus the depreciation that has been taken on the asset.

• How is WDV calculated for assets acquired in the previous year under income tax act?

For assets acquired in the previous year, the WDV is simply the actual cost of the asset.

• How is WDV calculated for assets acquired before the previous year under income tax act?

For assets acquired before the previous year, the WDV is the actual cost of the asset minus all depreciation that has been allowed on the asset under the Income Tax Act or any other law for the time being in force relating to income tax.

• What happens to the WDV when an asset is sold under income tax act?

When an asset is sold, the WDV is used to calculate the capital gains or losses. If the asset is sold for more than the WDV, then there is a capital gain. If the asset is sold for less than the WDV, then there is a capital loss.