# Section 43(1): Actual Cost of an Asset
"Actual cost" is the figure on which depreciation is computed. Section 43(1) tells you how to build up this figure starting from the invoice price.
## Standard Computation
| Item | Amount |
|---|---|
| Purchase price | xxx |
| Add: Installation, transportation & trial-run expenses | xxx |
| Add: Interest on loan up to date of put-to-use | xxx |
| Add: Taxes & duties (only if ITC is not available) | xxx |
| Less: Subsidy / Government grant received | (xxx) |
| Less: Amount earned by selling trial-run production | (xxx) |
| Actual cost of the asset | xxx |
## Cash Payment Restriction
If payment for the purchase or any related expense exceeds Rs. 10,000 to a single person in a single day by cash, bearer cheque, or crossed cheque (i.e., any mode other than account-payee cheque/draft/ECS/prescribed electronic mode), that payment shall not form part of actual cost. This disallowed amount is also not available for depreciation.
## Special Cases — Actual Cost
| Situation | Actual Cost |
|---|---|
| Asset used in Scientific Research (Sec 35) | NIL |
| Section 35AD asset | NIL |
| Asset acquired by gift / will | WDV of the previous / preceding owner |
| Stock-in-trade converted into capital asset & used in business | FMV on the date of conversion |
| Building used for personal purpose, later brought into business | Original cost less notional depreciation till date (at current rates) — only applicable for buildings; for other assets use original cost |
| Re-purchase of an asset previously sold | (i) WDV at time of sale, or (ii) Re-purchase price — whichever is lower |
| Asset purchased & leased back to the same person | WDV of the previous owner (the lessee) |
## Key Idea
The section ensures that the depreciation base reflects the true economic cost to the assessee — including all incidental costs up to put-to-use, but net of any element that has been recovered (subsidy, trial-run sales) or could otherwise be double-claimed (cash payments hit by Sec 40A(3)-type discipline).