# Written Down Value (WDV) [Section 43(6)]
Depreciation under the block-of-assets system is charged on the WDV of the block. Section 43(6) tells us how to compute that WDV.
## Basic computation
- Asset acquired during the current previous year: WDV = Actual Cost.
- Asset bought in earlier years:
> **WDV = Actual Cost − Aggregate depreciation *actually allowed***
- WDV of a block is computed as per Section 43(6)(c) — refer to the standard depreciation computation format:
- Opening WDV of block
- (+) Actual cost of assets acquired during the year
- (−) Money receivable for assets sold/discarded/destroyed during the year
- = WDV before depreciation, on which depreciation is charged.
## Special adjustments
### (d) Exempt entities becoming taxable [Explanation 6]
When an entity that was previously exempt becomes taxable, depreciation is computed on a WDV equal to Actual Cost minus notional depreciation for the exempt period. (Any revaluation done earlier must be reversed/adjusted.) The idea: the asset is treated as if it had been depreciated all along.
### (e) Composite income [Explanation 7]
Where income is partly taxable and partly exempt (e.g., tea manufacturing — 40% taxable as business income, 60% exempt as agricultural income):
- Depreciation deduction is allowed only to the extent of the taxable portion, BUT
- The full depreciation is reduced from the block to arrive at the closing WDV.
> So you deduct only the proportionate amount against income, but the block falls by the full amount.
## Worked illustration of composite income (from notes)
- Turnover ₹20 lakh; Expenses ₹4 lakh; Depreciation ₹1 lakh.
- Net income = ₹20L − ₹4L − ₹1L = ₹15 lakh.
- Taxable income = 40% × ₹15 lakh = ₹6 lakh.
- Full ₹1 lakh depreciation is deducted from the block (closing WDV), even though only 40% was effectively allowed against income.