Book Profit

Guidance Note on Report under section 115JC of Income-tax Act, 1961

Income Tax - The Finance Act, 2011 for the first time introduced the provisions relating to Alternate Minimum tax for the Limited Liability partnerships. In order to moderate the outgo of profit linked deductions, the Finance Minister in the year 2012, extended the levy of this tax to all non corporate assesses....

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Section 115J, 115JA & 115JB may be ultravirse the Constitution of India & Income-tax Act,1961

Income Tax - CA Dev Kumar Kothari Section 115J, 115JA and 115JB may be ultravirse the Constitution of India and the Income-tax Act,1961 – a study with reference to some very weakly prepared and contested cases about validity of provision  for tax on book profit /  minimum alternate tax (MAT) and some suggestions for tax payers and government [...

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Rejection of books of Accounts – Section 145(3) – Issues & Case Laws

Income Tax - Section 145 of the Income Tax Act 1961, lays down that income chargeable under the head “Profit and gains of business or profession” or “Income from other sources” shall, subject to the accounting standards notified by the Central Government in the Official Gazette, be computed in accordance with either cash or mercantile system o...

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Download Automatic MAT Calculator in Excel Format with Case Laws

Income Tax - We have attached below an excel utility to compute the MAT as per provisions of Section 115JB of Income Tax Act, 1961. While preparing the utility Author of the utility has  considered various income-tax cases decided by various judicial authorities both in favour of assessee and in favour of revenue. Utility is in Excel File Format [&h...

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S.115JB P/L a/c prepared under regulatory Acts to be basis for computing book profit for insurance,banking,electricity company

Income Tax - As per section 115JB, every company is required to prepare its accounts as per Schedule VI of the Companies Act, 1956. However, as per the provisions of the Companies Act, 1956, certain companies, e.g. insurance, banking or electricity company, are allowed to prepare their profit and loss account in accordance with the provisions specifie...

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In revised DTC MAT proposed to be computed on book Profits and not on Gross Assets

Income Tax - The revised discussion paper on DTC, released on 15.05.2010, has addressed the concerns on all the nine areas that were brought to the notice of the Finance Minister. It has sought to restore the computation of minimum alternate tax (MAT) on book profit basis....

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Budget 2010-11: Change in Income tax provisions on Conversion of a private company or an unlisted public company into a LLP

Income Tax - The Finance (No. 2) Act, 2009 provided for the taxation of LLPs in the Income-tax Act on the same lines as applicable to partnership firms. Section 56 and section 57 of the Limited Liability Partnership Act, 2008 allow conversion of a private company or an unlisted public company (hereafter referred as company) into an LLP. Under the exis...

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IT department claimed Rs 30,000 crore from companies that violated MAT provisions

Income Tax - Income Tax department has claimed Rs 30,000 crore from companies that have violated provisions under the minimum alternate tax. Sources said the claim is not only for the current assessment year of 2009-10, wherein assessments are still going on, but also for previous four-five assessment years, which are under litigation either in courts...

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MAT will be eased for infrastructure companies in new DTC

Income Tax - The government is likely to ease the incidence of minimum alternate tax, or MAT, on infrastructure companies. The department of revenue plans to change the proposed direct tax code to exempt these companies from MAT for the first few years since they execute projects with long gestation periods. The code, in its current form, says all com...

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Federation of Gujarat Industries supported demand for rewriting the Direct Tax Code

Income Tax - Federation of Gujarat Industries (FGI) here has supported the demand for rewriting the Direct Tax Code (DTC) and do away with changes suggested in Minimum Alternate Tax proposals as it could spell doom for companies....

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S.115JB Provision for doubtful debt to be added to Book Profit for MAT Calculation

Eastern India Powertech Ltd. Vs. Addl. CIT, Range 10 (ITAT Delhi) - In the books of account, assessee had made provision for doubtful debts for this amount. The matter is sub-judice before court or arbitration. This shows that the amount was not ascertained. It remained contingent at the relevant time. Moreover, it had been gone against assessee due to amendment in...

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Retrospective Amendment to s. 115JB vide FA 2009 is not ultra vires or unconstitutional

Whirlpool of India Ltd. Vs Union of India (Delhi High Court) - Section 115J/115JB targeted corporate entities for imposing a Minimum Alternate Tax on their book profit. It was noticed by the legislature that as a result of various tax concessions and incentives certain companies making huge profits and also declaring substantial dividends have been managing the...

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Bonus Provision under Payment of Bonus Act,1965 is ascertained liability for MAT calculations

O.B.C. Vs Commr. of Income Tax-1 & ANR. (Delhi High Court) - We see no reason to take a different view from that adopted by the Bombay High Court. However, Mr Sabharwal, appearing on behalf of the revenue, raised a pointed question as to whether, in fact, the provision for payment of bonus in this case was actually an ascertained liability. ...

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Provision for site restoration expense on the basis of scientific method carried out by an independent agency eligible for deduction in book profit

Assistant Commissioner of Income-tax Vs Tata Petrodyne Ltd. (ITAT Mumbai) - The assessee has contended that the amount debited by the assessee is as per an independent enquiry carried out by M/s Institute of Oil and Gas Production Technology and therefore, it cannot be held as unascertained liability. The Assessing Officer did not accept the explanation of the assessee and ...

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Business losses carried forward beyond a period of eight years could be deducted in computing the book profit

Susi Sea Foods Pvt. Ltd. Vs. ACIT (ITAT Visakhapatnam) - Susi Sea Foods Pvt. Ltd. v. ACIT - Business losses carried forward beyond a period of eight years could be deducted in computing the book profit and hence the limitation of eight years for carry forward and set off of business losses under the normal tax provisions is not applicable while computing ...

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Recent Posts in "Book Profit"

Guidance Note on Report under section 115JC of Income-tax Act, 1961

The Finance Act, 2011 for the first time introduced the provisions relating to Alternate Minimum tax for the Limited Liability partnerships. In order to moderate the outgo of profit linked deductions, the Finance Minister in the year 2012, extended the levy of this tax to all non corporate assesses....

Read More
Posted Under: Income Tax |

Section 115J, 115JA & 115JB may be ultravirse the Constitution of India & Income-tax Act,1961

CA Dev Kumar Kothari Section 115J, 115JA and 115JB may be ultravirse the Constitution of India and the Income-tax Act,1961 – a study with reference to some very weakly prepared and contested cases about validity of provision  for tax on book profit /  minimum alternate tax (MAT) and some suggestions for tax payers and government [...

Read More
Posted Under: Income Tax |

Rejection of books of Accounts – Section 145(3) – Issues & Case Laws

Section 145 of the Income Tax Act 1961, lays down that income chargeable under the head “Profit and gains of business or profession” or “Income from other sources” shall, subject to the accounting standards notified by the Central Government in the Official Gazette, be computed in accordance with either cash or mercantile system o...

Read More
Posted Under: Income Tax |

S.115JB Provision for doubtful debt to be added to Book Profit for MAT Calculation

Eastern India Powertech Ltd. Vs. Addl. CIT, Range 10 (ITAT Delhi)

In the books of account, assessee had made provision for doubtful debts for this amount. The matter is sub-judice before court or arbitration. This shows that the amount was not ascertained. It remained contingent at the relevant time. Moreover, it had been gone against assessee due to amendment in Act. The amendment made by inserting cl...

Read More

Retrospective Amendment to s. 115JB vide FA 2009 is not ultra vires or unconstitutional

Whirlpool of India Ltd. Vs Union of India (Delhi High Court)

Section 115J/115JB targeted corporate entities for imposing a Minimum Alternate Tax on their book profit. It was noticed by the legislature that as a result of various tax concessions and incentives certain companies making huge profits and also declaring substantial dividends have been managing their affairs in such a way as to avoid pay...

Read More

Bonus Provision under Payment of Bonus Act,1965 is ascertained liability for MAT calculations

O.B.C. Vs Commr. of Income Tax-1 & ANR. (Delhi High Court)

We see no reason to take a different view from that adopted by the Bombay High Court. However, Mr Sabharwal, appearing on behalf of the revenue, raised a pointed question as to whether, in fact, the provision for payment of bonus in this case was actually an ascertained liability. ...

Read More

Download Automatic MAT Calculator in Excel Format with Case Laws

We have attached below an excel utility to compute the MAT as per provisions of Section 115JB of Income Tax Act, 1961. While preparing the utility Author of the utility has  considered various income-tax cases decided by various judicial authorities both in favour of assessee and in favour of revenue. Utility is in Excel File Format [&h...

Read More

Provision for site restoration expense on the basis of scientific method carried out by an independent agency eligible for deduction in book profit

Assistant Commissioner of Income-tax Vs Tata Petrodyne Ltd. (ITAT Mumbai)

The assessee has contended that the amount debited by the assessee is as per an independent enquiry carried out by M/s Institute of Oil and Gas Production Technology and therefore, it cannot be held as unascertained liability. The Assessing Officer did not accept the explanation of the assessee and added this amount for the purpose of com...

Read More

S.115JB P/L a/c prepared under regulatory Acts to be basis for computing book profit for insurance,banking,electricity company

As per section 115JB, every company is required to prepare its accounts as per Schedule VI of the Companies Act, 1956. However, as per the provisions of the Companies Act, 1956, certain companies, e.g. insurance, banking or electricity company, are allowed to prepare their profit and loss account in accordance with the provisions specifie...

Read More
Posted Under: Income Tax |

Business losses carried forward beyond a period of eight years could be deducted in computing the book profit

Susi Sea Foods Pvt. Ltd. Vs. ACIT (ITAT Visakhapatnam)

Susi Sea Foods Pvt. Ltd. v. ACIT - Business losses carried forward beyond a period of eight years could be deducted in computing the book profit and hence the limitation of eight years for carry forward and set off of business losses under the normal tax provisions is not applicable while computing book profit under section 115JA of the I...

Read More
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