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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 specified in their regulatory Acts. In order to align the provisions of Income-tax Act with the Companies Act, 1956, it is proposed to amend section 115JB to provide that the companies which are not required under section 211 of the Companies Act to prepare their profit and loss account in accordance with the Schedule VI of the Companies Act, 1956, profit and loss account prepared in accordance with the provisions of their regulatory Acts shall be taken as a basis for computing the book profit under section 115JB.
It is, proposed to amend section 115JB to provide that the book profit for the purpose of section 115JB shall be increased by the amount standing in the revaluation reserve relating to the revalued asset which has been retired or disposed, if the same is not credited to the profit and loss account.
Reeling under the impact of global slowdown and a high interest rate regime, India Inc on Monday demanded that tax rates be retained at existing levels even as finance minister Pranab Mukherjee expressed concerns about challenges facing the economy.In their customary pre-Budget meeting with Mukherjee, industry leaders also demanded that healthcare services be kept outside service tax ambit, and privatise coal mines.
Gujarat High Court has issued notices to the Union Ministry of Finance and the Income Tax department in response to petitions by two companies of Adani Group, challenging the imposition of Minimum Alternative Tax (MAT) through an amendment in the Finance Act, 2011. The notices were issued yesterday by the division bench of Chief Justice S J Mukhopadhaya and Justice J B Pardiwala while hearing the petitions by Mundra Port Special Economic Zone Ltd (MPSEZL) and Adani Power Ltd (APL). Next hearing is scheduled for July 8.
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 Income tax Act, 1961.
Shree Bhagawathy Textiles Ltd. v. Asstt. CIT – If the assessee has made a claim of deduction from this profit not enumerated in the clauses (i) to (ix) covered by Explanation to section 115JA, the assessment so completed based on the profit taken from the profit and loss account appropriation account submitted by the assesseee happens to be an apparent mistake which could having satisfied on the factual mistake committed by the assessing officer in the original assesment, rightly upheld the revised assessment issued under section 154 by reversing their earlier order.
Under the revised norms, 10% excise would be levied on 45% of the tariff value of retail price on branded readymade garments as against 60% proposed in the Budget. Finance Minister Pranab Mukherjee on Tuesday eased some of the pressure on the readymade garment sector by increasing the abatement available for levy of taxes on retail price of some branded garments and textile made-ups.
Minimum Alternate Tax :- Under the existing provisions of section 115JB(1), a company is required to pay a minimum alternate tax (MAT) on its book profit, if the income-tax payable on the total income, as computed under the Act in respect of any previous year relevant to the assessment year commencing on or after 1st April, 2011, is less than the MAT. The amount of tax paid under the said section is allowed to be carried forward and set off against tax payable up to the tenth assessment year immediately succeeding the assessment year in which the tax credit becomes allowable under the provisions of section 115JAA.
The above ruling lays down that the amount withdrawn from revaluation reserve and credited to the Profit & Loss account cannot be reduced from book profit if such amount had not increased the book profit at the time of creation of reserve.
Joint CIT v. Rolta India Ltd. (SC) -Can interest under sections 234B and 234C be levied where a company is assessed on the basis of book profits under section 115JB? On this issue, the Supreme Court observed that there is a specific provision in section 115JB(5) providing that all other provisions of the Income-tax Act, 1961 shall apply to every assessee, being a company, mentioned in that section. Section 115JB is a self-contained code pertaining to MAT, and by virtue of sub-section (5) thereof, the liability for payment of advance tax would be attracted. Therefore, if a company defaults in payment of advance tax in respect of tax payable under section 1 15JB, it would be liable to pay interest under sections 234B and 234C. Therefore, interest under sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under section 1 15JB.
