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- 1. MINIMUM ALTERNATE TAXMINIMUM ALTERNATE TAX Special Provisions for payment of tax by certainSpecial Provisions for payment of tax by certain companies S. 115JB –companies S. 115JB – (1)Notwithstanding anything contained in any other(1)Notwithstanding anything contained in any other provision of this Act, where in the case ofprovision of this Act, where in the case of a co., the income tax payable on the total incomea co., the income tax payable on the total income computed under this Act of any P.Y., is less thancomputed under this Act of any P.Y., is less than 18.5% of its book profit, such book profit shall be18.5% of its book profit, such book profit shall be deemed to be its total income and it shall paydeemed to be its total income and it shall pay income-tax @ 18.5% on such total income.income-tax @ 18.5% on such total income.
- 2. (2) Every co. shall prepare its P/L A/c. for the(2) Every co. shall prepare its P/L A/c. for the relevant P. Y. as per the provisions of Parts II andrelevant P. Y. as per the provisions of Parts II and III of Schedule VI to the Cos. Act, 1956.III of Schedule VI to the Cos. Act, 1956. While preparing the annual a/c.s including P/LWhile preparing the annual a/c.s including P/L A/c. –A/c. – (i) the accounting policies, (ii) the accounting(i) the accounting policies, (ii) the accounting standards adopted for preparing such a/c.sstandards adopted for preparing such a/c.s including P/L A/c. and (iii) the method and ratesincluding P/L A/c. and (iii) the method and rates of depreciation, shall be the same as have beenof depreciation, shall be the same as have been adopted for preparing such a/c.s including P/Ladopted for preparing such a/c.s including P/L A/c. laid before the A.G.M. of the co., as per S.A/c. laid before the A.G.M. of the co., as per S. 210 of the Cos. Act, 1956.210 of the Cos. Act, 1956.
- 3. Where the co., has adopted F. Y. under theWhere the co., has adopted F. Y. under the Cos. Act which is different from the P. Y.Cos. Act which is different from the P. Y. under this Act, (i) the accounting policies,under this Act, (i) the accounting policies, (ii) accounting standards and (iii) the(ii) accounting standards and (iii) the method and rates of depr. Shall correspondmethod and rates of depr. Shall correspond to those adopted for preparing such a/c.sto those adopted for preparing such a/c.s including P/L A/c. for such F. Y. or part ofincluding P/L A/c. for such F. Y. or part of the F. Y. falling within the relevant P. Y.the F. Y. falling within the relevant P. Y.
- 4. ExplanationExplanation –– Book profit means net profit as per P/L A/c.Book profit means net profit as per P/L A/c. prepared under sub. sec. (2), as increased byprepared under sub. sec. (2), as increased by –– (a)(a) income-tax paid or payable and provisionincome-tax paid or payable and provision therefore,therefore, (b)(b) amounts carried to any reserves, otheramounts carried to any reserves, other than a reserve u/s. 33AC,than a reserve u/s. 33AC, (c)(c) provisions for liabilities other thanprovisions for liabilities other than ascertained liabilities.ascertained liabilities. (d)(d) provisions for losses of subsidiaryprovisions for losses of subsidiary companies,companies, (e)(e) dividends paid or proposed,dividends paid or proposed,
- 5. (f) expenditure relatable to income exempt u/s. 10(f) expenditure relatable to income exempt u/s. 10 (other than u/s. 10(38)) or 11 or 12(other than u/s. 10(38)) or 11 or 12 (g) depreciation,(g) depreciation, (h) The amount of deferred tax and the provision(h) The amount of deferred tax and the provision therefore,therefore, if any amount referred to in (a) to (h) above isif any amount referred to in (a) to (h) above is debited to P/L A/c. and as reduced by –debited to P/L A/c. and as reduced by – (i)(i) amount withdrawn from reserves or provisionsamount withdrawn from reserves or provisions (excluding reserve created before 1.4.97(excluding reserve created before 1.4.97 otherwise than by way of debit to P/L A/c.), ifotherwise than by way of debit to P/L A/c.), if such amount is credited to P/L. A/c.,such amount is credited to P/L. A/c.,
- 6. Amount withdrawn from reserve createdAmount withdrawn from reserve created or prov. made in a P.Y. relevant to A. Y.or prov. made in a P.Y. relevant to A. Y. 1997-98 or any subsequent A. Y. shall be1997-98 or any subsequent A. Y. shall be reduced from the book profit only if thereduced from the book profit only if the book profit of that P. Y. was increased bybook profit of that P. Y. was increased by those reserves or provisions,those reserves or provisions, (ii) income exempt u/s. 10 (other than u/s.(ii) income exempt u/s. 10 (other than u/s. 10(38)) or 11 or 1210(38)) or 11 or 12 (iia) depr. debited to P/L A/c. excluding the(iia) depr. debited to P/L A/c. excluding the depr. on account of revaluation of assets,depr. on account of revaluation of assets,
- 7. (iib) amount withdrawn from revaluation res.(iib) amount withdrawn from revaluation res. and credited to P/L A/c. to the extent itand credited to P/L A/c. to the extent it does not exceed depr. on account ofdoes not exceed depr. on account of revaluation of assets,revaluation of assets, (iii) loss b/f. or unabsorbed depr. whichever(iii) loss b/f. or unabsorbed depr. whichever is less as per books of account,is less as per books of account,
- 8. ExplanationExplanation –– For the purposes of this clause –For the purposes of this clause – (a)(a) loss shall not include depr.,loss shall not include depr., (b)(b) the provisions of this clause shall notthe provisions of this clause shall not apply, if the loss b/f. or unabsorbedapply, if the loss b/f. or unabsorbed depr. is NIL.depr. is NIL. (iv) amount deductible u/s. 80HHC,(iv) amount deductible u/s. 80HHC, Computed u/s. 80HHC(3)(a) or (b) or (c)Computed u/s. 80HHC(3)(a) or (b) or (c) or 80HHC (3A),or 80HHC (3A), (v) Amount deductible u/s. 80HHE(v) Amount deductible u/s. 80HHE computed u/s. 80HHE(3) or 80HHE(3A),computed u/s. 80HHE(3) or 80HHE(3A),
- 9. (vi) amount deductible u/s. 80HHF(3),(vi) amount deductible u/s. 80HHF(3), (vii) amount of profit of sick industrial co.(vii) amount of profit of sick industrial co. commencing from A. Y. relevant to P. Y. incommencing from A. Y. relevant to P. Y. in which it became sick u/s. 17(1) of S.I.C.A.which it became sick u/s. 17(1) of S.I.C.A. and ending with the A. Y. during which theand ending with the A. Y. during which the net worth of such co. becomes equal to ornet worth of such co. becomes equal to or exceeds the accumulated losses,exceeds the accumulated losses, (viii) Deferred tax credited to P/L A/c.(viii) Deferred tax credited to P/L A/c. Income tax shall include - (i) D.D.T. u/s.Income tax shall include - (i) D.D.T. u/s. 115-O or 115R , (ii) interest charged under115-O or 115R , (ii) interest charged under the I. T. Act, (iii) sur charge, (iv) Edu. Cess,the I. T. Act, (iii) sur charge, (iv) Edu. Cess, or (v) Sec. & Higher Edu. Cess.or (v) Sec. & Higher Edu. Cess.
- 10. (3) Nothing contained in sub-sec. (1) shall(3) Nothing contained in sub-sec. (1) shall affect the determination of amounts ofaffect the determination of amounts of the relevant P. Y. to be c/f. to subsequentthe relevant P. Y. to be c/f. to subsequent year(s) u/s 32(2) or 32A(3), 72(i)(ii), 73, 74year(s) u/s 32(2) or 32A(3), 72(i)(ii), 73, 74 or 74A(3).or 74A(3).
- 11. (4) A. co. to which this section applies shall(4) A. co. to which this section applies shall furnish audit report certifying that the bookfurnish audit report certifying that the book profit has been computed according to theprofit has been computed according to the provisions of this section along with returnprovisions of this section along with return of income filed u/s. 139(1) or in responseof income filed u/s. 139(1) or in response to notice u/s. 142(1)(i).to notice u/s. 142(1)(i). Save as otherwise provided in thisSave as otherwise provided in this section, all other provisions of this Actsection, all other provisions of this Act shall apply to every co., mentioned in thisshall apply to every co., mentioned in this section.section.
- 12. ? Interest u/s. 234B cannot be levied in caseInterest u/s. 234B cannot be levied in case where a company is liable to pay tax u/s.where a company is liable to pay tax u/s. 115JB as book profit can be determined115JB as book profit can be determined after the end of the year.after the end of the year. ? Snowcem v.DCIT – Appeal No. 238 ofSnowcem v.DCIT – Appeal No. 238 of 2006.2006.
- 13. Scheme of Tax Credit – S. 115JAAScheme of Tax Credit – S. 115JAA –– (1)(1) Not relevantNot relevant (1A) Where any tax is paid u/s. 115JB (1) by a(1A) Where any tax is paid u/s. 115JB (1) by a co., for A. Y. 2006-07 or any subsequentco., for A. Y. 2006-07 or any subsequent A. Y., the credit of tax so paid shall beA. Y., the credit of tax so paid shall be allowed under this section.allowed under this section. (2) Tax credit to be allowed shall be the(2) Tax credit to be allowed shall be the difference between the tax paid for any A.difference between the tax paid for any A. Y. u/s. 115JB(1) and tax payable by the ‘A’Y. u/s. 115JB(1) and tax payable by the ‘A’ on its total income computed according toon its total income computed according to the provisions of this Act.the provisions of this Act.
- 14. No interest shall be payable on the tax creditNo interest shall be payable on the tax credit allowed under this section.allowed under this section. (3) Tax credit shall be c/f. and set off(3) Tax credit shall be c/f. and set off according to sub-sec. (4) and (5), but suchaccording to sub-sec. (4) and (5), but such c/f. shall not be allowed beyond the 10c/f. shall not be allowed beyond the 10thth A.A. Y. immediately succeeding the A. Y. inY. immediately succeeding the A. Y. in which it becomes allowable and w.e.f. A. Y.which it becomes allowable and w.e.f. A. Y. 2007-08 beyond the 72007-08 beyond the 7thth A. Y.A. Y. (4) Tax credit shall be allowed set off in a(4) Tax credit shall be allowed set off in a year when tax becomes payable on incomeyear when tax becomes payable on income computed according to the provisions ofcomputed according to the provisions of this Act other than S. 115JBthis Act other than S. 115JB
- 15. (5) Set off of b/f. tax credit for any A. Y. shall(5) Set off of b/f. tax credit for any A. Y. shall be the difference between tax on its totalbe the difference between tax on its total income and the tax which would have beenincome and the tax which would have been payable u/s. 115JB for that A. Y.payable u/s. 115JB for that A. Y. (6) Where as a result of an order u/s. 143(1)(6) Where as a result of an order u/s. 143(1) or (3), S. 144, S. 147, S. 154, S. 155,or (3), S. 144, S. 147, S. 154, S. 155, S.245D(4), S. 250, S. 254, S. 260, S. 262,S.245D(4), S. 250, S. 254, S. 260, S. 262, S. 263 or S. 264, tax payable under this ActS. 263 or S. 264, tax payable under this Act is reduced or increased, tax credit allowedis reduced or increased, tax credit allowed under this section shall be reduced orunder this section shall be reduced or increased accordingly.increased accordingly.