Search Results For: Book Profits


QUERY: Whether penalty under section 271(1)(c) of the Act can be levied in a case where tax has been paid by the assessee under section 115JB of the Act and amount of tax payable as book profit is the same even as per order of assessment, with reference to variation in the amount of loss or income determined as per normal provisions of the Income-tax Act?
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In CIT v. Nalwa Sons Investments Ltd., [327 ITR 543 (Del.)] the facts were the assessee filed return declaring loss of Rs. 43.47 crores. Thereafter, the revised return exhibiting the income at Rs. 3.87 crores were filed under provisions of section 115JB

QUERY: A company has credited gain arising from transfer of a capital assets directly to capital reserve account, without routing through profit and loss account. The auditor has not qualified the accounts and the ROC also has not taken any objection to the accounts. Whether Assessing Officer can add back this amount to the book profit while calculating MAT liability?
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From the query it is not clear what type of a capital asset has been transferred and directly credited to capital reserve account.

The cardinal principle has been propounded by the Supreme Court in Apollo Tyres Ltd. vs. CIT [255 ITR 273], while deciding the matter under Section 115J of the Income-tax Act, 1961 which was precursor to

QUERY: In a partnership firm, the remuneration to the partners are calculated and paid as per Sec. 40(b)(v) and according to the slabs prescribed in the Income Tax Act, 1961, which is authorized by, and in accordance with, the terms of partnership deed and relates to the period falling after the date of such partnership deed.

Now a Finance Bill is passed on 27-7-2009 in which an amendment is carried out in Sec. 40(b)(v) in respect of remuneration of partners and is made applicable for entire Financial Year 2009-10 i.e. from 1-4-2009 onwards.

Since Finance Bill was passed on 27-7-2009, the amendment to remuneration clause can be carried out in supplementary partnership deed only after 27-7-2009.

Now in the circumstances, whether such amendment to partnership deed can be applicable to remuneration for the entire Financial Year 2009-10 so for the new limits or whether the amendment can only be prospective from the date of amendment in Partnership Deed?
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The payment of remuneration within the prescribed limits to working partners is allowable. Such remuneration is allowable on the basis of ‘book profit’ as defined in Explanation 3 to section 40(b) of the Act.

QUERY: We have made a capital profit of Rs. 10 crores from sale of our property. We have been advised that the profits being capital in nature can be directly credited to the capital reserves account in the balance sheet and need not be routed through the P & L A/c. As the profits are not a part of the P&L A/c, can we avoid paying MAT book profits u/s 115JB?
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No! Even if capital profits are credited to the capital reserves a/c in the balance sheet, they have to be added to the “book profits” for purposes of s. 115JB.