The net result of the business carried on by a branch of foreign company in India for the year ended 31st March, 2022 was at a loss of ₹ 150 lakh after charging off head office expenses of ₹ 220 lakh allocated to the bra

Section 44C of the Income tax Act, 1961 restricts the allowability of the head office expenses to the extent of lower of an amount equal to 5% of the adjusted total income or the amount actually incurred as is attributable to the business of the assessee in India. For the purpose of computing the adjusted total income, the head office expenses of ₹ 220 Lakhs charged to the profit and loss account have to be added back. The amount of Income to be declared by the assessee for A.Y. 2022-23 will be as under: Particulars Amount (lakhs) Net loss for the year ended on 31.03.2022 (150 lakhs) Add: Amount of head office expenses to be considered separately as per section 44C of the Income tax Act, 1961 220 lakhs Adjusted Total Income 70 lakhs Less: Head office expenses allowable u/s 44C is the lower of following: (3.5 lakhs) (i) ₹ 3.5 lakhs being 5% of ₹ 70 lakhs or (ii) ₹ 220 lakhs Income to be declared in the Income tax Return for AY 2022-23 66.50 lakhs