Shakshitha Pvt. Ltd., furnishes the following summarized position of its profit and loss account and pertinent additional information thereto, for the year ended 31-3-2018: (All amounts are in lakhs) (i) Net profit as pe

CS Professional · Advanced Tax Laws and Practice · PYQS · June 2018
Shakshitha Pvt. Ltd., furnishes the following summarized position of its profit and loss account and pertinent additional information thereto, for the year ended 31-3-2018: (All amounts are in lakhs) (i) Net profit as per books: ₹ 26 lakhs (ii) Share income from an AOP: ₹ 6 lakhs Expenditure debited in books for earning such income: ₹ 0.8 lakhs (iii) Provision for income-tax: ₹ 2 lakhs (iv) CSR expenditure debited to P & L Account: ₹ 14 lakhs (v) Royalty received relating to business (Chargeable at 10%): ₹ 6 lakhs (vi) The brought forward business loss and depreciation are as under: As per books As per IT Act Business loss for AY 2017-18 ₹ 4 lakhs ₹ 12 lakhs Depreciation ₹ 3 lakhs ₹ 11 lakhs (vii) The members as well as their shares in the AOP in which Shakshitha Pvt. Ltd. is a member, are specific and determinate. (viii) In the current year, the depreciation charged as per books is the same as that of the one allowable as per Income-Tax Act, 1961, before considering the provisions of section 32(2). Compute the book profits of the company and the tax on book profits under section 115JB for the AY 2018-19. The company is not an Ind-As compliant company.

Answer & Explanation:

Computation of Book Profits u/s 115JB of Shakshita Pvt Ltd. Assessment Year (2018-19) Sr. No. Particulars Rs. in Lakhs (i) Net Profit as per books 26 (ii) Share income from an AOP (This is not an AOP which pays tax at the maximum marginal rate. Hence no adjustment is required) - Expenditure debited in books for earning such income (Not Allowed) - (iii) Provision for Income tax 2 (iv) CSR expenditure debited to P&L ₹ 14 Lakhs (no need to add back this expenditure for MAT) - (v) Royalty received relating to business (to be considered separately, as it is taxed at special rate of 10%). Hence to be deducted. (6) Total 22 Less: lower of brought forward losses or depreciation as per books (3) Book Profits 19 Calculation of Tax Payable Particulars Tax Payable (Rs. in Lakhs) Royalty @ 10% of ₹ 6 Lakhs 0.6 Other Income @ 18.50% 3.515 Total 4.115 Add: EC + SHEC @ 3% .12345 Total tax payable as per MAT u/s 115JB 4.23845

Topics: Income Tax Act, 1961

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