Mr. Vaibhav, a resident individual aged 46 years, engaged in the business of plywood and sculptures, maintains his books of account under section…

Computation of total income of Mr. Vaibhav for A.Y. 2025-26 under normal provisions of the Act Particulars ₹ ₹ I Income from business or profession Net profit as per profit and loss account 51,42,000 Add: Items of expenditure not allowable while computing business income Depreciation as per books of accounts 13,66,000 Payment for professional services [Since the tax was deducted on time, but such tax has not been paid on or before the due date specified in section 139(1),30,000 (1,00,000 x 30%) has to be disallowed in F.Y. 2024-25 under section 40(a)(ia) and has to be added back] 30,000 Payment for renovation of office [Unreasonable payment made to brother for renovating his office has to be added back as per section 40A(2)] 1,00,000 Payment to M/s Vishnu & Co, a micro enterprise, for purchase of raw material [Not Allowable as per section 43B(h) since payment was made to a micro enterprise and the same was not within the time specified in the written agreement] 30,000 Conversion of interest into loan [Conversion of unpaid interest into loan shall not be construed as payment of interest for the purpose of section 43B. The amount of unpaid interest so converted into loan shall be allowed as deduction only in the year in which the converted loan is actually paid.] Accordingly, only - 30,000 shall be allowed as deduction in P.Y. 2024-25 [6 lakhs/ 20 installments] 5,70,000 Payment received from sale of stock-in-trade converted from capital assets [Sale consideration - FMV as on date of conversion] 1,50,000 22,46,000 73,88,000 Less: Depreciation as income-tax Rules, 1962 12,00,000 61,88,000 II Capital Gains Sale consideration 3,50,000 Less: Indexed cost of acquisition [₹ 1,80,000 × 348/ 240] 2,61,000 Long term capital gains [Indexation benefit is available since the property is transferred before 23.7.2024] 89,000 Gross Total Income 62,77,000 Less: Deduction under Chapter VI-A Deduction under section 80C Investment in five-year deposit 1,50,000 Deduction under section 80CCD(1B) Contribution in NPS 50,000 Deduction under section 80JJAA (See working note below) 17,28,000 19,28,000 Total Income 43,49,000 Computation of tax liability of Mr. Vaibhav for A.Y. 2025-26 under normal provisions of the Act Particulars ₹ ₹ Tax @20% on LTCG of 89,000 on sale of Sculptures [Since the property is transferred before 23.7.2024] 17,800 Tax at slab rate on balance income of 42,60,000 Upto 2,50,000 Nil 2,50,001 - 5,00,000 [@5% of 2.50 lakh] 12,500 5,00,001 - 10,00,000 [@20% of 5,00,000] 1,00,000 10,00,001 -42,60,000 [@ 30% of 32,60,000] 9,78,000 10,90,500 11,08,300 Add: Health and education cess@4% 44,332 Tax liability 11,52,632 Tax liability (Rounded off) 11,52,630 Computation of adjusted total income and AMT of Mr. Vaibhav for A.Y. 2025-26 Particulars ₹ ₹ Total Income 43,49,000 Add: Deduction under section 80JJAA 17,28,000 Adjusted Total Income 60,77,000 Alternate Minimum Tax @18.5% 11,24,245 Add: Surcharge @10% since adjusted total income exceeds 50lakhs but does not exceed 1crore 1,12,425 12,36,670 Add: Health and education cess@4% 49,467 Tax liability 12,86,137 Tax liability (Rounded off) 12,86,140 Since the regular income-tax payable is less than the alternate minimum tax payable, the adjusted total income shall be deemed to be the total income and tax is leviable @18.5% thereof plus surcharge@10% and cess@4%. Therefore, tax liability as per section 115JC is 12,86,140. AMT Credit to be carried forward under section 115JEE ₹ Tax liability under section 115JC 12,86,140 Less: Tax liability under the regular provisions of the Income-tax Act, 1961 11,52,630 1,33,510 Working Note Computation of Deduction under section 80JJAA Particulars ₹ Additional employee cost 17,28,000 = 24,000 × 12 × 20 = 57,60,000 Deduction under section 80JJAA = 30% of 57,60,000 Since casual employees do not participate in recognized provident fund, they do not qualify as additional employees. Further, 30 regular employees employed on 1.8.2024 also do not qualify as additional employees since their monthly emoluments exceed - 25,000.Therefore, only 20 employees employed on 1.4.2024 qualify as additional employees, and the total emoluments paid or payable to them during the P.Y.2024-25 is deemed to be the additional employee cost.