The Statement of Profit & Loss of Tirupati Private Ltd., a domestic company engaged in manufacturing, shows net profit of 1,07,00,000 for the…

Computation of Total Income and Tax Liability of Tirupati Private Ltd. as per section 115BAA for the A.Y.2025-26 Particulars Amount (₹) I Income from house property [Rental income from commercial property] Gross Annual Value¹/Net Annual Value 5,30,000 Less: Deduction under section 24(a) 30% of Net Annual Value 1,59,000 3,71,000 II Profits and gains of business and profession Net profit as per profit and loss account 1,07,00,000 Add: Items debited but to be considered separately or to be disallowed B (ii) Donation paid to Swachh Bharat Kosh 85,000 [Not an expenditure incurred wholly and exclusively for the manufacturing business. Hence, not allowable under section 37] B (iii) Contribution towards pension scheme of employees 50,000 [Contribution towards pension scheme, referred to in section 80CCD, of employees is allowed only to the extent of 14% of salary of the employee in the P.Y. i.e.,1,40,000 being 14% of 10,00,000. Therefore, the excess contribution of 50,000 [i.e.,1,90,000 -1,40,000] is disallowed u/s 36(1)(iva). B (iv) Payment to transport contractor - [As per section 194C(6), no tax is required to be deducted at source since the payment is to a transport contractor not having more than 10 goods carriages at any time during the previous year and he has given a declaration to that effect along with his PAN. Hence, disallowance under section 40(a)(ia) for non-deduction of tax at source is not attracted. Also, since payment is made by account payee cheque, no disallowance under section 40A(3) is attracted]. B (v) Bonus to employees 4,48,000 [Since the payment is made after the due date of filing return of income, disallowance under section 43B is attracted] B (vi) Provision for income-tax (including interest of 70,000 thereon) 4,20,000 [Not allowable as deduction. Disallowance under section 40(a) (ii) is attracted] B (vii) Contribution to a University approved and notified u/s 35(1)(ii) 1,00,000 [No deduction is allowed u/s 115BAA in respect of contribution to a University approved and notified u/s 35(1)(ii)] B (viii) Interest on loan borrowed for investing in shares of ABC Inc. 1,50,000 [Allowability or otherwise of interest expenditure on earning dividend has to be considered separately under the head "Income from Other Sources"] 12,53,000 1,19,53,000 Add: Cash Payment for purchase of raw material deemed as income 45,000 A(4) [Since the provision for outstanding bill for purchase of raw material has been allowed as deduction during the P.Y.2023-24, cash payment in excess of 10,000 against such bill in the P.Y. 2024-25 would be deemed as income of P.Y.2024-25 as per section 40A(3A)] 1,19,98,000 Less: Expenditure to be allowed B (i) & A(1) Depreciation 4,89,000 [Difference between the normal depreciation of 16.75 lakhs as per Income-tax Act, 1961 [See Note below] and depreciation charged to the statement of profit and loss of 11.86 lakhs]. Note - ²Printers and scanners form an integral part of the computer system and they cannot be used without the computer. Thus, they are part of the computer system, they would be eligible for depreciation at the higher rate of 40% applicable to computers including computer software. However, EPABX is not a computer and is, hence, not entitled to higher depreciation @40%³. Accordingly, depreciation of 1,25,000 on EPABX computed @ 25% (40% - 15%) is to be reduced from the depreciation given as per the Income-tax Act, 1961 of 18lakhs. Thus, depreciation as per Income-tax Act, 1961 allowed as deduction would be - 16.75 lakhs. A(2) Additional depreciation on new plant and machinery Nil [Not allowable as deduction under section 115BAA] A(3) Audit Fees relating to P.Y.2023-24 30,000 [₹ 30,000, being 30% of audit fees of 1,00,000 provided for in the books of account of F.Y.2023-24 would have been disallowed due to non-deduction of tax at source. Since tax has been deducted in October, 2024 and paid on 12.12.2024, the amount of 30,000 is deductible while computing business income of P.Y.2024-25]. 5,19,000 1,14,79,000 Less: Items credited to statement of profit and loss, but not includible in business income A (i) Rent received from vacant land 2,55,000 [Chargeable to tax under the head "Income from other sources"] A (ii) Rent received from commercial property owned by the company 5,30,000 [Chargeable to tax under the head "Income from house property"] A (iii) Interest received on income tax refund 48,000 [Chargeable to tax under the head "Income from other sources"] A (iv) Profit on sale of plot 8,00,000 [Chargeable to tax under the head "Capital Gains"] A (v) Dividend from ABC Inc. company 6,00,000 [Dividend received from foreign company is taxable under the head "Income from Other Sources"] 22,33,000 92,46,000 Profits and gains from the business of manufacturing 92,46,000 III Capital Gains Capital gain on sale of plot Sale consideration 58,00,000 Less: Cost of Acquisition [since land is transferred on or after 23.7.2024, indexation benefit will not be to a person other than an individual or a HUF, resident in India] 50,00,000 Long-term capital gain 8,00,000 IV Income from Other Sources Rent received from vacant land 2,55,000 Interest received on income-tax refund 48,000 Excess of issue price of shares over the fair market value of shares is not taxable w.e.f. A.Y. 2025-26 - Dividend from ABC Inc., a foreign company 6,00,000 Less: Interest expenditure of 1,20,000 (₹ 1,50,000 allowed deduction upto 20% of dividend) 4,80,000 7,83,000 Gross Total Income 1,12,00,000 Less: Deductions under Chapter VI-A Deduction under section 80G - Not allowable u/s 115BAA Deduction under section 80M 4,80,000 Deduction in respect of inter-corporate dividend to the extent of 5,20,000, being dividend distributed by it one month prior to the due date specified u/s 139(1) or - 4,80,000 dividend received to the extent includible in the gross total income, whichever is lower Total Income 1,07,20,000 Computation of tax liability Tax on long-term capital gains @ 12.5% 1,00,000 Tax on other income @22% on 99,20,000 21,82,400 22,82,400