Taurus Industries Ltd., a domestic company, provides the following information of its Statement of Profit and Loss for the year ended on 31/03/2025.…

Computation of "Book Profit" for levy of MAT under section 115JB for A.Y. 2025-26 Particulars Particulars ₹ Net Profit as per Statement of Profit and Loss 26,00,000 Add: Net profit to be increased by the following amounts as per Explanation 1 to section 115JB(2): - Provision for the loss of subsidiary 2,00,000 - Provision for doubtful debts, being the amount set aside as provision for diminution in the value of any asset 2,25,000 - Provision for income-tax 2,50,000 [As per Explanation 2 to section 115JB, income-tax shall include, inter alia, any interest charged under the Act, therefore, whole of the amount of provision for income-tax including - 55,000 towards interest payable has to be added back] - Depreciation 5,20,000 11,95,000 37,95,000 Less: Net profit to be decreased by the following amounts as per Explanation 1 to section 115JB: - Share in income of an AOP as a member 2,50,000 [In a case, where AOP has paid tax on its total income at maximum marginal rate, no income-tax is payable by the company, being a member of AOP, in accordance with the provisions of section 86. Therefore, share in income of an AOP on which no income-tax is payable in accordance with the provisions of section 86, would be reduced while computing book profit, since the same has been credited to profit and loss account] - Income from units in UTI - [Income from units in UTI not to be reduced while computing the book profits, since the same is taxable in the hands of unitholders] - Depreciation other than depreciation on revaluation of assets (₹ 5,20,000 - 3,00,000) 2,20,000 - Unabsorbed depreciation or brought forward business loss, whichever is less, as per the books of account. 5,00,000 [Lower of unabsorbed depreciation - 5,00,000 and brought forward business loss - 9,00,000 as per books of accounts has to be reduced while computing the book profit] 9,70,000 Book Profit 28,25,000 Computation of MAT liability under section 115JB Particulars ₹ 15% of book profit 4,23,750 Add: Health & education cess@4% 16,950 Minimum Alternate Tax liability 4,40,700 Notes: (1) It is only the specific items mentioned under Explanation 1 to section 115JB, which can be adjusted from the net profit as per the Statement of Profit and Loss prepared as per the Companies Act for computing book profit for levy of MAT. Since the following items are not specified thereunder, the same cannot be adjusted for computing book profit: Interest to financial institution (unpaid before filing of return) andPenalty for infraction of law (2) Provision for gratuity based on actuarial valuation is an ascertained liability [CIT v. Echjay Forgings (P) Ltd. (2001) 251 ITR 15 (Bom.)]. Hence, the same should not be added back to compute book profit. (3) As per proviso to section 115JB(6), the profits from unit established in special economic zone cannot be excluded while computing the book profit, and hence, such income would be liable for MAT.