Page 321 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes 6. Expenditure relatable to Income (eligible for deduction from Book Profit) exempt under
section 10 or 11 or 12,
7. Amount of depreciation, including amount of depreciation on Revalued amount of Fixed
Asset,
8. Amount of deferred tax and the provision thereof,
9. Amount or amounts set aside as provision for diminution in the value of any asset.

Such Net Profit, as increased, shall be reduced by the following amounts only, if credited to the
Profit and Loss Account:
1. Amount withdrawn from Reserves or Provisions from those created before 01.04.1997
without debiting Profit and Loss Account,
2. Amount withdrawn from reserves created on or after 01.04.1997 if such amount was allowed
to be charged to Net Profit for the purpose of Section 115JB or Section 115JA,
3. Income exempt under section 10 [other than 10(38), 10(23G)] or 11 or 12,
4. Amount of Deferred Tax,
5. Amount withdrawn from Revaluation Reserve to the extent it does not exceed the
depreciation on revalued amount of Fixed Asset charged to Profit and Loss Account,
6. Amount of depreciation, excluding amount of depreciation on Revalued amount of Fixed
Asset,
7. Lower of the following:
i. Brought Forward Loss (as per Books) – Loss does not include Depreciation,
ii. Unabsorbed Depreciation (as per Books),

8. Profits eligible for deduction under section 80HHC or 80HHE or 80HHF, up to Assessment
Year 2005–06,
9. Amount of Profits of Sick Industrial Company, during the period of sickness.

Notes The aforesaid computation of Book Profit and Minimum Alternate Tax shall not
affect the determination of the amounts in relation to the relevant previous year to be
carried forward to the subsequent year(s) under the provisions of section 32(2) or of
section 32A (3) or section 72(1) (ii) or section 73 or section 74 or of section 74A (3).

MAT Credit

A new tax credit scheme is introduced by which MAT paid can be carried forward for set-off
against regular tax payable during the subsequent five year period subject to certain conditions,
as under:

When a company pays tax under MAT, the tax credit earned by it shall be an amount which
is the difference between the amount payable under MAT and the regular tax. Regular tax
in this case means the tax payable on the basis of normal computation of total income of
the company.
MAT credit will be allowed carry forward facility for a period of five assessment years
immediately succeeding the assessment year in which MAT is paid. Unabsorbed MAT
credit will be allowed to be accumulated subject to the five year carry forward limit.

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