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2014 (1) TMI 711 - HC - Income TaxDetermination of book profit u/s 115J - Held that:- Following Karnataka Small Scale Industries Development Corporation Ltd., Vs. Commissioner of Income-Tax [2002 (12) TMI 4 - SUPREME Court] - Section 115J, therefore, involves two processes. Firstly, an assessing authority has to determine the income of the company under the provisions of the Income-tax Act. Secondly, the book profit is to be worked out in accordance with the Explanation to section 115J(1) and it is to be seen whether the income determined under the first process is less than 30 per cent of the book profit. Section 115J would be invoked if the income determined under the first section (1) of section 115J gives the definition of 'book profit' by incorporating the requirement of section 25 of the Companies Act in the computation of the book profit. Brought forward loss or unabsorbed depreciation whichever is less would be reduced in arriving at the book profits. Sub-section (2), however, provides that the application of this provision would not affect the carry forward of unabsorbed depreciation, unabsorbed investment allowance, business losses to the extent not set off, and deduction under section 80 J, to the extent not set off as computed under the Income-tax Act - The very object of the provision of section 115J is to tax such companies which are making huge profits and also declaring substantial dividends but are managing their affairs in such a way as to avoid payment of income-tax - Decided in favour of assessee.
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