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MAT - Computation of Book Profits - Additions - Explanation 1 - Income Tax - Ready Reckoner - Income TaxExtract For the purposes of this section, book profit means the profit as shown in the statement profit and loss account for the relevant previous year prepared as per sub-section (2) above, as increased by the following amounts if following amounts are DEBITED TO PROFIT LOSS ACCOUNT the amount of income tax paid or payable, and the provision thereof; TO BE ADDED NOT TO BE ADDED Income Tax Wealth Tax DDT under section 115-O Securities transaction Tax Interest under Income tax Act. Interest under Wealth Tax Act and other Acts Surcharge and Education Cess Penalties Commodities Transaction Tax the amounts carried to any reserves by whatever name called (other than the reserve specified u/s 33AC ) Transfer to reserves as per any statue is to be added back. Excess provisions are reserves and are to be added back. Transfer to reserves under section 10AA , 80IA , etc. shall be added back. the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; (that means provisions made to meet unascertained liabilities); TO BE ADDED NOT TO BE ADDED Provision for leave encashment/ warranty on adhoc basis Provision for leave encashment/ warranty on scientific basis Provision for gratuity on adhoc basis Provision for gratuity on basis of Actuary Provision for losses, contingencies Bad Debts written off. the amount by way of provision for losses of subsidiary companies; Even the actual loss of the subsidiary company debited to Profit Loss Account shall be added back for computing book profits. the amount or amounts of dividend paid or proposed; the amount or amounts of expenditure relatable to any income to which section 10 (other than provisions contained in section 10(38) thereof) or section 11 or section 12 apply: The expenditure incurred on following income is to be added back: Income exempt under section 10 except 10(38) Income exempt under section 11 12 the amount of depreciation (entire depreciation including depreciation on revalued assets). the amount of deferred tax and provision thereof. the amount or amounts set aside as provision for diminution in the value of any asset, the amount or amounts of expenditure relatable to income by way of royalty in respect of patent chargeable to tax under section 115BBF (Inserted by FA, 2016 , w.e.f. 1-4-2017) Any Expenditure related to share in the income of AOP/BOI. Any expenditure related to the income to foreign company i.e. from capital gain on securities or Interest, dividend, royalty or fees for technical services. (if tax rate on above income is less than MAT rate 15%.) Any notional los on exchange on share os SPV with units of Buiness Trust or notional loss due to change in carrying amount of units or loss on transfer of units. Amount of actual gain on transfer of units of business trust. (Selling price of units - Cost of shares of SPV) The following shall be added back while computing the Book profits: Provision for bad and doubtful debts as it amounts to provision for diminution in value of assets, namely, debtors. Provision for diminution in value of any investment or asset as per AS-13 / AS-28 . the amount standing in revaluation reserve relating to revalued asset on the retirement or disposal of such asset, if such amount is not credited to the Profit Loss Account. Amount of income/ loss in the case of units referred to in Section 47(xvii)
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