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Section 115JB(2D) Adjustment on account of additional income of past years by finance Act 2021 - Income Tax - Ready Reckoner - Income TaxExtract Section 115JB(2D) Adjustment on account of additional income of past years by finance Act 2021 w.e.f. A.Y 2021-22 Reason for Amendment : The computation of book profit u/s 115JB does not provide for any adjustment on account of additional income of past year(s) included in books of account of current year on account of secondary adjustment under section 92CE or on account of an Advance Pricing Agreement (APA) entered with taxpayer under section 92CC . As per the amendment made by FA, 2021 - In case of company, where there is an increase in book profit of current PY due to income of past year or years included in the book profit on account of an Advance Pricing Agreement (APA) u/s 92CC or secondary adjustment u/s 92CE, the AO shall on an application made by the assessee recompute the book profit of past year or years. AO will also compute tax payable by assessee. Notes : For the purpose of rectification u/s 154 , 4 year time limit shall be computed from the end of financial year in which application is made by assessee. Above provision is only applicable if company have not utilized MAT credit arise in earlier years. Above provisions are also applicable for AY 20-21 or earlier years. If any refund arise due to above provision then assessee not entitle for any interest on such refund. The adjustment under the provision is dependent on application by the assessee company. In other words, the company has an option whether to seek the adjustment or not. Rule 10RB : Relief in tax payable u/s 115JB(1) due to operation of section 115JB(2D ) Tax payable by assesee company u/s 115JB(1) for the PY referred to in that section shall be reduced by the following amount, namely :- (A-B) - (D-C), where, A = Tax payable by assessee company u/s 115JB(1) on the book profit of the previous yeart including the past income; B = Tax payable by the assess company u.s 115JB(1) on the book profit of previous year after reducimng the book profit with the past income; C = Aggregate of tax payable by the assessee company u/s 115JB(1) on the book profit of those past year or years to which the past income belongs; D = Aggregate of tax payable by the assessee company u/s 115JB(1) on the book profit of past year or years, referred to in item C, after increasing the book profit with relevant past incomes of such year or years Provided that if the value of (A-B)-(D-C) in the formula is negative, its value shalll be deemed to be zero Notes : For the purposes of section 115JB(1) , past income would be the amount of income of past year or years included in the book profit or the PY on account of an APA entered by the assessee u/s 92CC or on account of Secondary Adjustment required to be made u/s 92CE . On application of provision of Rule 10RB(1) , the tax credit allowed to the assessee u/s 115JAA shall be reduced by the amount which is equal to the amount of reduction that has been allowed under Rule 10RB(1).
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