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Illustrations on Minimum Alternate Tax (MAT) under section 115JB

Question No 1
The net profit of ABP Ltd. as per Profit & Loss Account for the previous year 2014-15 is Rs.100 lakhs after
debiting/crediting the following items:
(i)
Provision for income-tax: Rs.15 lakhs
(ii)
Provision for deferred tax: Rs.8 lakhs
(iii)
Proposed Dividend: Rs.20 lakhs
(iv)
Depreciation debited to Profit & Loss Account is Rs.12 lakhs. This includes depreciation on revaluation
of asset to the tune of Rs.2Iakhs.
(v)
Profit from unit established in Special Economic Zone: Rs.30 lakhs
(vi)
Provision for permanent diminution in value of investments: Rs.2 lakhs
Brought forward losses and unabsorbed depreciation as per books of the company are as follows:
Previous
Brought forward loss
Unabsorbed Depreciation
year
(Rs. in lakhs)
(Rs. in lakhs)
2011-12
2
5
2012-13
3
2013-14
10
2
Compute book profit of the company under section 115JB for Assessment Year 2015-16.

Question No 2
The net profit as per the profit and loss account of XYZ Ltd., a resident company, for the year ended 31.3.2015 is
Rs.190 lacs arrived at after making the following adjustments:
(i)
Depreciation on assets Rs. 100 lacs
(ii) Reserve for currency exchange fluctuation Rs. 50 lacs
(iii) Provision for tax Rs. 40 lacs
(iv) Proposed dividend Rs.120 lacs
Following further information are also provided by company:
(a)
Net profit includes Rs.10 lacs received from a subsidiary company.
(b)
Provision for tax includes Rs.16 lacs of tax payable on distribution of profit and of Rs.2 lacs of interest
payable on income-tax.
(c)
Depreciation includes Rs.40 lacs towards revaluation of assets.
(d)
Amount of Rs.50 lacs credited to P & L account was drawn from revaluation reserve.
(e)
Balance of profit and loss account shown in balance sheet at the asset side as at 31.3.2014 was Rs.30
lacs representing unabsorbed depreciation.
Compute the income of the company for the year ended 31.3.2015 liable to tax under MAT.

CA Pinky Agarwal

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Question No 3
Hyper Ltd., engaged in diversified activities, earned a net profit of Rs.14,25,000 after debit/credit of the
following items to its profit and loss account for the year ended on 31.3.2015:
(a)
Items debited to Profit and Loss Account
Rs.
Expenses on Industrial Unit exempt under section 10A
2,10,000
Provision for Loss of Subsidiary
70,000
Provision for Sales Tax Demand (paid before due date)
75,000
Provision for Wealth Tax Demand
90,000
Provision for Income Tax Demand
1,05,000
Expenses on purchase/sale of equity shares
15,000
Depreciation
3,60,000
Interest on deposit credited to buyers on 31.3.2015 for advance received
From them, on which TDS was deposited on 31.7.2015
90,000
(b)
Items credited to Profit and Loss Account
Income on Industrial Unit exempt under section 10A
2,70,000
Profit from 100% EOU under section 10B
60,000
Long term capital gain on sale of equity shares on which securities
Transaction tax was paid
3,60,000
Income from units of UTI
75,000
The company provides the following additional information:
(i)
Depreciation includes Rs.1,50,000 on account of revaluation of fixed assets.
(ii)
Depreciation allowable as per Income-tax Rules is Rs.2,80,000.
(iii)
Brought forward Business Loss/Unabsorbed Depreciation:
F.Y.
Amount as per books
Amount as per Income-tax
Loss
Depreciation
Loss
Depreciation
2010-2011
2,50,000
3,00,000
2,00,000
2,50,000
2011-2012
Nil
2,70,000
1,00,000
1,80,000
2012-2013
3,50,000
3,15,000
1,20,000
2,10,000
You are required to:
(i) compute the total income of the company for the assessment year 2015-16 giving the reasons for
treatment of items and
(ii) examine the applicability of section 115JB of the Income-tax Act, and compute book profit and the tax
credit to be carried forward.

CA Pinky Agarwal

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