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20. Amendment of section 115JB. |
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—In section 115JB of the Income-tax Act, after sub-section (2),—
(a) the Explanation shall be numbered as Explanation 1 and in Explanation 1 as so numbered, after clause (g), for the portion beginning with the words "if any amount referred" and ending with the words "as reduced by—", the following shall be substituted and shall be deemed to have been substituted with effect from the 1st day of April, 2001, namely:—
"(h) the amount of deferred tax and the provision therefor,
if any amount referred to in clauses (a) to (h) is debited to the profit and loss account, and as reduced by—’’;
(b) after Explanation 1 as so numbered, the following shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2001, namely:—
"Explanation 2.— For the purposes of clause (a) of Explanation 1, the amount of income-tax shall include—
(i) any tax on distributed profits under section 115-O or on distributed income under section 115R;
(ii) any interest charged under this Act;
(iii) surcharge, if any, as levied by the Central Acts from time to time;
(iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and
(v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time.".
Clause 20 seeks to amend section 115JB of the Income-tax Act, which relates to special provision for payment of tax by certain companies.
The said section provides that in the case of a company, if the tax payable on the total income, as computed under the Income-tax Act in respect of any previous year is less than seven and- a-half per cent. of its book profit (ten per cent. for previous year relevant to assessment year 2007-08 and onwards), such book profit shall be deemed to be the total income of the assessee and the tax payable for the relevant previous year shall be seven and-a-half per cent. (ten per cent. for previous year relevant to assessment year 2007-08 and onwards) of such book profit. Sub-section (2) deals with the preparation of profit and loss account. As per the Explanation after sub-section (2), the expression "book profit" means the net profit as shown in the profit and loss account prepared in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 as increased or reduced by certain adjustments, as specified in that section. Clause (a) of the aforesaid Explanation, inter alia, provides that the book profit shall be increased by the amount of income-tax paid or payable and the provision therefor, if debited to profit and loss account.
It is proposed to number the Explanation of section 115JB as Explanation 1 and insert a new clause after clause (g) of the Explanation 1 as so numbered so as to provide that the book profit shall be increased by the amount of deferred tax and the provision therefor, if debited to profit and loss account.
Further it is proposed to insert a new Explanation after Explanation 1 so as to provide that for the purposes of clause (a) of the Explanation 1 the amount of income-tax shall include,—
(i) tax on distributed profits or on distributed income under section 115-O or section 115R, respectively ;
(ii) any interest charged under this Act ;
(iii) surcharge, if any, as levied by the Central Acts from time to time ;
(iv) Education Cess on income-tax, if any, levied by the Central Acts from time to time ; and
(v) Secondary and Higher Education Cess on income-tax, if any, levied by the Central Acts from time to time.
These amendments will take effect retrospectively from 1st April, 2001 and will accordingly apply in relation to the assessment year 2001-02 and subsequent assessment years.
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