Sec. 115JB: This Sec. provides that if the
income tax payable on the total income of a Company is less that
18.5% of its book profit then, the book profit shall be deemed to
be the total income of the Company and income tax @ 18.5% shall be
payable on the same.
An amendment has been introduced whereby every assessee Company
shall prepare its profit and loss accounts in accordance with Part
II of Schedule IV to the Companies Act, 1956 and not Part II and
III of Schedule IV as was previously provided.
The amendment also states that any insurance or a banking
company or any company engaged in the generation or supply of
electricity (Sec. 211 Company), shall prepare its profit and loss
accounts in accordance with the provisions of the Act governing
such a Company.
Further, the insertion of Explanation 1 (j) provides that where
the amount standing in the revaluation reserve on the sale of the
revalued asset, has not been credited to the Profit and loss
account, such amount shall be added to the net profit for the
purposes of computation of book profit.
Previously, if the assessee revalued the asset and sold the
asset, the difference between the original cost and revaluation
amount was not added to the book profits. Therefore, the assessee
could revalue the asset and sell it at the revalued price thereby
incurring no gain in book profits and avoiding MAT thereon.
However, after the amendment MAT will be payable on the increase in
value caused by revaluation on the transfer of asset.
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Recently the Delhi High Court's in the case of CUB Pty Ltd granted relief to multinationals licensing and registering their intellectual property in India and held that the situs of an intangible asset like IPRs, shall be the situs of the owner of such asset.
Mumbai Income Tax Appellate Tribunal in the case of Praful Chandaria, dealt with the issue of taxability of consideration received by the assessee pursuant to grant of call option in respect of shares of an Indian company.
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