Abdul raheem: M.E

ASSIGNMENT NO: 2

MINIMUM ALTERNATE TAX

Introduction:-Law makers observed that there is many companies which are disclosing massive profit in the accounts as laid in the Annual General Meeting (AGM) before the shareholder but at the same time these companies also showing profit nil or bit above nil for the income tax purpose. Variance between profits as per the Companies Act and as per Income Tax Act was due to many dissimilar allowance of disallowance in the both Acts e.g. difference in method and rate of depreciation provided in both Acts

To put an end on this trend and bring these kind of companies under the tax net, law maker framed concept of MAT, according to this concept corporate entity has to pay minimum tax. The concept of MAT is govern by the provisions contains in section 115JB of Income Tax Act, 1961.
Applicability of MAT:-MAT is applicable to all companies including the foreign companies.
Analysis of provision of section 115JB:- Where in case of a company, the income tax payable on the total income as computed under the income tax act in respect of any previous year is less than 18.5% of its BOOK PROFIT, then such book profit shall be deemed to be the total income of the assessee and the tax payable on such total income shall be the amount of income tax at the rate of 18.5%. This income tax is, further has to be enhance by surcharge (as applicable) and education cess (@3%).
In the simple words every company has to compute its income tax liability as per two sets of provisions. The set of provisions which results in higher income tax liability become the income tax payable. Followings are the two set of provisions:
1). Income tax computed as per normal provisions of income tax act.
2). Income tax computed as per provision of section 115JB of income tax act.
Meaning of Book Profit:-Book Profit is defined in the explanation 1 to section 115JB as book profit means the net profit as shown in the profit & loss account for the relevant previous year and as increased and decreased by some prescribed items.
In simple words to compute book profit, we have to take profit & loss account and make some prescribed additions and deletions to it.
Before going to analysis prescribed additions and deletions, we must understand the meaning of “Profit & Loss Account”.
Meaning of profit & loss account for the purpose of book profit:-As per sub-section (2) of section 115JB:-
1). Assessee being a company on which the proviso to sub-section (2) of section 211 of the companies act, 1956 is applicable, shall for the purpose of section 115JB, prepare profit & loss account for the relevant previous year in accordance with the provisions of Act governing such company. (However, proviso to sub-section (2) of section 211 of the companies act, 1956 is applicable on Electricity, Insurance & Banking companies, these company is required to follows the provisions of governing laws for the purpose of making profit & loss account.)
2). Assessee being a company other than a company refer above in (1), shall, for the purpose of section 115JB, prepare the profit & loss account in accordance with provision of part-II of schedule-VI to the Companies Act, 1956.
While preparing the profit & loss account for the purpose of book profit and for the purpose of laying accounts before the company at its AGM, following shall be same:-
1). The accounting polices
2). The accounting standards
3). The method & rates of depreciation.
Analysis of prescribed additions and deletion to the net profit as shown in the profit & loss account:-Explanation 1 to sub-section (2) of section 115JB prescribed some items which has to be added or deleted from the net profit as shown in the profit and loss account.
1). Additions to net profit: Where followings amount (form I to IX) debited to profit & loss account:-

Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
Provision for loss of subsidiary companies
Amount of dividends paid or proposed.
Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
Amount of depreciation (including depreciation on account of revaluation of asset).
Amount of deferred tax and provision therefor.
Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

Analysis of amendment proposed by Finance Bill-2015:- Finance Bill-2015 brings amendments in explanation-1 to sub-section (2) of section 115JB through clause-29 of the bill, as follows:-
1). Additions to net profit: Where followings amount (form I to IX) debited to profit & loss account:-

1. the amount or amounts of expenditure relatable to, income, being share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86.

In simple words, assessee is not liable to pay MAT on share in the income of AOP/BOI on which no income tax is payable u/s 86.

2. the amount or amounts of expenditure relatable to income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992.

In Simple words, now FII is not liable to pay MAT on capital gain arising on transaction in securities, however, they are liable to pay MAT on short term capital gain arising on transaction in securities on which STT is not chargeable.

2). Deletion to net profit:

the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any such amount is credited to the profit and loss account
the amount of income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, if any such amount is credited to the profit and loss account.

MAT Credit: – When any amount of tax is paid as MAT by an assessee being a company, then, credit in respect of tax so paid shall be allowed to him in accordance with the provision of section 115JAA.
1). Allowable Tax Credit = Difference of MAT paid and income tax payable under normal provision of Income tax Act, 1961.
(However, no interest shall be paid on this Tax credit by the revenue.)
2). Such tax credit shall be carry forward for 10 assessment year immediately succeeding the assessment year in which such credit is become allowable.
3). Tax credit shall be allowed set off in a year when tax becomes payable on the total income in accordance with the normal provisions of the Act.
4). Set off shall be allowed to the extent of difference between tax on the total income (under normal provision) and tax which would have been payable u/s 115JB for that assessment year.
Applicability of other provisions of Income tax Act:-Section 115JB(5) states that save as otherwise provided in this section, all other provisions of this act shall apply to every company, mentioned in this section.
Therefore the company to which MAT applies shall be liable to pay Advance Tax, interest u/s 234A, 234B & 234C. The company shall also be liable to pay penalty for concealment of income.
Furnishing of the Report:-Every company to which this section applies shall furnish a report from a Chartered Accountant in the Form-29B certifying that the book profit has been computed in accordance with the provisions of the section 115JB and such report shall be furnished along with the return of income.
- See more at: http://taxguru.in/income-tax/minimum-alternate-tax-mat-115jb-income-tax-act-1961.html#sthash.nMEQmJ6K.dpuf

Introduction:-Law makers observed that there is many companies which are disclosing massive profit in the accounts as laid in the Annual General Meeting (AGM) before the shareholder but at the same time these companies also showing profit nil or bit above nil for the income tax purpose. Variance between profits as per the Companies Act and as per Income Tax Act was due to many dissimilar allowance of disallowance in the both Acts e.g. difference in method and rate of depreciation provided in both Acts.

Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
Provision for loss of subsidiary companies
Amount of dividends paid or proposed.
Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
Amount of depreciation (including depreciation on account of revaluation of asset).
Amount of deferred tax and provision therefor.
Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

In simple words, assessee is not liable to pay MAT on share in the income of AOP/BOI on which no income tax is payable u/s 86.

2). Deletion to net profit:

the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any such amount is credited to the profit and loss account
the amount of income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, if any such amount is credited to the profit and loss account.

Applicability of MAT:-MAT is applicable to all companies including the foreign companies.

Analysis of provision of section 115JB:- Where in case of a company, the income tax payable on the total income as computed under the income tax act in respect of any previous year is less than 18.5% of its BOOK PROFIT, then such book profit shall be deemed to be the total income of the assessee and the tax payable on such total income shall be the amount of income tax at the rate of 18.5%. This income tax is, further has to be enhance by surcharge (as applicable) and education cess (@3%).

In the simple words every company has to compute its income tax liability as per two sets of provisions. The set of provisions which results in higher income tax liability become the income tax payable. Followings are the two set of provisions:

1). Income tax computed as per normal provisions of income tax act.

2). Income tax computed as per provision of section 115JB of income tax act.

Meaning of Book Profit:-Book Profit is defined in the explanation 1 to section 115JB as book profit means the net profit as shown in the profit & loss account for the relevant previous year and as increased and decreased by some prescribed items.

In simple words to compute book profit, we have to take profit & loss account and make some prescribed additions and deletions to it.

Before going to analysis prescribed additions and deletions, we must understand the meaning of “Profit & Loss Account”.

Meaning of profit & loss account for the purpose of book profit:-As per sub-section (2) of section 115JB:-

1). Assessee being a company on which the proviso to sub-section (2) of section 211 of the companies act, 1956 is applicable, shall for the purpose of section 115JB, prepare profit & loss account for the relevant previous year in accordance with the provisions of Act governing such company. (However, proviso to sub-section (2) of section 211 of the companies act, 1956 is applicable on Electricity, Insurance & Banking companies, these company is required to follows the provisions of governing laws for the purpose of making profit & loss account.)

2). Assessee being a company other than a company refer above in (1), shall, for the purpose of section 115JB, prepare the profit & loss account in accordance with provision of part-II of schedule-VI to the Companies Act, 1956.

While preparing the profit & loss account for the purpose of book profit and for the purpose of laying accounts before the company at its AGM, following shall be same:-

1). The accounting polices

2). The accounting standards

3). The method & rates of depreciation.

Analysis of prescribed additions and deletion to the net profit as shown in the profit & loss account:-Explanation 1 to sub-section (2) of section 115JB prescribed some items which has to be added or deleted from the net profit as shown in the profit and loss account.

1). Additions to net profit: Where followings amount (form I to IX) debited to profit & loss account:-

Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
Provision for loss of subsidiary companies
Amount of dividends paid or proposed.
Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
Amount of depreciation (including depreciation on account of revaluation of asset).
Amount of deferred tax and provision therefor.
Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

Analysis of amendment proposed by Finance Bill-2015:- Finance Bill-2015 brings amendments in explanation-1 to sub-section (2) of section 115JB through clause-29 of the bill, as follows:-

1). Additions to net profit: Where followings amount (form I to IX) debited to profit & loss account:-

In simple words, assessee is not liable to pay MAT on share in the income of AOP/BOI on which no income tax is payable u/s 86.

2). Deletion to net profit:

the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any such amount is credited to the profit and loss account
the amount of income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, if any such amount is credited to the profit and loss account.

1). Allowable Tax Credit = Difference of MAT paid and income tax payable under normal provision of Income tax Act, 1961.

(However, no interest shall be paid on this Tax credit by the revenue.)

2). Such tax credit shall be carry forward for 10 assessment year immediately succeeding the assessment year in which such credit is become allowable.

3). Tax credit shall be allowed set off in a year when tax becomes payable on the total income in accordance with the normal provisions of the Act.

4). Set off shall be allowed to the extent of difference between tax on the total income (under normal provision) and tax which would have been payable u/s 115JB for that assessment year.

Applicability of other provisions of Income tax Act:-Section 115JB(5) states that save as otherwise provided in this section, all other provisions of this act shall apply to every company, mentioned in this section.

Therefore the company to which MAT applies shall be liable to pay Advance Tax, interest u/s 234A, 234B & 234C. The company shall also be liable to pay penalty for concealment of income.

Furnishing of the Report:-Every company to which this section applies shall furnish a report from a Chartered Accountant in the Form-29B certifying that the book profit has been computed in accordance with the provisions of the section 115JB and such report shall be furnished along with the return of income.

Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
Provision for loss of subsidiary companies
Amount of dividends paid or proposed.
Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
Amount of depreciation (including depreciation on account of revaluation of asset).
Amount of deferred tax and provision therefor.
Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

In simple words, assessee is not liable to pay MAT on share in the income of AOP/BOI on which no income tax is payable u/s 86.

2). Deletion to net profit:

the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any such amount is credited to the profit and loss account
the amount of income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, if any such amount is credited to the profit and loss account.

Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
Provision for loss of subsidiary companies
Amount of dividends paid or proposed.
Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
Amount of depreciation (including depreciation on account of revaluation of asset).
Amount of deferred tax and provision therefor.
Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

In simple words, assessee is not liable to pay MAT on share in the income of AOP/BOI on which no income tax is payable u/s 86.

2). Deletion to net profit:

the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any such amount is credited to the profit and loss account
the amount of income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, if any such amount is credited to the profit and loss account.

Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
Provision for loss of subsidiary companies
Amount of dividends paid or proposed.
Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
Amount of depreciation (including depreciation on account of revaluation of asset).
Amount of deferred tax and provision therefor.
Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

In simple words, assessee is not liable to pay MAT on share in the income of AOP/BOI on which no income tax is payable u/s 86.

2). Deletion to net profit:

the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any such amount is credited to the profit and loss account
the amount of income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, if any such amount is credited to the profit and loss account.

Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
Provision for loss of subsidiary companies
Amount of dividends paid or proposed.
Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
Amount of depreciation (including depreciation on account of revaluation of asset).
Amount of deferred tax and provision therefor.
Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

In simple words, assessee is not liable to pay MAT on share in the income of AOP/BOI on which no income tax is payable u/s 86.

2). Deletion to net profit:

the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any such amount is credited to the profit and loss account
the amount of income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, if any such amount is credited to the profit and loss account.

Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
Provision for loss of subsidiary companies
Amount of dividends paid or proposed.
Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
Amount of depreciation (including depreciation on account of revaluation of asset).
Amount of deferred tax and provision therefor.
Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

In simple words, assessee is not liable to pay MAT on share in the income of AOP/BOI on which no income tax is payable u/s 86.

2). Deletion to net profit:

the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income-tax is payable in accordance with the provisions of section 86, if any such amount is credited to the profit and loss account
the amount of income from capital gains arising on transactions in securities (other than short term capital gains arising on transactions on which securities transaction tax is not chargeable), accruing or arising to an assessee being a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, if any such amount is credited to the profit and loss account.

ASSIGNMENT NO: 1

SMART CITIES MISSON OF INDIA

Everything you wanted to know about Narendra Modi's 100 smart cities

From the very beginning of his election campaign, Prime Minister Narendra Modi has spoken about building 100 smart cities in India. The promise has always been part of the great Modi vision to make this India's century, alongside bullet trains, linked rivers and bringing back black money. But not much had been done, with only Rs 7,000 crore allocated to the smart cities in this year's budget and a tiny fraction of that spent.

On Wednesday, the Union Cabinet finally took the bull by the horns. It cleared an approval for Rs 48,000 crore to be allocated to the Smart Cities Mission, with Rs 100 crore to be given to each city per year for the next five years. That represents a huge investment in urban renewal overall, although a relatively small amount per city, making it clear that the government still expects most of the real financial support for smart cities to come from private sources. Reports suggest the government plans to begin with shortlisting 20 cities.

And since it first spoke about smart cities in last year's interim budget, the government has made some progress on defining what it means with the project.

What are smart cities?
There’s no simple definition for smart cities. The term encompasses a vision of an urban space that is ecologically friendly, technologically integrated and meticulously planned, with a particular reliance on the use of information technology to improve efficiency. In most parts of the world, the idea begins with using digital technology to make a city more efficient and to improve wellbeing.

The Modi government's idea is a little different. The government's reference note for Members of Parliament on the issue actually offers a fairly simple definition: "Smart Cities are those that are able to attract investments." Everything else, such as good infrastructure and simple processes that make it easy to start and run businesses, follow from this.

What is smart about them?
Traditional ideas of smart cities suggest lots of data collection, using sensors – electricity, gas, water, traffic and other government analytics – that can be carefully compiled and integrated into a smart grid and then fed into computers that can focus on making the city as efficient as possible.

The Modi government is going a bit broader with its concept of a smart city, to basically mean any city that works well, especially for businesses. Admitting that it is hard to define smart cities, the ministry of urban development's concept note from last November on the issue still attempts to do so.

Source: Ministry of Urban Development

"Smart Cities are those that are able to attract investments and experts & professionals. Good quality infrastructure, simple and transparent online business and public services processes that make it easy to practice one’s profession or to establish an enterprise and run it efficiently without any bureaucratic hassles are essential features of a citizen centric and investor-friendly smart city," the note said.

Why do we need them?
India’s is urbanising at an unprecedented rate, so much that estimates suggest nearly 600 million of Indians will be living in cities by 2030, up from 290 million as reported in the 2001 census.

Source: Ministry of Urban Development

Alongside the hordes of Indians go the jobs and the money as well: a McKinsey Global Institute study estimated that cities would generate 70% of the new jobs created by 2030, produce more than 70% of the Indian gross domestic product and drive a fourfold increase in per capita income across the country.

“The cost of not paying attention to India’s cities is enormous,” the McKinsey report said. “The speed of urbanisation poses an unprecedented managerial and policy challenge – yet India has barely engaged in a national discussion about how to handle the seismic shift in the makeup of the nation.”

Are they going to be new cities?
In his budget speech last year, Jaitley listed out exactly why the government believes it needs to be spending money on 100 smart cities. He claimed that “unless new cities are developed to accommodate the burgeoning number of people, the existing cities would soon become unlivable.”

But the government isn't going to be building entirely new cities with Rs 100 crore each. Instead, the money will mostly be spent on upgrading existing facilities, since the very selection process requires current cities to prove that they are eligible. States could potentially suggest areas that are going to be built up as options for the smart city mission – Andhra Pradesh's new capital for example – but most will come from existing cities.

Which cities have been picked and how ?
The Lok Sabha reference note suggests one satellite city for each of India's metros, all state capitals, all cities in the population range of 1-4 million or more, and few others including those of tourist and religious importance.

The Cabinet's note explains that the cities will be picked based on a City Challenge Competition, with the aim of financing those that have shown the potential to fulfill the mission's objectives. "Each state will shortlist a certain number of smart city aspirants as per the norms to be indicated and they will prepare smart city proposals for further evaluation for extending Central support," the cabinet note said. Reports suggest that the government will first begin with shortlisting 20 cities.

How will the government turn them smart?
The cabinet note focuses on retrofitting, redevelopment, pan-city initiatives and development of new cities. It also gave a few examples.

"Under retrofitting, deficiencies in an identified area will be addressed through necessary interventions as in the case of Local Area Plan for downtown Ahmedabad. Redevelopment enables reconstruction of already built-up area that is not amenable for any interventions, to make it smart, as in the case of Bhendi Bazar of Mumbai and West Kidwai Nagar in New Delhi. Pan-city components could be interventions like Intelligent Transport Solutions that benefits all residents by reducing commuting time," it said.

Who will pay for them?
Rs 100 crore per city will clearly not be enough, and even if more is added, it’s unlikely the government will have the resources to pay for the cities. In the budget last year, the government announced that it was relaxing norms for foreign direct investment to make it easier for outside companies to invest in smart cities. The Cabinet note also mentions that it expects Special Purpose Vehicles to be set up for smart cities by each state, which will ensure their financing. In addition, India has spoken to France, Japan and Singapore and other countries about collaborating on the projects.

What about those cities that don’t make the cut?
At a meeting regarding the smart cities in June 2014, the urban development ministry secretary said that the focus will not be just 100 cities but all urban areas across the country. “There exists no valid reason to leave the 101st city in the process of development,” he said. Those will not, however, be eligible for central funds under the Smart City Mission.

Do we have any smart cities already (and who is building them)?
A quick Google search for India’s “first smart city” produces more than 70,000 results, and many of them lead to different places.

In Bangalore, Cisco is working to set up a smart grid-based Education City, where all the utilities will be integrated with data. Outside Mumbai, the Lodha group has given IBM a contract to build all data systems in their Palava city project. Kochi has a special economic zone that seeks to replicate Dubai’s smart city project. Gujarat has two projects, the Dholera urban area, which is part of the Delhi-Mumbai industrial corridor, and the Gujarat International Finance Tec-City, both of which have problems but are being touted as examples that could be scaled up across the country.

Abdul raheem

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