Comments on: We have made a capital profit of Rs. 10 crores. Can we exclude it from MAT book profits for s. 115JB?

By: vinita

vinita — Tue, 06 Dec 2011 07:31:44 +0000

What would be the case if there was a brought forward LTCL from earlier years which could wipe off LTCG during the concerned financial year. Then if we include capital recipt in book profit and tax under 115JB , then the benifit of set off under Section 74 would be effectively lost for that year, which is very unfair to assessee. Surely this cannot be the intent of Section 115JB. Infact even subclause 3 of Section 115JB implies that the right would continue. Kindly provide your view on this.

By: Atul T Suraiya

Atul T Suraiya — Tue, 16 Aug 2011 11:53:19 +0000

The write off of a term loan should be correctly entered in the books. The prinicpal amount written off would be set off against the principal liability. The interest amount should be written off thru the P&L account and that would be taxable u/s 41(1).

By: Pawan Singla

Pawan Singla — Thu, 23 Jun 2011 12:42:48 +0000

Yes. There is latest direct judgement on the issue.The provisions of sec. 115JB have become a bit complicated. There are divergent opininon on the certain issue.

By: nikhil porwal

nikhil porwal — Mon, 31 Jan 2011 15:15:14 +0000

DOES THIS MEAN THAT A WRITE OFF OF A TERM LOAN ON A ONE TIME SETTLEMENT OF A TERM LOAN (NOT A WORKING CAPITAL LOAN) WITH THE BANK IF WHICH IS CREDITED TO THE PROFIT & LOSS ACCOUNT WILL ALSO ATTRACT THE PROVISIONS OF II5JB? WHEN THE NATURE OF THE INCOME ITSELF IS NOT THAT BEING AN INCOME HOW CAN IT BE TAXED? PLEASE CLARIFY

By: VEERAMANI

VEERAMANI — Sun, 10 Oct 2010 05:13:37 +0000

Capital gains is brought to tax by a deeming provision. The capital gains is not in the nature of income and hence the deeming provision was necessary.

The ICAI in its wisdom said Capital gains is to be treated as income and should be credited to Profit & Loss a/c. Deeming provision should be limited to taxing it under the head Capital Gains. I do not know whether the capital gains could be even if credited to Capital reserve could be taxed under 115JB if one views that the Capital Gains is not in the nature of income as such. If one looks at share premium this also could be taxed under sec.115JB if Capital Gains is to be credited to Profit & Loss a/c

By: Venkatraman Shrinivas.

Venkatraman Shrinivas. — Wed, 30 Jun 2010 07:25:57 +0000

The profit of the year after making appropriation towards dividends etc,., has necessarily to be transferred to General Reserve., without transferring them to reserved (general unless such transfer is supported by any resolution as intended for any specific purpose) There is no option to carry forward, ass it is without a transfer to reserve. Of-course reserves can be kept for certain years unless it is intended for any specific purpose like statutory reqwuirement such as replacement of assets., or devedlopmental work Otherwise it is mandated that such surplus would need to be declared as dividend to equity share holders.

By: virupakshi A

virupakshi A — Wed, 02 Jun 2010 14:45:06 +0000

For how many years a pvt ltd company can carried forward their profit/surplus in their profit & loss a/c without transferring to General Reserve a/c.

Please reply to my query