14 December 2013
‘Book profit’ = Net Profit as per profit & loss account add Adjustments of Step I less Adjustments of Step II
Step I: Positive adjustments in net profit to compute "book profit": a) the amount of income-tax paid or payable and its provision; b) the amount carried to any reserves, other than a reserve specified under section 33AC; c) the amount set aside for meeting unascertained liabilities; d) the provision for losses of subsidiary companies; e) dividends paid or proposed; f) the expenditure relatable to any income exempt under Sec. 10 [other than Sec. 10(38)], Sec. 11 or Sec. 12; g) the amount of depreciation; h) deferred tax liability created during the year; i) the provision for diminution in the value of any asset; or j) the amount standing in revaluation reserve relating to revalued asset on the retirement or disposal of such asset.
14 December 2013
Step II: Negative adjustments in net profit to compute "book profit": a) the amount withdrawn from any reserve or provision, if credited to the profit and loss account. Provided that the book profit of earlier years have also been increased by those reserves or provisions in the year of creation; b) income exempt under Sec. 10 [other than Sec. 10(38)], Sec. 11 or Sec. 12 c) the amount of depreciation debited to the profit and loss account (excluding depreciation on account of revaluation of assets); d) the amount withdrawn from revaluation reserve and credited to the profit and loss account, to the extent it does not exceed the amount of depreciation on account of revaluation of assets as referred above; e) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account; f) the amount of profits of sick industrial company unless the entire net worth of such company becomes equal to or exceeds the accumulated losses; or g) deferred tax asset recognised during the year.
14 December 2013
Step II: Negative adjustments in net profit to compute "book profit": a) the amount withdrawn from any reserve or provision, if credited to the profit and loss account. Provided that the book profit of earlier years have also been increased by those reserves or provisions in the year of creation; b) income exempt under Sec. 10 [other than Sec. 10(38)], Sec. 11 or Sec. 12 c) the amount of depreciation debited to the profit and loss account (excluding depreciation on account of revaluation of assets); d) the amount withdrawn from revaluation reserve and credited to the profit and loss account, to the extent it does not exceed the amount of depreciation on account of revaluation of assets as referred above; e) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account; f) the amount of profits of sick industrial company unless the entire net worth of such company becomes equal to or exceeds the accumulated losses; or g) deferred tax asset recognised during the year.
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