Amongst the adjustments that have to be made to Net Profit to arrive at Book Profit of a Company, do prior period expenses also have to be added back?
Sonam Bidasaria
(CA)
(770 Points)
Replied 31 March 2012
Prior period exopenses will not have to be added back as it is not covered in the explanation to SEc 115JB
Explanation 51[1].—For the purposes of this section, “book profit” means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by—
(a) the amount of income-tax paid or payable, and the provision therefor; or
(b) the amounts carried to any reserves, by whatever name called 52[, other than a reserve specified under section 33AC]; or
(c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or
(d) the amount by way of provision for losses of subsidiary companies; or
(e) the amount or amounts of dividends paid or proposed ; or
(f) the amount or amounts of expenditure relatable to any income to which 53[section 10 (other than the provisions contained in clause (38) thereof) or 54[***]section 11 or section 12 apply; or]
55[(g) the amount of depreciation,]
56[(h) the amount of deferred tax and the provision therefor,
57[(i) the amount or amounts set aside as provision for diminution in the value of any asset,
if any amount referred to in clauses (a) to (i) is debited to the profit and loss account, and as reduced by,—]]
58[(i) the amount withdrawn from any reserve or provision (excluding a reserve created before the 1st day of April, 1997 otherwise than by way of a debit to the profit and loss account), if any such amount is credited to the profit and loss account:
LIVE Course on Foreign Exchange Management Act (FEMA)(with recording)
LIVE Form 10 B and Form 10BB: Handle Tax Audit Reports of Charitable Organizations(with recording)
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