(1)(a) Irrespective of anything contained in any other provision of this Act, where in the case of an assessee being a company, the income-tax payable on the total income as computed under this Act for a tax year is less than the minimum alternate tax payable for such tax year, then— (i) the book profit shall be deemed to be the total income of that assessee for such tax year; and (ii) the assessee shall be liable to pay income-tax equal to the minimum alternate tax. (b) For the purposes of clause (a), the expressions “minimum alternate tax” means the amount of tax computed on the book profit— (i) in case of a company being a unit located in an International Financial Services Centre and deriving its income solely in convertible foreign exchange, at the rate of 9%; (ii) in case of any other company, at a rate of 15%. (c) For the purposes of this section, “book profit” means the profit as shown in the statement of profit and loss for the relevant tax year prepared as per clause (f), as increased by— (i) income-tax paid or payable and the provision therefor, if any such amount is debited to the statement of profit and loss, where income-tax shall include— (A) any interest charged under this Act; (B) surcharge, if any, as levied under the Central Acts; (C) Education Cess on income-tax, if any, as levied under the Central Acts; and (D) Secondary and Higher Education Cess on income-tax, if any, as levied under the Central Acts; (ii) the amounts carried to any reserves, called by any name, if any such amount is debited to the statement of profit and loss; (iii) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities, if any such amount is debited to the statement of profit and loss; (iv) the amount by way of provision for losses of subsidiary companies, if any such amount is debited to the statement of profit and loss; Direct Taxes Committee 2 94
(v) dividends paid or proposed, if any such amount is debited to the statement of profit and loss; (vi) expenditure relatable to any income to which provisions of section 11 apply or any expenditure out of regular income of a registered non-profit organisation referred in section 335, if any such amount is debited to the statement of profit and loss; (vii) depreciation, if any such amount is debited to the statement of profit and loss; (viii) deferred tax and the provision therefor, if any such amount is debited to the statement of profit and loss; (ix) the amount or amounts set aside as provision for diminution in the value of any asset, if any such amount is debited to the statement of profit and loss; (x) the amount standing in revaluation reserve relating to revalued asset on the retirement or disposal of such asset, if any such amount is not credited to the statement of profit and loss, and as reduced by— (xi) The amount withdrawn from any reserve or provision (excluding a reserve created before the 1st April, 1997 otherwise than by way of a debit to the statement of profit and loss), where,–– (A) any such amount is credited to the statement of profit and loss; and (B) the book profit of such year has been increased by those reserves or provisions out of which the said amount was withdrawn; (xii) income to which any of the provisions of section 11 apply or any regular income of a registered non-profit organisation referred in section 335, if any such amount is credited to the statement of profit and loss; (xiii) depreciation debited to the statement of profit and loss excluding the depreciation on account of revaluation of assets; (xiv) the amount withdrawn from revaluation reserve and credited to the statement of profit and loss, to the extent it does not exceed depreciation on account of revaluation of assets referred to in sub-clause (xiii); (xv) deferred tax, if any such amount is credited to the statement of profit and loss; (xvi) loss brought forward (excluding depreciation) or unabsorbed depreciation, whichever is less, as per books of account, except, where either of such amount is nil, in case of a company other than the company referred to in clause (d)(vi) and (vii), Direct Taxes Committee 2 95
and as further adjusted by the amounts referred to in clause (d).