Computation of book profits under section 115J of the Income-tax Act, 1961--Effect of clause (iii) of the ^Explanation^ under section 115J

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ief Commissioners of Income-tax All Directors-General of Income-tax. Sir, Clause (iii) of the Explanation under section 115J, which was inserted by the Direct Tax Laws (Amendment) Act, 1989, with effect from assessment year 1989-90, provides for a deduction from the book-profits attributable to a business, the profits from which are eligible for deduction under section 80HHC or 80HHD. It als .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... f the Board's Circular No. 559 dated 4-5-1990 (see [1990] 184 ITR (St.) 91), that the intention behind introduction of the said Explanation was to ensure that the provisions of section 115J, which provided for a tax on the book-profits, did not take away the 100 per cent. exemption which was to be allowed in respect of export profits and the profits from tourism-related industry. It was also state .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... that it is only the manner of computation specified in section 80HHC(3) or (3A) or 80HHD, and not the amounts themselves, that should be imported into Explanation (iii) under section 115J. 3. Accordingly, the deduction contemplated under Explanation (iii) to section 115J should be computed according to the following steps :_ (i) it should be first decided whether the assessee carries on a busi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ssessee as required under section 80HHC(3A)(b) or, as the case may be, the proportion of the receipts specified in section 80HHD(2) to the total receipts of the business carried on by the assessee should be determined and the said proportion should be applied to the amount arrived at (ii) above to determine the quantum of deduction under section 115J. 4. This may be brought to the notice of all .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X