Income Tax Act

Official PDF pages 271–275

SOURCE PDF PAGE 271
( ii )   “permitted machinery and plant used outside India” means the
machinery or plant, which was previously used outside India by
any other person, if the following conditions are fulfilled:—
( A )   such machinery or plant was not, at any time previous to the
date of the installation, used in India;
( B )   such machinery or plant is imported into India from any
country outside India; and
( C )   no deduction on account of depreciation in respect of such
machinery or plant has been allowed or is allowable under
the provisions of this Act in computing the total income of
any person for any period before the date of installation of
machinery or plant by the person;
( iii )   “unabsorbed depreciation” shall have the meaning assigned to it
in section 116(13)( e ); and
( iv )   “Unit”shall have the same meaning as assigned to it in section 2( zc )
of the Special Economic Zones Act, 2005 (28 of 2005).
D.—Special provisions relating to minimum
alternate tax and alternate minimum tax
Special provision for minimum alternate tax and alternate minimum tax
206.   (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 pay -
able 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  
28
[ 14% ] .
( 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;
28.   Substituted for “15%” by the Finance Act, 2026, w.e.f.   1-4-2026 .

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( 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 liabil -
ities, 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;
( v )   dividends paid or proposed, if any such amount is debited to the state -
ment 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
59
, 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 );

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SOURCE PDF PAGE 273
( xv )   deferred tax, if any such amount is credited to the statement of profit
and loss;
( xvi )   loss brought forward (excluding depreciation) or unabsorbed deprecia-
tion, 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 ),
and as further adjusted by the amounts referred to in clause ( d ).
( d ) While computing the book profit under this section, the following amounts shall
be further adjusted:—
( i )   in case of a company being a member of association of persons or body
of individuals having income being share of the assessee in the income of
an association of persons or body of individuals, on which no income-tax
is payable as per the provisions of section 310, then—
( A )   the amount or amounts of expenditure relatable to such income if
debited to the statement of profit and loss, is to be added; and
( B )   the amount being income if credited to the statement of profit and
loss, is to be reduced;
( ii )   in case of a foreign company having income accruing or arising from—
( A )   capital gains arising on transactions in securities; or
( B )   the interest, dividend, royalty or fees for technical services charge -
able to tax at the rate or rates specified in Chapter XIII,
and the income-tax payable thereon as per the provisions of this Act, other
than the provisions of this Part, is at a rate less than the rate specified
in clause ( b ), then—
( I )   the amount or amounts of expenditure relatable to such income if
debited to the statement of profit and loss, is to be added; and
( II )   the amount being income if credited to the statement of profit and
loss, is to be reduced;
( iii )   in case of a company, which has transferred any capital asset, being share
of a special purpose vehicle to a business trust,—
( I )   the following amounts, if debited to the statement of profit and
loss, are to be added:—
( A )   the amount representing the notional loss on transfer of such
capital asset, to a business trust in exchange of units allotted
by the trust referred to in section 70(1)( zi ); or
( B )   the amount representing the notional loss resulting from any
change in carrying amount of the said units; or
( C )   the loss on transfer of units referred to in section 70(1)( zi );
( II )   the following amounts, if credited to the statement of profit and
loss, are to be reduced:—

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( A )   the amount representing the notional gain on transfer of such
capital asset, to a business trust in exchange of units allotted
by the trust referred to in section 70(1)( zi ); or
( B )   the amount representing the notional gain resulting from any
change in carrying amount of the said units; or
( C )   the gain on transfer of units referred to in section 70(1)( zi );
( iv )   in case of a company that has transferred units referred to in section
70(1)( zi ) and, where the gain or loss on such transfer has been computed
by taking into account—
( A )   the cost of the shares exchanged with units referred to in section
70(1)( zi ); or
( B )   the carrying amount of the shares at the time of exchange, if such
shares are carried at a value other than the cost through statement
of profit and loss,
then, the gain on transfer of such units is to be added, and the loss on
transfer of such units is to be reduced;
( v )   in case of a company whose total income includes income by way of
royalty in respect of a patent which is chargeable to tax under section
194(1)—
( A )   the amount or amounts of expenditure relatable to such royalty
income, if any such amount is debited to the statement of profit
and loss, is to be added; and
( B )   the income by way of such royalty, is to be reduced;
( vi )   in case of a company, where the Tribunal, on an application moved by
the Central Government under section 241 of the Companies Act, 2013
(18 of 2013) has after suspension of the Board of Directors of such com -
pany has nominated new directors under section 242 of the said Act,
the aggregate amount of unabsorbed depreciation and loss (excluding
depreciation) brought forward of such company and its subsidiary and
the subsidiary of such subsidiary, is to be reduced;
( vii )   in case of a company against whom corporate insolvency resolution
process has been admitted by the Adjudicating Authority under section
7 or 9 or 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016),
the aggregate amount of unabsorbed depreciation and loss (excluding
depreciation) brought forward, is to be reduced;
( viii )   in case of a company being a sick industrial company under section
17(1) of the Sick Industrial Companies (Special Provisions) Act, 1985
(1 of 1986), as it stood immediately before its repeal by the Sick Industrial
Companies (Special Provisions) Repeal Act, 2003 (1 of 2004), the profits
for the period commencing from the tax year in which such company has
become a sick industrial company and ending with the tax year during
which the entire net worth of such company becomes equal to or exceeds
the accumulated losses, is to be reduced;

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SOURCE PDF PAGE 275
( ix )   in case of a company, whose financial statements are drawn up in compli -
ance with the Indian Accounting Standards specified in Annexure to the
Companies (Indian Accounting Standards) Rules, 2015 made under the
Companies Act, 2013 (18 of 2013), the amounts mentioned in column A
of the Table below shall be added and the amounts mentioned in column
B of the said Table below are to be reduced:
TABLE
Amounts (to be added)   Amounts (to be reduced)
(A)   (B)
(1) Amounts credited to the statement
of profit and loss as referred in clause
( e )( i ).
(1) Amounts debited to the statement
of profit and loss as referred in clause
( e )( i ).
(2) The amounts or aggregate of the
amounts debited to the statement of
profit and loss on distribution as referred
in clause ( e )( ii ).
(2) The amounts or aggregate of the
amounts credited to the statement of
profit and loss on distribution as referred
in clause ( e )( ii ).
(3)   Amount   being   one-fifth   of   the
transition   amount   in   the   year   of
convergence and each of the following
four tax years.
(3)   Amount   being   one-fifth   of   the
transition   amount   in   the   year   of
convergence and each of the following
four tax years.
(4) The amount or the aggregate of the
amounts referred to in clause ( e )( iii ), if
such amount is not decreased.
(4) The amount or the aggregate of the
amounts referred to in clause ( e )( iii ), if
such amount is not increased.
(5) The amount or the aggregate of the
amounts referred to in clause ( e )( iv ), if
such amount is not decreased.
(5) The amount or the aggregate of the
amounts referred to in clause ( e )( iv ), if
such amount is not increased.
( e ) For the purposes of the Table in clause ( d )( ix ),—
( i )   the amount referred to in columns A and B of serial number 1 of the said
Table shall be the other comprehensive income in the statement of profit
and loss under the head “Items that will not be re-classified to profit or
loss”, excluding—
( A )   revaluation surplus for assets as per the Indian Accounting Stand -
ards 16 and Indian Accounting Standards 38; or
( B )   gains or losses from investments in equity instruments designated
at fair value through other comprehensive income as per the Indian
Accounting Standards 109,
and the amount or the aggregate of the amounts referred to in sub-clause
( i )( A ) and ( B ) for the tax year or any of the preceding tax years, and
relatable to such investment or asset, in the tax year in which the said
investment or asset is retired, disposed, realised or otherwise transferred;