COMPUTATION OF GROSS PROFITS
Accounting Year ending ......
Item
No.
Particulars Amount of
sub-items
Amount of
main items
Remarks
2
[1. Net Profit, as show in the Profit and
Loss Account after making usual and
necessary provisions.
Rs. Rs.
2. Add back provision for:
(a) Bonus to employees.
(b) Depreciation.
(c) Development Rebate Reserve. See foot-note (1)
(d) Any other reserves. See foot-note (1)
Total of Item No. 2 . . .
Rs.
3. Add back also: See foot-note (1)
(a) Bonus paid to employees in respect
of previous accounting years.
See foot-note (1)
(b) The amount debited in respect of
gratuity paid or payable to
employees in excess of the
aggregate of—
(i) the amount, if any, paid to, or
provided for payment to, an
approved gratuity fund; and
(ii) the amount actually paid to
employees on their retirement
or on termination of their
employment for any reason.
(c) Donations in excess of the amount
admissible for income-tax.
1. Ins. by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980).
2. Where the profit subject to taxation is shown in the Profit and Loss Account and the provision made for taxes on income
is shown, the actual provision for taxes on income shall be deducted from the profit.
19
Item
No.
Particulars Amount of
sub-items
Amount of main
items
Remarks
Rs. Rs.
(d) Capital expenditure (other
than capital expenditure on
scientific research which is
allowed as a deduction under
any law for the time being in
force relating to direct taxes)
and capital losses (other than
losses on sale of capital
assets on which depreciation
has been allowed for
income-tax).
See foot-note (1)
(e) Any amount certified by the
Reserve Bank of India in
terms of sub-section (2) of
section 34A of the Banking
Regulation Act, 1949
(10 of 1949).
(f) Losses of, or expenditure
relating to, any business
situated outside India.
Total of Item No. 3. . . . Rs.
4. Add also income, profits or gains
(if any) credited directly to
published or disclosed reserves,
other than—
(i) capital receipts and capital
profits (including profits on
the sale of capital assets on
which depreciation has not
been allowed for incometax);
(ii) profits of, and receipts
relating to, any business
situated outside India;
(iii) income of foreign banking
companies from investment
outside India.
Net total of Item No. 4. . . . . Rs.
5. Total of Item Nos. 1, 2, 3 and 4 Rs.
20
Item
No.
Particulars Amount of
sub-items
Amount of
main items
Remarks
Rs. Rs.
6. Deduct:
(a) Capital receipts and capital
profits (other than profits on
the sale of assets on which
depreciation has been
allowed for income-tax).
See foot-note (2)
(b) Profits of, and receipts
relating to, any business
situated outside India.
See foot-note (2)
(c) Income of foreign banking
companies from investments
outside India.
See foot-note (2)
(d) Expenditure or losses (if any)
debited directly to published
or disclosed reserves, other
than—
(i) capital expenditure and
capital losses (other
than losses on sale of
capital assets on which
depreciation has not
been allowed for
income-tax);
(ii) losses of any business
situated outside India.
(e) In the case of foreign banking
companies proportionate
administrative (overhead)
expenses of Head Office
allocable to Indian business.
See foot-note (3)
(f) Refund of any excess direct
tax paid for previous
accounting years and excess
provision, if any, of previous
accounting years, relating to
bonus, depreciation, or
development rebate, if
written back.
See foot-note (2)
(g) Cash subsidy, if any, given by
the Government or by any body
corporate established by any
law for the time being in force
or by any other agency through
budgetary grants, whether given
directly or through any agency
for specified purposes and the
proceeds of which are reserved
for such purposes.
See foot-note (2)
Total of Item No. 6. . . .
7. Gross Profits for purposes of
bonus (Item No. 5 minus Item
No. 6)
Rs. Rs.
21
[Explanation.—In sub-item (b) of Item 3, “approved gratuity fund” has the same meaning
assigned to it in clause (5) of section 2 of the Income-tax Act.
Foot-notes—
(1) It, and to the extent, charged to Profit and Loss Account.
(2) If, and to the extent, credited to Profit and Loss Account.
(3) In the proportion of Indian Gross Profit (Item No. 7) to Total World Gross Profit (as per
Consolidated Profit and Loss Account adjusted as in Item No. 2 above only).]