Assessment of Companies

Meaning of Companies:

A company means any Indian company, any body corporate incorporated under the law of a
foreign country and any institution, association or whether incorporated or not and whether
Indian or non-Indian, which is declared by general or special order of the CBDT to be a
company.

Types of Companies:
1. Company in which the public are substantially interested.
2. Indian Company: It means a company formed and registered in India. It includes
statutory corporations.
3. Public Sector Company: It means any statutory corporation or a government company.
4. Domestic Company: It means an Indian company or any other company which has made
prescribed arrangements for declaration of dividends in India in respect of its taxable
income in India.
5. Foreign Company: It means any company registered in foreign company and functioning
in India also.
6. Company registered under section 8 of Companies Act. 2013 – It is a company formed
to promote art, charity, commerce and religion. These are non-profit making company.

Income Tax Rates for Companies:

Particulars Rate of Tax
If Total Income does not exceed 400 crores 25%
If Total Income exceeds 400 crores 30%
Surcharge:
If Total Income exceeds Rs. 1 crore but does not exceed Rs. 10 crore 7%
If Total Income exceeds Rs. 10 crore 12%
Health, Education and Swach Bharat Cess 4%

Applicable Special Rates in some special cases

Winnings 30%
Long Term Capital Gain 20%
Short Term Capital Gain U/s 111A 15%

Minimum Alternate Tax (MAT) U/s 115JB 15%

Add: Applicable surcharge & Cess
Computation of Income from Business of Company:

Particulars Rs. Rs.

Net Profit as per Statement of Profit & Loss xxxxx
Add: Disallowed Expenses:
a. Payment in cash if the amount exceeds Rs. 10,000
b. Payment of taxes other than Indirect Taxes like GST &
Customs duty
c. All Provisions and Reserves
d. Fine or Penalty
e. Donations and Charity
f. Capital Expenditure / Purchase of Assets
g. Contribution to Political Party
h. Proposed Dividend, Interim Dividend & Dividend Paid
i. Provision for losses of subsidiary company
j. Provision for unascertained liabilities

Less: Disallowed Incomes:

a. Rent Received
b. Profit on Sale of Assets
c. Interest Received
d. Dividend received
e. Refund of penalties
f. Refund of Taxes
g. Agricultural Income
h. Bad Debts recovered ( Earlier Disallowed)

Less: Losses & Expenses allowed but not debited to P & L A/C
a. Bad debts written off
b. Depreciation if any
c. Indirect Taxes paid before filing the return of income like
GST, Customs duty etc.

Add: Income Taxable under Business head but not credited to

Profit and Loss A/C
a. Commission Received
b. Discount received
c. Unrecorded Business Income

Less: B/f unabsorbed depreciation

Income from Business of Company XXXX

Computation of Total Income of the Company:

Particulars
1. Income from House Property xxx
2. Income from Business xxx
Less: B/f Business Loss xx Xxx
3. Capital Gain Xxx
4. Income from Other Sources xxx
Gross Total Income XXXX
Less: Deduction U/sec 80G to 80LA xxx
Total Income XXXX

Problems: Assessment of Companies

1. A domestic company in which public substantially interested submits the following
particulars of its income of the PY ended 31.03.2024
a. Profits of the business after deduction of donations to approved charitable
institution Rs. 1,30,000
b. Donation to charitable institution by cheque Rs. 30,000
c. Interest on Govt. Securities Rs. 10,000
d. Dividend from a domestic company Rs. 60,000
e. Long Term capital gains Rs. 50,000
f. Book Profits U/sec 115JB
During the FY 2023-24 the company deposited Rs. 15,000 in Industrial Development
Bank of India.
2. A domestic company in which public substantially interested submits the following
particulars of its income of the PY ended 31.03.2024
g. Profits of the business after deduction of donations to approved charitable
institution Rs. 2,80,000
h. Donation to charitable institution by cheque Rs. 40,000
i. Interest on Govt. Securities Rs. 20,000
j. Dividend from a domestic company Rs. 75,000
k. Long Term capital gains Rs. 60,000
l. Book Profits U/sec 115JB
During the FY 2023-24 the company deposited Rs. 25,000 in Industrial Development
Bank of India.
3. A domestic company submits the following particulars of its income for the PY ending on
March 31, 2024
a. Profits of the business after deduction of donations to approved charitable
institution Rs. 4,00,000
b. Donation to charitable institution by cheque Rs. 50,000
c. Interest on Govt Securities Rs. 20,000
 d. Dividend from a domestic company Rs. 60,000
e. Long term capital gain Rs. 1,00,000
f. Book Profits U/s 115JB Rs. 10,00,000
During the Financial Year 2023-24 the company deposited Rs. 50,000 in Industrial
Development Bank of India.
4. For the Assessment Year 2024-25 a company has calculated its Book Profit as per the
provisions of sec 115JB of the Income Tax Act, 1961 at Rs. 95 lakh as against the total
income of Rs. 30 lakh for the same period as per the statement of Profits and Loss of the
company. Calculate the amount of Tax payable by the company.
5. The book profits of a company in the PY 2023-24 computed in accordance with sec
115JB of the Income Tax Act, is Rs. 12,00,000. Its total income under th Income Tax Act
for the same period is computed at Rs. 3,50,000. Is the company liable to pay MAT? If
yes, how much has to be paid?
6. The book profit of a company in the PY 2022-23 computed in accordance with Sec 115
JB of the Income Tax Act, is Rs. 13,00,000. Its total income under the Income Tax Act
for the same period is computed at Rs. 4,50,000. Is the company liable to pay MAT? If
yes, how much has to be paid?
7. For the Assessment Year 2024-25 a company has calculated its Book Profit as per the
provisions of sec 115JB of the Income Tax Act, 1961 at Rs. 95 lakh as against the total
income of Rs. 30 lakh for the same period as per the statement of Profits and Loss of the
company. Calculate the amount of Tax payable by the company.
8. Kwality Electronics Ltd is a domestic company in which public are substantially
interested. The following are the particulars of income in respect of the PY 2023-24:
a. Interest on Government securities Rs. 20,000
b. Income from Business Rs. 4,90,000
c. Short term capital gain Rs. 15,000
d. Long term capital gain Rs. 33,000
e. Dividend from Indian Company Rs. 20,000
f. Book Profits U/sec 115JB Rs. 9,00,000
Compute the company’s total income and tax liability.
9. Sriram Electronics Ltd, is a domestic company, the following are the particulars of
income in respect of the PY
i. Interest on Govt. securities Rs. 60,000
ii. Income from Business Rs. 7,50,000
iii. Dividend from Indian Co. (Gross) Rs. 45,000
iv. Book Profit U/s 115JB Rs. 14,00,000
Compute Total Income and Tax Liability of company.
10. From the following information compute the tax payable by X Ltd for the AY 2024-25
a. Business income from sale of securities Rs. 8,50,000
b. Other business income Rs. 10,00,000
c. Long term capital gains Rs. 4,00,000
d. Securities transaction tax paid Rs. 1,50,000 (not deducted from business income)
11. From the following information compute the tax payable by an Indian Company for the
AY 2024-25:
a. Business income (Turnover in the PY 2021-22) Rs. 20,00,000
b. Dividend received from specified foreign company Rs. 5,00,000
c. Income from Other Sources Rs. 1,00,000
12. ABC Company Ltd submits the following particulars of its income for the PY ending on
March 31, 2023
i. Profits of the business after deduction donation to National Defense Fund Rs.
8,00,000
ii. Donation to National Defense Fund Rs. 45,000
iii. Interest on Govt. Securities Rs. 35,000
iv. Dividend from domestic company Rs. 55,000
v. Long Term Capital Gain Rs. 1,95,000
vi. Book Profit U/s 115JB Rs. 9,00,000
Compute Total Income and Tax Liability of company.
13. Sahas company limited is a widely held domestic company. The following are the
particulars of its income in respect of the PY 2023-24
a. Income from business Rs. 1,09,80,000
b. Interest on Govt securities Rs. 20,000
c. Short term capital gain u/s 111A Rs. 30,000
d. Long term capital gain Rs. 66,000
e. Dividend from domestic company Rs. 20,000
f. Dividend from foreign company Rs. 20,000
g. Book Profit U/s 115JB Rs. 1,05,00,000
During the PY the company donated Rs. 50,000 to National Defense Fund by cheque.
Compute company’s total income and tax payable for the AY 2024-25
14. If Total Income of a company is Rs. 8,00,000 (LTCG Rs. 50,000 included). What is the
tax liability in normal case?
a. Rs. 2,05,400 b. Rs. 2,08,000 c. Rs. 2,12,500 d. Rs. 2,15,000
15. If Book Profit of a company Rs. 12,00,000. What is the tax liability as per MAT U/s
115JB?
a. Rs. 1,87,200 b. Rs. 1,80,000 c. Rs. 3,00,000 d. Rs. None of the above
16.