Income Tax Act, 2025
Section 4: Ins. by Act 10 of 2000, s. 50 (w.e.f. 12001).
4. Ins. by Act 10 of 2000, s. 50 (w.e.f. 12001).
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Explanation.—For the purposes of this section, “book profit” means the net profit as shown in the
profit and loss account for the relevant previous year prepared under sub-section (2), as increased by—
(a) the amount of income-tax paid or payable, and the provision therefor; or
(b) the amounts carried to any reserves by whatever name called; or
(c) the amount or amounts set aside to provisions made for meeting liabilities, other than
ascertained liabilities; or
(d) the amount by way of provision for losses of subsidiary companies; or
(e) the amount or amounts of dividends paid or proposed; or
(f) the amount or amounts of expenditure relatable to any income to which any of the provisions
of Chapter III applies;
1[(g) the amount or amounts set aside as provision for diminution in the value of any asset,
if any amount referred to in clauses (a) to (g) is debited to the profit and loss account, and as reduced
by,—]
(i) the amount withdrawn from any reserves or provisions if any such amount is credited to the
profit and loss account:
Provided that, where this section is applicable to an assessee in any previous year (including the
relevant previous year), the amount withdrawn from reserves created or provisions made in a
previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 2[but
ending before the 1st day of April, 2001] shall not be reduced from the book profit unless the book
profit of such year has been increased by those reserves or provisions (out of which the said amount
was withdrawn) under this Explanation; or
(ii) the amount of income to which any of the provisions of Chapter III applies, if any such
amount is credited to the profit and loss account; or
3[(iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per
books of account.
Explanation.—For the purposes of this clause,—
(a) the loss shall not include depreciation;
(b) the provisions of this clause shall not apply if the amount of loss brought forward or
unabsorbed depreciation is nil; or]
(iv) the amount of profits derived by an industrial undertaking from the business of generation or
generation and distribution of power; or
1. Subs. by Act 33 of 2009, s. 44, for “if any amount referred to in clauses (a) to (f) is debited to the profit and loss account,
and as reduced by, —” (w.e.f. 11998).
the amount of income-tax paid or payable, and the provision therefor; or
the amounts carried to any reserves by whatever name called; or
the amount or amounts set aside to provisions made for meeting liabilities, other than
ascertained liabilities; or
the amount by way of provision for losses of subsidiary companies; or
the amount or amounts of dividends paid or proposed; or
the amount or amounts of expenditure relatable to any income to which any of the provisions
of Chapter III applies;
1[
the amount or amounts set aside as provision for diminution in the value of any asset,
if any amount referred to in clauses
to
is debited to the profit and loss account, and as reduced
by,—]
the amount withdrawn from any reserves or provisions if any such amount is credited to the
profit and loss account:
Provided that, where this section is applicable to an assessee in any previous year (including the
relevant previous year), the amount withdrawn from reserves created or provisions made in a
previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 2[but
ending before the 1st day of April, 2001] shall not be reduced from the book profit unless the book
profit of such year has been increased by those reserves or provisions (out of which the said amount
was withdrawn) under this Explanation; or
the amount of income to which any of the provisions of Chapter III applies, if any such
amount is credited to the profit and loss account; or
3[
the amount of loss brought forward or unabsorbed depreciation, whichever is less as per
books of account.
Explanation.—For the purposes of this clause,—
the loss shall not include depreciation;
the provisions of this clause shall not apply if the amount of loss brought forward or
unabsorbed depreciation is nil; or]
the amount of profits derived by an industrial undertaking from the business of generation or
generation and distribution of power; or
1. Subs. by Act 33 of 2009, s. 44, for “if any amount referred to in clauses
to
is debited to the profit and loss account,
and as reduced by, —” (w.e.f. 11998).