Income Tax Act, 2025
Section 10: Ins. by Act 7 of 2017, s. 47 (w.e.f. 12018).
10. Ins. by Act 7 of 2017, s. 47 (w.e.f. 12018).
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(b) decreased by all amounts debited to other comprehensive income in the statement of profit
and loss under the head “Items that will not be re-classified to profit or loss;
(c) increased by amounts or aggregate of the amounts debited to the statement of profit and loss
on distribution of non-cash assets to shareholders in a demerger in accordance with Appendix A of
the Indian Accounting Standards 10;
(d) decreased by all amounts or aggregate of the amounts credited to the statement of profit and
loss on distribution of non-cash assets to shareholders in a demerger in accordance with Appendix A
of the Indian Accounting Standards 10:
Provided that nothing contained in clause (a) or clause (b) shall apply to the amount credited or
debited to other comprehensive income under the head “Items that will not be re-classified to profit or
loss” in respect of—
(i) revaluation surplus for assets in accordance with the Indian Accounting Standards 16 and
Indian Accounting Standards 38; or
(ii) gains or losses from investments in equity instruments designated at fair value through
other comprehensive income in accordance with the Indian Accounting Standards 109:
Provided further that the book profit of the previous year in which the asset or investment
referred to in the first proviso is retired, disposed, realised or otherwise transferred shall be
increased or decreased, as the case may be, by the amount or the aggregate of the amounts
referred to in the first proviso for the previous year or any of the preceding previous years and
relatable to such asset or investment.
(2B) In the case of a resulting company, where the property and the liabilities of the undertaking or
undertakings being received by it are recorded at values different from values appearing in the books of
account of the demerged company immediately before the demerger, any change in such value shall be
ignored for the purpose of computation of book profit of the resulting company under this section.
(2C) For a company referred to in sub-section (2A), the book profit of the year of convergence and
each of the following four previous years, shall be further increased or decreased, as the case may be, by
one-fifth of the transition amount:
Provided that the book profit of the previous year in which the asset or investment referred to in
sub-clauses (B) to (E) of clause (iii) of the Explanation is retired, disposed, realised or otherwise
transferred, shall be increased or decreased, as the case may be, by the amount or the aggregate of the
amounts referred to in the said sub-clauses relatable to such asset or investment:
Provided further that the book profit of the previous year in which the foreign operation referred to in
sub-clause (F) of clause (iii) of the Explanation is disposed or otherwise transferred, shall be increased or
decreased, as the case may be, by the amount or the aggregate of the amounts referred to in the said
sub-clauses relatable to such foreign operations.
Explanation.––For the purposes of this sub-section, the expression––
(i) “year of convergence” means the previous year within which the convergence date falls;
(ii) “convergence date” means the first day of the first Indian Accounting Standards reporting
period as defined in the Indian Accounting Standards 101;
(iii) “transition amount” means the amount or the aggregate of the amounts adjusted in the other
equity (excluding capital reserve and securities premium reserve) on the convergence date but not
including the following:––
(A) amount or aggregate of the amounts adjusted in the other comprehensive income on the
convergence date which shall be subsequently re-classified to the profit or loss;
(B) revaluation surplus for assets in accordance with the Indian Accounting Standards 16 and
Indian Accounting Standards 38 adjusted on the convergence date;
492
(C) gains or losses from investments in equity instruments designated at fair value through
other comprehensive income in accordance with the Indian Accounting Standards 109 adjusted
on the convergence date;
(D) adjustments relating to items of property, plant and equipment and intangible assets
recorded at fair value as deemed cost in accordance with paragraphs D5 and D7 of the Indian
Accounting Standards 101 on the convergence date;
(E) adjustments relating to investments in subsidiaries, joint ventures and associates recorded
at fair value as deemed cost in accordance with paragraph D15 of the Indian Accounting
Standards 101 on the convergence date; and
(F) adjustments relating to cumulative translation differences of a foreign operation in
accordance with paragraph D13 of the Indian Accounting Standards 101 on the convergence date.]
(3) Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to
the relevant previous year to be carried forward to the subsequent year or years under the provisions of
sub-section (2) of section 32 or sub-section (3) of section 32A or clause (ii) of sub-section (1) of
section 72 or section 73 or section 74 or sub-section (3) of section 74A.
(4) Every company to which this section applies, shall furnish a report in the prescribed form from an
accountant as defined in the Explanation below sub-section (2) of section 288, certifying that the book
profit has been computed in accordance with the provisions of this section along with the return of
income filed under sub-section (1) of section 139 or along with the return of income furnished in response
to a notice under clause (i) of sub-section (1) of section 142.
(5) Save as otherwise provided in this section, all other provisions of this Act shall apply to every
assessee, being a company, mentioned in this section.]
1[(5A) The provisions of this section shall not apply to any income accruing or arising to a company
from life insurance business referred to in section 115B.]
2[(6) The provisions of this section shall not apply to the income accrued or arising on or after the 1st
day of April, 2005 from any business carried on, or services rendered, by an entrepreneur or a Developer,
in a Unit or Special Economic Zone, as the case may be:]
3[Provided that the provisions of this sub-section shall cease to have effect in respect of any previous
year relevant to the assessment year commencing on or after the 1st day of April, 2012.]
4[(7) Notwithstanding anything contained in sub-section (1), where the assessee referred to therein, is
a unit located in an International Financial Services Centre and derives its income solely in convertible
foreign exchange, the provisions of sub-section (1) shall have the effect as if for the words “eighteen and
one-half per cent” wherever occurring in that sub-section, the words “nine per cent” had been substituted.
Explanation.—For the purposes of this sub-section,—
(a) “International Financial Services Centre” shall have the same meaning as assigned to it in
clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005);
(b) “unit” means a unit established in an International Financial Services Centre;
(c) “convertible foreign exchange” means a foreign exchange which is for the time being treated
by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign
Exchange Management Act, 1999 (42 of 1999) and the rules made thereunder.]
decreased by all amounts debited to other comprehensive income in the statement of profit
and loss under the head “Items that will not be re-classified to profit or loss;
increased by amounts or aggregate of the amounts debited to the statement of profit and loss
on distribution of non-cash assets to shareholders in a demerger in accordance with Appendix A of
the Indian Accounting Standards 10;
decreased by all amounts or aggregate of the amounts credited to the statement of profit and
loss on distribution of non-cash assets to shareholders in a demerger in accordance with Appendix A
of the Indian Accounting Standards 10:
Provided that nothing contained in clause
or clause
shall apply to the amount credited or
debited to other comprehensive income under the head “Items that will not be re-classified to profit or
loss” in respect of—
revaluation surplus for assets in accordance with the Indian Accounting Standards 16 and
Indian Accounting Standards 38; or
gains or losses from investments in equity instruments designated at fair value through
other comprehensive income in accordance with the Indian Accounting Standards 109:
Provided further that the book profit of the previous year in which the asset or investment
referred to in the first proviso is retired, disposed, realised or otherwise transferred shall be
increased or decreased, as the case may be, by the amount or the aggregate of the amounts
referred to in the first proviso for the previous year or any of the preceding previous years and
relatable to such asset or investment.
In the case of a resulting company, where the property and the liabilities of the undertaking or
undertakings being received by it are recorded at values different from values appearing in the books of
account of the demerged company immediately before the demerger, any change in such value shall be
ignored for the purpose of computation of book profit of the resulting company under this section.
For a company referred to in sub-section
to
of clause
of the Explanation is retired, disposed, realised or otherwise
transferred, shall be increased or decreased, as the case may be, by the amount or the aggregate of the
amounts referred to in the said sub-clauses relatable to such asset or investment:
Provided further that the book profit of the previous year in which the foreign operation referred to in
sub-clause
of clause
of the Explanation is disposed or otherwise transferred, shall be increased or
decreased, as the case may be, by the amount or the aggregate of the amounts referred to in the said
sub-clauses relatable to such foreign operations.
Explanation.––For the purposes of this sub-section, the expression––
“year of convergence” means the previous year within which the convergence date falls;
“convergence date” means the first day of the first Indian Accounting Standards reporting
period as defined in the Indian Accounting Standards 101;
“transition amount” means the amount or the aggregate of the amounts adjusted in the other
equity (excluding capital reserve and securities premium reserve) on the convergence date but not
including the following:––
amount or aggregate of the amounts adjusted in the other comprehensive income on the
convergence date which shall be subsequently re-classified to the profit or loss;
revaluation surplus for assets in accordance with the Indian Accounting Standards 16 and
Indian Accounting Standards 38 adjusted on the convergence date;
492
gains or losses from investments in equity instruments designated at fair value through
other comprehensive income in accordance with the Indian Accounting Standards 109 adjusted
on the convergence date;
adjustments relating to items of property, plant and equipment and intangible assets
recorded at fair value as deemed cost in accordance with paragraphs D5 and D7 of the Indian
Accounting Standards 101 on the convergence date;
adjustments relating to investments in subsidiaries, joint ventures and associates recorded
at fair value as deemed cost in accordance with paragraph D15 of the Indian Accounting
Standards 101 on the convergence date; and
adjustments relating to cumulative translation differences of a foreign operation in
accordance with paragraph D13 of the Indian Accounting Standards 101 on the convergence date.]
Nothing contained in sub-section
shall affect the determination of the amounts in relation to
the relevant previous year to be carried forward to the subsequent year or years under the provisions of
sub-section
of section 32 or sub-section
of section 32A or clause
of sub-section
of
section 72 or section 73 or section 74 or sub-section
of section 74A.
Every company to which this section applies, shall furnish a report in the prescribed form from an
accountant as defined in the Explanation below sub-section
of section 288, certifying that the book
profit has been computed in accordance with the provisions of this section along with the return of
income filed under sub-section
of section 139 or along with the return of income furnished in response
to a notice under clause
of sub-section
of section 142.
Save as otherwise provided in this section, all other provisions of this Act shall apply to every
assessee, being a company, mentioned in this section.]
1[
The provisions of this section shall not apply to any income accruing or arising to a company
from life insurance business referred to in section 115B.]
2[
The provisions of this section shall not apply to the income accrued or arising on or after the 1st
day of April, 2005 from any business carried on, or services rendered, by an entrepreneur or a Developer,
in a Unit or Special Economic Zone, as the case may be:]
3[Provided that the provisions of this sub-section shall cease to have effect in respect of any previous
year relevant to the assessment year commencing on or after the 1st day of April, 2012.]
4[
Notwithstanding anything contained in sub-section
shall have the effect as if for the words “eighteen and
one-half per cent” wherever occurring in that sub-section, the words “nine per cent” had been substituted.
Explanation.—For the purposes of this sub-section,—
“International Financial Services Centre” shall have the same meaning as assigned to it in
clause
of section 2 of the Special Economic Zones Act, 2005 (28 of 2005);
“unit” means a unit established in an International Financial Services Centre;
“convertible foreign exchange” means a foreign exchange which is for the time being treated
by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign
Exchange Management Act, 1999 (42 of 1999) and the rules made thereunder.]