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CS Executive · Tax Laws and Practice · Profits and Gains from Business and Profession

Under Schedule X of the Income-tax Act, 2025, Deccan Gas Ltd claimed the site restoration deduction. It later closed the specified account and withdrew Rs 60 lakh, of which Rs 10 lakh is payable to the Central Government as profit share under the agreement. What is deemed business profit of that tax year on closure?

Rs 50 lakh is deemed business profit. On closure of the specified account, Schedule X charges the amount withdrawn less the amount payable to the Central Government as profit or production share, which is Rs 60 lakh minus Rs 10 lakh.

  1. ARs 60 lakh
  2. BRs 10 lakh
  3. CRs 50 lakhCorrect
  4. DNil, as the amount was already deducted earlier

Explanation

Paragraph 3(3) gives A = B - C. B is Rs 60 lakh withdrawn and C is Rs 10 lakh payable to the Central Government, so A = Rs 50 lakh. Rs 60 lakh ignores the deduction for the Government share.

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