Book profit under MAT cannot exclude joint venture income exempt only under section 86; statutory adjustments alone apply.

Section 115JB requires book profit to be computed from the net profit shown in the profit and loss account, subject only to the specific additions and reductions in the Explanation. Share of profit from joint ventures credited in the accounts could not be excluded merely because it was exempt in the normal computation under section 86. The statutory exclusion under the Explanation extends to income covered by sections 10, 11 and 12, not to income exempt under section 86. Accordingly, the joint venture profit had to be included in book profit for MAT purposes, and no further deduction could be read into section 115JB beyond the express adjustments.

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Issues: Whether the assessee's share of profit from joint ventures assessed as an association of persons, though not taxable in the normal computation by virtue of section 86, could be excluded while computing book profit under section 115JB.

Analysis: Section 115JB requires book profit to be computed from the profit and loss account prepared in accordance with the Companies Act, 1956, subject only to the specific additions and reductions expressly provided in the Explanation. The assessee had credited the joint venture profits in its profit and loss account, and the mere fact that such income was not taxable under the normal provisions did not permit its exclusion from book profit. The exclusion under the Explanation extends to income covered by sections 10, 11 and 12, and not to income exempt only under section 86. The computation under the normal provisions and the computation of book profit are distinct, and no further deduction can be read into section 115JB beyond the statutory adjustments.

Conclusion: The share of profit from the joint ventures was not excludible from book profit under section 115JB and had to be included in the MAT computation.

Final Conclusion: The revenue's appeal succeeded and the addition made by the Assessing Officer in the book profit computation was restored.

Ratio Decidendi: For section 115JB, only those reductions expressly permitted by the statutory Explanation can be made from the net profit shown in the accounts, and income exempt under a provision outside sections 10, 11 and 12 cannot be excluded merely because it is not taxable under the normal provisions.

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