Gross profit computation for bonus requires adding back reserves, depreciation, and specified disallowances before making permitted deductions.

Computation of gross profits for bonus begins with net profit shown in the profit and loss account after usual and necessary provisions, and then requires specified additions for reserves, employee bonus, depreciation, gratuity excess, disallowed donations, capital items, RBI-certified amounts, and foreign business losses or expenditure. It also includes income credited directly to reserves, while excluding capital receipts, foreign business items, and foreign investment income of foreign banking companies. From the total, permitted deductions are made, including capital receipts, foreign business items, reserve debits, allocable head-office expenses of foreign banking companies, written-back excess provisions, and qualifying cash subsidies.

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