Section 115JF — Case Laws & Commentary

CHAPTER XII-BA — SPECIAL PROVISIONS RELATING TO CERTAIN PERSONS OTHER THAN A COMPANY (ALTERNATE MINIMUM TAX)

SECTION 115JF — INTERPRETATION IN THIS CHAPTER

Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · Live Provision — the definitions clause

Status: LIVE. Section 115JF is the definitions clause of Chapter XII-BA, inserted by the Finance Act, 2011 with effect from 1 April 2012 and updated as the Chapter evolved. It defines the terms on which the whole Chapter turns — most importantly “alternate minimum tax” and “regular income-tax” — and the IFSC-related terms (convertible foreign exchange, International Financial Services Centre, unit) that support the reduced rate in section 115JC(4).

Finance Act, 2026 impact: None. The Finance Act, 2026 does not amend section 115JF.

A. SECTION COMMENTARY

A.1 Purpose and place in the scheme

Section 115JF gives the Chapter its vocabulary. “Accountant” takes the meaning in the Explanation below section 288(2) — relevant to the Form 29C report required by section 115JC(3). “Alternate minimum tax” is the tax computed on adjusted total income at the applicable category rate: nine per cent for an IFSC unit, fifteen per cent for a co-operative society, and eighteen and one-half per cent in any other case. “Regular income-tax” means the income-tax payable for a previous year on the total income under the provisions of the Act other than Chapter XII-BA — that is, the figure against which AMT is compared. “Convertible foreign exchange”, “International Financial Services Centre” and “unit” carry the meanings drawn from the Foreign Exchange Management Act, 1999 and the Special Economic Zones Act, 2005, and support the IFSC concession. Clause (c) has been omitted.

A.2 Core doctrinal theme

The two definitions that do the heavy lifting are “alternate minimum tax” and “regular income-tax”, because the charge in section 115JC is struck by comparing them. Both are derived from the regular computation of total income: “regular income-tax” is the tax on total income computed under the Act ignoring this Chapter, and “alternate minimum tax” is the rate applied to the adjusted total income (total income with the specified deductions added back). The definitions are therefore not free-standing abstractions; they are the two quantities whose comparison determines whether AMT is payable and, with section 115JD, how much credit arises.

B. STATUTORY POSITION (verbatim)

Reproduced verbatim from the Income-tax Act, 1961 (Bare Act, as amended by the Finance Act, 2025; unchanged by the Finance Act, 2026):

Interpretation in this Chapter.

115JF. In this Chapter— (a) “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288; (b) “alternate minimum tax” means the amount of tax computed on adjusted total income,— (i) in case of an assessee being a unit referred to in clause (i) of sub-section (4) of section 115JC, at the rate of nine per cent; (ia) in case of an assessee, being a co-operative society referred to in clause (ii) of sub-section (4) of section 115JC, at the rate of fifteen per cent; (ii) in any other case, at a rate of eighteen and one-half per cent;

(ba) “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 purpose of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules made thereunder; (bb) “International Financial Services Centre” shall have the meaning assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); (c) [***]; (d) “regular income-tax” means the income-tax payable for a previous year by a person on his total income in accordance with the provisions of this Act other than the provisions of this Chapter; (e) “unit” means a unit established in an International Financial Services Centre.

C. CASE LAW — CLUSTERED BY ISSUE

Cluster C-1 : The operative quantities applied in practice — “adjusted total income” and “regular income-tax”

Candour: a definitions clause is rarely the sole subject of litigation, and there is no reported decision construing the clause (b) or clause (d) definitions of section 115JF in isolation; they are applied arithmetically. They were, however, applied in substance in the Pune housing-project decisions, where the Tribunal worked out the adjusted total income by adding back the section 80-IB(10) deduction and compared it with the regular income-tax to determine the AMT liability. Those cases therefore illustrate the two defined quantities at work.

Deputy Commissioner of Income-tax v. Vikram Developers & Promoters, ITAT Pune Bench “B”, ITA No. 608/Pune/2020, A.Y. 2014-15, 10 January 2023 [TS-21-ITAT-2023(PUN)]; and Assistant Commissioner of Income-tax v. Vijay Tukaram Raundal [2023] 147 taxmann.com 53 (Pune-Trib.).

Relevance to this section: Both orders proceed on the section 115JF meaning of “adjusted total income” (total income increased by the heading-C deduction added back) and “regular income-tax” (tax under the Act ignoring this Chapter), and apply the eighteen-and-one-half-per-cent rate in clause (b)(ii). They show how the defined terms operate; they do not, and need not, construe the definitions as such. (Full facts and sourcing appear in the Section 115JC file.)

Source: ITAT Pune Bench · ITA No. 608/Pune/2020, TS-21-ITAT-2023(PUN); [2023] 147 taxmann.com 53 (Pune-Trib.). Verified via BCAJ (March 2023), Taxsutra and Taxmann.

Cluster C-2 : The category rates and the IFSC vocabulary

The three rates in clause (b) — nine per cent (IFSC unit), fifteen per cent (co-operative society) and eighteen and one-half per cent (all others) — mirror, and are keyed to, section 115JC(4). The IFSC terms in clauses (ba), (bb) and (e) borrow established meanings (the Reserve Bank of India’s treatment of convertible foreign exchange under FEMA, 1999; the definition of an International Financial Services Centre in section 2(q) of the SEZ Act, 2005). These definitions have not generated reported judicial controversy; they are applied on their plain terms and by reference to the parent statutes named in them.

D. PRACTITIONER NOTES

(1) Ensure the Form 29C report is signed by an “accountant” who satisfies the Explanation below section 288(2), including the independence bars in that Explanation. (2) Apply the correct category rate from clause (b) — nine, fifteen or eighteen and one-half per cent — consistently with section 115JC(4). (3) Compute “regular income-tax” strictly as the tax under the Act ignoring Chapter XII-BA, so that the comparison with AMT is made on the right figures. (4) For an IFSC claim, verify the “unit”, “convertible foreign exchange” and IFSC conditions against the parent statutes referred to in clauses (ba), (bb) and (e).