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The Excess Profits Tax Act, 1940

( ACT NO. XV OF 1940 )

Standard profits
6. (1) For the purposes of this Act, the standard profits of a business in relation to any chargeable accounting period shall, subject to the provisions of sub-sections (3) and (4), be an amount bearing to the profits of the business during the standard period, if in respect of that business a standard period is available, the same proportion as the chargeable accounting period bears to the standard period:
 
 
 
 
Provided that if the average amount of capital employed in the business during such chargeable accounting period is greater or less than the average amount of capital employed during the standard period, such amount shall be increased or decreased, as the case may be, by an amount calculated by applying the statutory percentage to the amount of such increase or decrease:
 
 
Provided further that in the case of a business which was commenced on or after the 31st day of March, 1936, the standard profits shall, at the option of the person carrying on the business, be an amount calculated by applying the statutory percentage to the average amount of capital employed in the business during such chargeable accounting period.
 
 
 
 
(2) For the purposes of this section the standard period shall, at the option of the person carrying on the business, be-
 
 
 
 
(a) the “previous year” as determined under section 2 of the Income tax Act, 1922, for the purpose of the income tax assessment for the year ending on the 31 st day of 1921 March, 1937, or the previous year as so determined for the year ending on the 31st day of March, 1938; or
 
 
 
 
(b) the “previous year” as so determined for the year ending on the 31st day of March, 1937, and that for the year ending on the 31st day of March, 1939; or
 
 
 
 
(c) the “previous year” as so determined for the year ending on the 31st day of March, 1938, and that for the year ending on the 31st day of March, 1939; or
 
 
 
 
(d) the “previous year” as so determined for the year ending on the 31st day of March, 1939, and that for the year ending on the 31st day of March, 1940:
 
 
 
 
Provided that in no case shall any period of less than nine months be taken as a standard period.
 
 
 
 
(3) If, within the period specified in the notice issued under sub section (1) of section 13, or within the extended period allowed by the Excess Profits Tax Officer under the proviso to that sub section the person carrying on the business makes an application to the Excess Profits Tax Officer in this behalf, the Excess Profits Tax Officer shall refer the application to the Board of Referees, and if the Board is satisfied that during the standard period the profits of the business were less than might at the beginning of that period have been reasonably expected, it may direct that the standard profits shall be computed as if the profits during the standard period were such greater amount as it think just:
 
 
Provided that such amount shall not exceed the statutory percentage of the average amount of the capital employed in the business unless the Board is satisfied that owing to some specific cause peculiar to the business it is just that a greater amount should be allowed:
 
 
 
 
Provided further that a determination on an application under this sub section¬-
 
 
 
 
(a) shall have effect with respect to all subsequent chargeable accounting periods;
 
 
 
 
(b) shall exclude any further application under this sub-section.
 
 
 
 
(4) The standard profits shall be taken to be Taka thirty six thousand in any case in which the standard profits computed in accordance with sub section (1) are less than this sum:
 
 
 
 
Provided that if the chargeable accounting period is greater or less than one year the sum of Taka thirty six thousand shall for the purpose of this sub section be increased or decreased proportionately.
 
 
 
 
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