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2016 (3) TMI 1056 - AT - Income TaxMAT computation - Assessment u/s 115JA - Held that:- Retrospective amendment in Section 115JA of the Act, the provision for doubtful debts and advances requires to be added back to the book profits u/s 115JA of the Act. The provision made for incremental wages remains an ascertained liability and not a contingent liability in the facts and circumstances of this case and accordingly does not requires to be added back as per Clause (c) of Explanation to Section 115JA(2) of the Act. Since the purchases were not debited in the profit and loss account for the financial year 1998-99 relevant to Asst Year 1999- 2000, the same is not eligible for deduction from computation of book profits u/s 115JA of the Act. However, we hold that the same is liable to be granted deduction in Asst Year 2000-2001 , being the year in which the purchases were debited by the assessee, while computing book profits u/s 115JA of the Act. The Learned AO is directed to grant relief for the same in Asst Year 2000-2001 in section 115JA computation in order to avoid double disallowance of genuine expenditure incurred by the assessee. AO does not have the jurisdiction to go beyond the net profit shown in the profit and loss account except to the extent provided in Explanation to Section 115JA of the Act. Disallowance of u/s 14A - Held that:- Provisions of Clause (f) of Explanation to Section 115JA of the Act cannot be invoked in the facts of the present case. We hold that unless an item is debited in the profit and loss account, the same cannot be the subject matter of addition to book profits under clause (f) of Explanation to section 115JA of the Act. The disallowance made u/s 14A of the Act read with Rule 8D is only artificial disallowance and obviously the same is not debited in the profit and loss account and the same cannot be imported into clause (f) of Explanation to Section 115JA of the Act.Thus we hold that no disallowance u/s 14A of the Act could be made for the purpose of computing book profits u/s 115JA of the Act.
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