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Minimum Alternate Tax (MAT) - Whether an Assessee is allowed to prepare two sets of books accounts under Schedule VI of Companies Act - One for the purpose of Shareholders / AGM and Second for the purpose of Income Tax |
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| 27-4-2009 | |||
Recent two judgments of Gujarat High court addressing the similar issue of book profit for the purpose of 115J (Minimum alternate Tax - MAT) allow the companies to prepare and two sets of books of accounts one set to be adopted by the shareholders in an AGM and second for the purpose of Income Tax. These two cases are: DY. COMMISSIONER OF I.T. (ASST) Versus ARVIND MILLS LTD. - 2009 TMI - 33194 - GUJARAT HIGH COURT THE DY.COMMISSIONER OF INCOME-TAX Versus SURAT TEXTILE MILLS LTD. - 2009 TMI - 33193 - GUJARAT HIGH COURT Relevant References: Apollo Tyres Ltd. Versus Commissioner of Income Tax - 2008 -TMI - 6081 - SUPREME Court Section 115J of Income Tax Act, 1961 The issues involved in the two cases: In the case of Surat Textile Mills Ltd., assessee has prepared books of accounts while claiming depreciation on SLM (Straight Line Method) for 15 months. This set of books of account has been approved by the shareholders in an AGM. But while calculating book profit for the purpose of section 115J, assessee prepared another set of books of accounts claiming depreciation on WDV (written down method) for the relevant assessment yar. In the case of Arvind Mills, assessee, assessee prepared one set of books of accounts in which it only 1/5 of expenses which was adopted by the shareholders in AGM. But while calculating book profit for the purpose of section 115J, assessee prepared another set of books of accounts claiming 100% of expenses. In both the cases, department contended that for the purpose of 115J, books of accounts only the figure of book profit approved at the Annual General Meeting had to be considered. Decision of Honorable High court of Gujarat While deciding the issue in the matter of ARVIND MILLS LTD, honorable High Court of Gujarat decided as: "8. The frame of question No.1 itself indicates that the profit and loss account which was prepared subsequently was in accordance with Parts II & III of Schedule VI of the Companies Act, but was different from the profit and loss account approved at the Annual General Meeting, and whether such an exercise was permissible. Applying the ratio of the Apex Court decision, one can say that the only requirement of provisions of sub-section (1A) of section 115J of the Act is that the accounts, more particularly, the profit and loss account, for the relevant previous year has to be prepared in accordance with Parts II & III of Schedule VI of the Companies Act and accounts so prepared have to be certified by the Chartered Accountants. In the facts of the present case, it is not found by any authority that the revised accounts submitted with revised return of income filed on 28.12.1990 were not audited. In fact, the positive averment made by the assessee before Commissioner (Appeals) remains unrefuted. 9. In the circumstances, the Assessing Officer had no powers or jurisdiction under the provisions of the Act to take a different view of the matter and had no option but to proceed to determine the taxable profits under section 115J of the Act as per the said provisions without disturbing the accounts in any manner whatsoever, including discarding of such accounts, except to the extent provided in the Explanation to section 115J of the Act. The Assessing Officer is not vested with any powers to ignore accounts prepared in accordance with requirements of Parts II & III of Schedule VI of the Companies Act. Therefore, the impugned order of Tribunal which holds so does not suffer from any legal infirmity so as to warrant interference." The same conclusion was followed in the matter of SURAT TEXTILE MILLS LTD.
Full text of both the judgments: DY. COMMISSIONER OF I.T. (ASST) Versus ARVIND MILLS LTD. - 2009 TMI - 33194 - GUJARAT HIGH COURT
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