Case Law Details
Mumbai Income Tax Appellate Tribunal (ITAT) ruled out in the case of Bombay Diamond Co. Ltd. (Taxpayer) [2009-TIOL-760- 1TAT-MUM] on the issue of whether the Tax Authority has power to adjust the book profit base for the computation of Minimum Alternate Tax (MAT), if it is apparently found that audited accounts are not prepared in accordance with Schedule VI (prescribed format) of The Companies Act, 1956 (Co Act).
The ITAT held that for the computation of MAT, profits disclosed as per the audited accounts should be adopted, provided the accounts are prepared in the prescribed format. If the accounts are not so prepared, the Tax Authority may substitute the amount declared as per the Profit and Loss Account (P&L) with the appropriate amount, regardless of the fact that the accounts are certified as complying with the prescribed format by auditors.
Background and facts of the case
- As per Section 115JB (Section) of the Indian Tax Law (ITL), a Taxpayer, which is a company, is required to prepare the P&L for the tax year in the prescribed format and to pay MAT at the rate of 15% of the book profit. This requirement to pay MAT is applicable in those cases where tax payable, as per regular provisions of the ITL, is lower than the MAT, computed in accordance with the provisions of the Section.
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