INCOME TAX ACT, 1961

Section 115JB

Minimum Alternation Tax - Book profits - Computation - Disallowance under section 14A read with rule 8D(iii)

Assessee was engaged in financing industrial units. Issue arose for consideration as to whether Tribunal was justified in law in holding that the indirect expenditure disallowed under section 14A read with rule 8D(iii) in computing the total income under normal provisions of the Act, was to be added to the net profit in computation of book profit for MAT purposes under section 115JB and thereby importing the provision of section 14A read with rule 8D into the MAT provisions on the facts and circumstances of the case. Held: Any expenditure relatable to earning of income exempt under section 10(2A) and section 10(35) is disallowed under section 14A of the Act and is added back to book profit under clause (f) of section 115JB, the same would amount to doing violence with the statutory provision, viz., Sub-sections (1) and (5) of section 115JB. Disallowance under section 14A is a notional disallowance and therefore, by taking recourse to section 14A, the amount cannot be added back to book profit under clause (f) of section 115JB. The amounts mentioned in clauses (a) to (i) of explanation to section 115JB(2) are debited to the statement of profit and loss account, then only the provisions of section 115JB would apply. The disallowance under section 14A of the Act is a notional disallowance and therefore, by taking recourse to section 14A of the Act, the amount cannot be added back to book profit under clause (f) of section 115JB of the Act.

Followed:CIT v. Addl. CIT (2020) 122 Taxmann.Com 160 (Karn), CIT v. Bengal Finance & Investments Pvt. Ltd. ITA. No. 337/2013 : 2018 TaxPub(DT) 145 (Bom-HC). Distinguished:Maxopp Investment Ltd. v. CIT(2018) 402 ITR 640(SC) : 2018 TaxPub(DT) 1403 (SC), and Jt. CIT. v. Rolta India Ltd. (2011) 330 ITR 470 (SC) : 2011 TaxPub(DT) 806 (SC).