INCOME TAX ACT, 1961

Section 115J

MAT - Book profit under section 115J - Computation - AO whether empowered to make adjustments beyond Explanation to section 115-J

Issue arose as to whether assessee was entitled to charge arrears of depreciation due to a change in the method of providing depreciation for earlier years to the profit and loss account of the current year for purpose of computing book profit under section 115-J. Further, whether 'Book Profit' for purposes of section 115-J was to worked out as per schedule VI of the Companies Act and not as per the Income Tax Act and the Income Tax Rules. Held: AO while computing the income under section 115-J has only the power of examining whether the books of account are certifies by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. AO thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, AO does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115-J.

Followed:Apollo Tyres Ltd. v. CIT 2002 (255) ITR 273 (SC) : 2002 TaxPub(DT) 1371 (SC) and M/s. Gita Forging (P) Ltd. v. CIT, Patiala & Anr. [ITA No. 134 of 2000, dt. 5-2-2020]

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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