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disallowance in Assesment by A.O.

a company filed its return as follow:

Book Profit under MAT= Rs. 3 Crore 

Taxable Income = Rs. 1 crore (LONG TERM CAPITAL GAIN)

Tax as per MAT= 55.5 LAKHS (@18.5%)

Tax as per I.T. = 20.6 lakhs (@20.6%,being LTCG)

MAT Credit= 34.9 lakhs (55.5-20.6)

now the above company is under scrutiny of I.T. Department.

A.O. disallowed the Cost of Improvement Of Rs. 50 Lakhs on ad-hoch basis being unreasonable according to A.O.  now what will be its effect on revised computation:

1) can A.O. add the disallowed amount in book profit for calculation of MAT?

please clarify with supporting case law.

 



By: KUNAL AGGARWAL

Dear Kunal,

In our opinion, AO cannot add the disallowed amount to MAT in your case.

CIT vs. Echjay Forgings (P) Ltd. [2001] 116 Taxmann 322 (Bom)
If a sum is debited to profit and loss account under the provisions of companies act, it will not be added to compute book profit, even if the same is disallowed under section 37 or under any other provision of the Act.   

Kind Regards
TaxReply.com



By: TAXREPLY.COM


By: RAKESH KUMAR MITTAL



821061
 
20
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20 Apr

☑ Monthly | GSTR-3B

GSTR-3B for the m/o Mar 2024 (Monthly Taxpayer - Rule 61) - Either Compulsory taxpayer > 5 cr. or Voluntary taxpayer < 5 cr.

☑ Monthly | GSTR-5A

GSTR-5A for the m/o Mar 2024 [Return by OIDAR Service Providers - Rule 64.]

22 Apr

☑ Quarterly | GSTR-3B

GSTR-3B for the Quarter Jan - Mar 2024 (QRMP Taxpayer < 5 Cr - Rule 61) - Category I States.

* State Category I - Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep.

24 Apr

☑ Quarterly | GSTR-3B

GSTR-3B for the Quarter Jan - Mar 2024 (QRMP Taxpayers < 5 Cr - Rule 61) - Category II States.

* State Category II - Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union territories of Jammu and Kashmir, Ladakh, Chandigarh and Delhi.

25 Apr

☑ Half-Yearly | ITC-04

ITC-04 for the half year (Oct - Mar 2024) (For taxpayers > 5 Cr. Turnover) - Rule 45.

☑ Annual | ITC-04

ITC-04 for the FY 2023-24 (For taxpayers upto 5 Cr. Turnover) - Rule 45.

28 Apr

☑ Monthly | GSTR-11

GSTR-11 for the m/o Mar 2024 (Statement of inward supplies by persons having Unique Identification Number (UIN)).

30 Apr

☑ Annual | GSTR-4

GSTR-4 (Annual Return) for FY 2023-24 by Composite Taxpayer (Rule 62).

☑ Quarterly | QRMP

Last date for opt-in / opt-out QRMP Scheme for quarter Apr - June 2024 (Rule 61A)