|QUERY:||A company has credited gain arising from transfer of a capital assets directly to capital reserve account, without routing through profit and loss account. The auditor has not qualified the accounts and the ROC also has not taken any objection to the accounts. Whether Assessing Officer can add back this amount to the book profit while calculating MAT liability?|
|ANSWER:||Click here to read the full answer of the expert|
|EXPERT:||CA. H. N. Motiwalla|
|GENRE:||Company Law, Taxation (Domestic)|
|CATCH WORDS:||Book Profits, capital gains, MAT|
From the query it is not clear what type of a capital asset has been transferred and directly credited to capital reserve account.
The cardinal principle has been propounded by the Supreme Court in Apollo Tyres Ltd. vs. CIT [255 ITR 273], while deciding the matter under Section 115J of the Income-tax Act, 1961 which was precursor to