Search Results For: MAT


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?
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EXPERT:
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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

QUERY: We have made a capital profit of Rs. 10 crores from sale of our property. We have been advised that the profits being capital in nature can be directly credited to the capital reserves account in the balance sheet and need not be routed through the P & L A/c. As the profits are not a part of the P&L A/c, can we avoid paying MAT book profits u/s 115JB?
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No! Even if capital profits are credited to the capital reserves a/c in the balance sheet, they have to be added to the “book profits” for purposes of s. 115JB.