Mat on book profits

This query is : Resolved

Rohan Sharma (Querist)
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12 September 2011 While calculating book profit for mat calculation we should consider the pior period itmes which is debited to profit & loss ???
Please reply urgently......

Hari Beldona

Hari Beldona (Expert)
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12 September 2011 Expenditure will be allowable under section 37(1) of the Income Tax Act, 1961 is as below:
1.Incurred wholly and exclusively for the purpose of the business or profession &
2.It is incurred during the accounting year&
3.It is not capital nature and not personal expenses of the assessee.
Hence prior period expenses debited to profit and loss account should not be considered.
For calculating book profits we have to take net profit as per profit & loss a/c

few additions or deletions will be made to Net profit to arrive book profits under MAT (Section 115 jb)
To conclude: While taking net profits prior period expenses not to be considered for computing MAT

Hari Beldona

Hari Beldona (Expert)
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12 September 2011 Not to be consider means while computing net profits prior period items to be ignored.

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