Disallowed expenses and MAT computation

As it was a disallowance of expense it may not be considered as an exemption u/s 10B (Though it is considered as income). According to provisions of Sec 10B of Income Tax Act, 1961 "deduction of such profits and gains as are derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee". 

  Hence, it will be taxable.

Also taking it in other perspective, it (disallowance) is non-compliance of law. Hence from my point of view it is taxable.

Please do reply if you are thinking in any other manner.

Hi, 115jb is calculated as per 115jb only and adjustments have to be made as per that sec only. As per echjay forgings p ltd 2009 bom case law states that disallowance u/s 37 or any other prov of act shall not be added back in computing book profit. And as far as 10B there is a case law of gem plus jewelry 2010 bom case law which talks abt disallowance and applicablity of 10 A on same lines. So that can be referred.

If the order giving effect to itat order is not as per law u can take recourse as applicable to normal order u/s 143 (3) by way of appeals or revision. Or you can file rectification u/s 154. The best option is for you to decide.

@ Karthik

I do agree with your view but theres one thing....I am not able to digest properly

In this case the expense was disallowed because there were no supporting vouchers to substantiate the expenditure. The order is of ITAT which is the final fact finding appelate authoirty.

Yes the disallowance should not as such be considered because while computing MAT we apply provisions of S.115JB which is a deeming provision and we are not at much liberty to make any changes in calculations.

 

As per subsection 2 of the said section, the profit and loss should be prepared in accordance with Companies Act. Now once when the ITAT has held that expenditure can not be substantiated can it be said that the current profits are not as per Companies Act and hence we should use the correct profits?

Like I am feeling a bit odd to say that even when ITAT has rejected the geniuniness of the expense and we still are saying its our expense....[Keeping a side the further appeal]

 

If we use the correct profit, then profit will increase and hence indirectly the MAT also would be payable on it.

 

Whats your say on the matter?