Section 115JB, read with section 154, of the Income-tax Act, 1961

Court :
In the ITAT Jaipur Bench ‘B’

Brief :
Section 115JB, read with section 154, of the Income-tax Act, 1961 - Minimum Alternate tax - Assessment year 2002-03 - Whether deferred tax liability is neither income-tax ‘paid’ or ‘payable’ nor a ‘provision’ against same, but it is nevertheless an ascertained liability duly certified as such in terms of legally incumbent Accounting Standards under Companies Act - Held, yes - Whether, therefore, amount of deferred tax liability neither falls within ambit of clause (a) of Explanation to sub-section (2) of section 115JB nor within ambit of clause (c) thereof and, therefore, for purpose of section 115B, book profit does not need to be increased by amount of deferred tax liability - Held, yes Facts For the relevant assessment year, the assessee declared the total income at Rs. 71, 96,700. Since the tax payable on the total income for the relevant previous year was less than 7½ per cent of the book profit, computation of tax was made as per provisions of section 115JB. The book profit so computed was Rs. 4,51,95,130. The Assessing Officer, accordingly, completed the assessment. While computing the book profit under section 115JB, the assessee had not added back Rs. 1,14,24,000 which was shown in the balance sheet as provision for deferred tax debited to profit and loss account. Since the book profit was under-assessed by this amount, the Assessing Officer after giving opportunity under section 154 made rectification in the assessment order to recompute MAT under section 115JB. The order under section 154 was questioned before the Commissioner (Appeals) on two accounts. Firstly, the adjustment of Rs. 1,14,24,000 was permissible under Accounting Standard-22 and, secondly, under provisions of section 154, only such mistakes can be rectified which are apparent from record and not such mistakes which have two possible views for interpretations or which are debatable in nature. The Commissioner (Appeals) did not agree with the contentions of the assessee and upheld the action of the Assessing Officer under section 154. On appeal :

Citation :
Maharaja Shree Umaid Mills Ltd. v. Assistant Commissioner of Income-tax, Circle-6, Jaipur