| COURT: | ITAT Lucknow |
| CORAM: | A. K. Garodia (AM), Sunil Kumar Yadav (JM) |
| SECTION(S): | 115JA, 115JB |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Book Profits, capital vs. revenue receipt, carbon credits |
| COUNSEL: | A. K. Gupta |
| DATE: | February 9, 2016 (Date of pronouncement) |
| DATE: | March 30, 2016 (Date of publication) |
| AY: | 2011-12 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 115JA/115JB: Capital receipts (such as subsidy & carbon credits), which have no income element, have to be excluded from book profits even if credited to the P&L A/c | |
The genesis of Sec 115J, thereafter section 115JA and now section 115JB was to ensure that the assessee, while making profit from operations, should not enjoy tax free status due to various deductions available under the Income Tax Act. There was never any intention of the legislature to tax what is not income at all. In a recent decision, the Hon’ble Apex Court in the case of Indo Rama Synthetics (I) Ltd -vs- CIT (2011) 330 ITR 363 (SC) has held that the object of MAT provisions is to bring out the real profit of the companies. The thrust is to find out the real working results of the company. Inclusion of receipt in the computation of MAT would defeat two fundamental principles, it would levy tax on receipt which is not in the nature of income at all and secondly it would not result in arriving at real working results of the company. The real working result can be arrived at only after excluding this receipt which has been credited to P&L a/c and not otherwise
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