Law:

Section:

2007] 294 ITR 57 [2008] 168 TAXMAN 299 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax v. Kovai Maruthi Paper & Board (P.) Ltd.* D. MURUGESAN AND P.P.S. JANARTHANA RAJA, JJ. TAX CASE (APPEAL) NO. 1104 OF 2007 AUGUST 6, 2007 Section 115JA of the Income-tax Act, 1961 - Minimum alternate tax - Whether once profit and loss account prepared by assessee is certified by authorities under Companies Act as having been properly maintained in accordance with Companies Act, Assessing Officer has only limited power of making increase and reductions as provided for in Explanation to section 115J - Held, yes - For relevant year, assessee computed its income under section 115JA on book profits and determined its tax liability accordingly - Assessing Officer, however, brought to tax amount of Government subsidy on generator, a portion of which was received by assessee but had not been reduced from cost of machinery on which claim of depreciation in excess of eligible limit was allowed - Whether since treatment of generator power subsidy initially credited does not find place in any one of items specified in section 115JA, same could not be used against assessee to calculate book profit under section 115JA and consequently, Assessing Officer was not justified in making said adjustment to book profits - Held, yes FACTS For the relevant year, the assessee computed income under section 115JA on the book profit and computed the tax liability accordingly. The return was processed under section 143(1) and notice was also issued. But, subsequently, the assessment was revised under section 154 to tax the amount of Government subsidy on generator, a portion of which was received by the assessee but had not been reduced from the cost of machinery on which claim of depreciation in excess of eligible limit was allowed. On appeal, the assessee contended that section 115JA speaks of net profit increased by certain items of expenses debited to the profit and loss account and since the treatment of generator power subsidy initially credited did not find place in any one of the items specified in section 115JA and the same could not be used against the assessee to calculate the book…

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