03 August 2024
Under Section 115JB of the Income Tax Act, 1961, which deals with Minimum Alternate Tax (MAT), the calculation of book profit involves adjustments to the profit and loss account as per the Companies Act, 2013.
### Relevant Provisions:
1. **Interest on TDS:** - The Income Tax Act does not specifically mention the treatment of interest on TDS in the context of MAT. However, the general principle is that adjustments are made to book profits to ensure that the calculation aligns with the provisions of the Income Tax Act.
2. **Section 115JB - Minimum Alternate Tax:** - **Section 115JB(2) specifies that** the profit and loss account should be prepared in accordance with the Companies Act, 2013, but it needs to be adjusted as specified in the section for the purpose of calculating MAT.
3. **Adjustments to Book Profit:** - **Explanation 1 to Section 115JB(2) specifically mentions** that the following shall not be deducted while computing the book profit: - Amounts not debited to the profit and loss account. - Provisions for taxation including income tax or any other tax.
**Interest on TDS** paid, being a provision or expense, is typically considered a part of provisions for taxation and, hence, is not allowed as a deduction while calculating MAT.
### **Example for Reference:**
The treatment of interest on TDS is often clarified through judicial pronouncements or practical guidelines, but the core principle is that only amounts directly debited to the profit and loss account are adjusted unless explicitly stated otherwise.
**The treatment of interest on TDS generally aligns with the principle that any provision for tax or interest related to tax is not added back under MAT adjustments.**
### **Key Points to Remember:**
1. **Section 115JB(2) Explanation 1** ensures that only the specified adjustments are to be considered, which usually excludes interest on TDS unless it specifically affects the calculation of book profit.
2. **Relevant Case Law:** Courts have interpreted provisions around MAT adjustments to include or exclude specific items based on their nature. For example, the case of *CIT vs. Bansal Credits Ltd.* (2010) highlighted that only provisions specifically mentioned under MAT rules are adjusted.
3. **Notification and Circulars:** Sometimes, the Central Board of Direct Taxes (CBDT) issues circulars or notifications providing clarity on specific items, but the base treatment is guided by the direct provisions of Section 115JB.
### **Conclusion:**
Interest on TDS is not typically added back while calculating book profit under MAT as per the general interpretation of Section 115JB. However, always ensure to check the most recent amendments, circulars, or case laws for any specific updates or clarifications.
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