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115JB

rahul (CA Final student) (76 Points)

07 November 2007

HI ALL,

WHILE COMPUTING BOOK PROFIT FOR MAT WE DO START WITH P.A.T & THEN PROCEED FOR ADDITIONS DELETIONS....

HOWEVER IF P.B.T. IS CONSIDERED TO BE THE BASE OF MAT COMPUTATION AM I SUPPOSE TO DEDUCT F.B.T N ADJUST DTA/DTL AS THE CASE MAY BE....WHICH I OTHERWISE WUDN'T HAVE DONE (CONSIDERING PAT AS THE BASE.)

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3 Replies

Sathish Karunakaran (ACA) (614 Points)
Replied 07 November 2007

Hi Rahul, Kindly read section 40a(ic), where u can find, FBT is a disallowable expenditure for all assessee. Hence if FBT has been claimed as an expenditure in P&L A/c., then the same has to added to PAT. But in case of PBT u need not add to it, b'coz FBT will be disclosed in P&L A/c. after PBT. (PBT = PAT + Income Tax + FBT + STT). FBT will be the permanent difference and not timing difference. Hence i guess DTA/DTL can't be created or reversed on FBT amount.

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(Guest)

Hi Rahul this is CA Vishal Paliwal Your question is very good. If u r calculating MAT by Taking PAT i.e after giving effect of FBT & DTA/DTL as the case may be you r not required to give effect of FBT or DTA/DTL Charged to P&L and u should only condsider Current Tax b'coz FBT is not tax on income and the same principle also applied on DTA/DTL Provision & section 115 JB requires to give effect only on those items mentioned in that section. Kindly also see judgment given by JAipur ITAT