The ITAT has held that an assessing officer cannot add alleged bogus losses back while computing book profit under Section 115JB of the Income Tax Act if they have been disallowed for regular income.
ITAT on Book Profit Adjustments
The ITAT Delhi has ruled that assessing officers cannot increase book profits under Section 115JB of the Income Tax Act by adding back losses that have been deemed bogus in the computation of regular income. This marks a significant stance on the limitations of assessing powers in tax calculations.
The tribunal discussed that the integrity of reported book profits should not be compromised by arbitrary adjustments without substantial evidence. This ruling upholds the principle that disallowances in regular assessments must carry through to MAT computations.
Tax professionals should take note of this ruling, as it clearly delineates the boundaries for making adjustments under MAT provisions. The focus remains on ensuring that the calculations reflect genuine financial performance without succumbing to arbitrary interventions.
Citations
- ITAT Order (2026) ITAT 127 4
