Sale of agricultural land excluded from MAT book profit where the land was not a capital asset.

Profit arising from the sale of agricultural land that is not a capital asset under section 2(14)(iii) cannot be included in book profit under section 115JB. The ITAT Cochin applied the view taken in the assessee's own earlier case and held that Chapter XII-B provides only an alternative method of tax computation; it does not enlarge the scope of total income or bring within MAT a receipt that is otherwise outside the charge of tax. The sale proceeds were therefore excluded from book profit computation.

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Issues: Whether the profit arising on sale of agricultural land, which is not a capital asset, is includible in the computation of book profit under section 115JB.

Analysis: The land sold was not a capital asset within section 2(14)(iii) of the Income-tax Act, 1961. The issue had already been decided in the assessee's own case in favour of exclusion from book profit, and the same reasoning was followed. Chapter XII-B was held to provide only an alternative basis for computing tax and not to enlarge the scope of total income or bring within MAT a receipt otherwise outside the charge of tax. The profit on sale of such agricultural land was therefore treated as not liable to inclusion in book profit under section 115JB.

Conclusion: The profit on sale of agricultural land was held not includible in the computation of book profit under section 115JB, in favour of the assessee.

Ratio Decidendi: A receipt arising from sale of agricultural land that is not a capital asset cannot be included in book profit under section 115JB, since Chapter XII-B does not expand the charge of tax beyond receipts otherwise falling within the Income-tax Act.

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