TaxTMI 
TaxTMI 
While completing the assessment for A/Y 2008-09, the assessing officer made addition to the income u/s 14A, however the income under MAT was higher than the regular income hence the tax was calculated as per the provisions of section 115JB. However, whiile computing the tax on book profit, the book profit was increased by the disallowance u/s 14A. Is the action on part of AO correct as this was a disallowance after assessment and not as per books.
addition of disallowance u/s 14A in the book profit for computing income under MAT
25 Jul 2011 
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Disallowance for exempt income expenses should not be imported into MAT computation; MAT requires separate book-profit adjustments.
The MAT regime is a self-contained code requiring book-profit adjustments for expenses attributable to exempt-income streams; assessment-stage disallowances under the normal-income disallowance provisions should not be mechanically imported into MAT computation, and expenses relating to exempt long-term capital gains must be considered separately when adjusting book profit. (AI Summary)
The MAT regime is a self-contained code requiring book-profit adjustments for expenses attributable to exempt-income streams; assessment-stage disallowances under the normal-income disallowance provisions should not be mechanically imported into MAT computation, and expenses relating to exempt long-term capital gains must be considered separately when adjusting book profit. (AI Summary)