Relief from MAT u/s 115JB with regard to adjustments made to book profit on account of Secondary Adjustment and APAs
Relief Provided
The Finance Act 2021 has introduce new sub-section (2D) of section 115JB to rationalize MAT provisions to consider the below situations in computing MAT liability:
- In case of income of past year is included in the books of accounts of the Assessee, on account of secondary adjustment made under Transfer Pricing on an application made by the Assessee to the AO in this behalf or as a result of APA, book profit shall be computed taking without into account such income;
Computation mechanism
CBDT vide Notification No. 92/2021 dated 09/08/2021 has introduced new Rule 10RB giving effect to the above provision.
As per Rule 10RB, MAT payable u/s 115JB by the company will be reduced by the relief calculated by below formula:
(A-B) – (D-C),
where,
A = tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of the previous year including the past income;
B = tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of the previous year after reducing the book profit with the past income;
C = Aggregate of tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of those past year or years to which the past income belongs;
D = Aggregate of tax payable by the assessee company under sub-section (1) of section 115JB on the book profit of past year or years, referred to in item C, after increasing the book profit with the relevant past income of such year or years:
Provided that if the value of (A-B)-(D-C) in the formula is negative, its value shall be deemed to be zero.
Filing Mechanism
For availing relief under the said rule 10RB, CBDT has introduced Form 3CEEA which needs to be uploaded and signed / verified electronically at the IT portal.
