MAT provisions do not apply to Banking Companies

Book profit tax is one of the artificial provisions meant to tax of corporates on deemed basis. Whether MAT provisions are applicable to banking companies came up before the Mumbai 'G' Bench of the tribunal in respect of Krung Thai Bank PCL v. Joint DIT (ITA No.3390/Mum/09),which was decided on 30.09.2010.

The facts relate to assessment year 2004-2005. The assessee admitted Rs.78.33 lakhs as profit in P&L account. The income for the year after adjusments was Rs.94.74 lakhs. Due to set off of brought forward losses,the total income returned was 'Nil'. The AO initiated reassessment proceedings and issued notice under sec 147 on the ground that the assessee did not apply sec.115JB provisions.

The tribunal upheld the contention of the assessee by holding that the MAT provisions are not applicable for banking companies. The reason being-the profit and loss account of the banks are not prepared in terms of the provisions of Part II and III of Schedule VI to the Companies Act,1956 and the banking companies are specifically exempted under the proviso to sec.211(2) of the Companies Act,1956. Since the Profit and loss account of the banks are prepared under the Banking Regulation Act,1949 the provisions of section 115JB(2) will not apply.

Thus the decision was rendered in favour of the assessee-bank.