The Pharmaceuticals Export Promotion Council of India (Pharmexcil) has suggested to the Union finance ministry to amend the provision prohibiting the assessing officers from re-opening assessments or enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessees u/s 154 for any assessment years beginning on or before the 1st day of April, 2006.
The exporters feel that section 115JB of IT Act, 1961 is contrary to the provisions prescribed under AS-13 of Companies Act. Since it is applicable with retrospective effect, it also gives scope to assessing officer for re-opening/enhancing of assessment or reduction of refund already made or increasing the liability of assessee.
Therefore, on behalf of the exporters, the Pharmexcil has suggested in its pre-budget proposal to amend the provision prohibiting the assessing officers from re-opening assessments or enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessees u/s 154 for any assessment years beginning on or before the 1st day of April, 2006.
In the pre-budget proposal, Pharmexcil has stated that the provision for the computation of “Book Profit” requires that the amount set aside as provision for diminution in the value of any asset is to be added back. Under section 211(3C) of the Companies Act, 1956, a company is mandatorily required to comply with AS-13 on ‘Investments’ notified by the Central Government under the Companies Accounting Standard Rules, 2006, which requires to create a provision for diminution in value of investment if the market value is less than the cost of acquisition.
Further, it has explained that the starting point of computation of Minimum Alternate Tax (MAT) liability is also ‘book profit’ of the assesses which is the net profit as per the profit & Loss Account.
Therefore, such profit must be determined after complying with the Accounting Standards notified by the Central Government So the Pharmexcil has suggested that the amendment in section 115JB is contrary to the treatment prescribed in AS-13.
Further, the foregoing amendment applies retrospectively from the assessment year 2001-02 thereby giving scope to the income tax authorities to re-open the concluded cases and cause undue hardship to the assesses.
Therefore, the exporters feel that the provision should be amended to prohibit the assessing officers from re-opening assessments or enhancing the assessment or reducing a refund already made or otherwise increase the liability of the assessees u/s 154 for any assessment years beginning on or before the 1st day of April, 2006.