MAT Computation Under Section 115JB: Jabalpur ITAT Remands Case for Fresh Hearing on Partnership Profit Exclusion

Case Overview

Case Name: Central Hatcheries Pvt Ltd Vs ACIT (ITAT Jabalpur)
Appeal Number: ITA No. 169/JAB/2025
Date of Order: 21/08/2026
Assessment Year: 2022-23
Forum: Income Tax Appellate Tribunal, Jabalpur

Background and Factual Matrix

Central Hatcheries Pvt Ltd, the assessee-company, had filed its return of income for Assessment Year 2022-23. The return was processed by the Centralised Processing Centre (CPC) under Section 143(1) of the Income Tax Act, 1961. During the course of such processing, the CPC proceeded to compute the book profit of the assessee under Section 115JB of the Act. This computation involved an adjustment pertaining to two specific items — the treatment of agricultural income and the assessee's share of profit received from a partnership firm.

As a direct consequence of this adjustment, a Minimum Alternate Tax (MAT) demand of ₹2,41,800/- was raised against the assessee-company.

Aggrieved by this outcome, the assessee approached the Commissioner of Income Tax (Appeals) [CIT(A)], seeking relief from the impugned demand. However, the CIT(A) dismissed the appeal, prompting the assessee to carry the matter further before the Income Tax Appellate Tribunal, Jabalpur.

Grounds of Appeal Raised Before the Tribunal

The assessee raised multiple grounds before the Jabalpur ITAT, which can be summarised as follows:

  1. The intimation issued under Section 143(1) was legally unsustainable since the adjustment embedded in it involved a debatable issue — a matter clearly beyond the permissible scope of that provision, as recognised by the Hon'ble Supreme Court in T.S. Balaram v. Volkart Bros. (1971) 82 ITR 50 (SC).

  2. The CIT(A) committed an error both in law and on facts by refusing to allow the exclusion of agricultural income and the share of profit from the partnership firm from the book profit, while computing MAT liability under Section 115JB of the Act.

  3. Crucially, the CIT(A) failed to adjudicate the specific and distinct ground relating to the deductibility of the assessee's share of profit from the partnership firm from book profit — a significant omission amounting to a violation of the principles of natural justice.

  4. The CIT(A) further erred by misreading the facts — treating what was, in substance, profit from agriculture as a loss from agriculture — and this factual error directly contributed to the wrongful raising of the MAT demand of ₹2,41,800/-.

  5. The assessee denied any liability to pay the said demand of ₹2,41,800/-, characterising it as both incorrect and contrary to law.