"Transfer pricing adjustments must be made while computing book profit for levy of Minimum Alternate Tax (MAT)". In the context of provisions contained in the Income-tax Act, 1961, examine the correctness of the above st

For the purpose of computing book profit for levy of minimum alternate tax, the net profit shown in the Statement of Profit and Loss account prepared in accordance with the Companies Act, 2013 must be increased / decreased only by the additions and deductions specified in Explanation 1 to section 115JB of the Income Tax Act, 1961. The Explanation 1 to section 115JB of the Income Tax Act, 1961 does not provide for adjustments for Transfer Pricing and therefore, transfer pricing adjustments cannot be made while computing book profit for levy of Minimum Alternate Tax. Hence, the statement that Transfer pricing adjustment must be made while computing book profit for levy of Minimum Alternate Tax (MAT) is incorrect .