pri IT department claimed Rs 30,000 crore from companies that violated MAT provisions IT department claimed Rs 30,000 crore from companies that violated MAT provisions

Income Tax department has claimed Rs 30,000 crore from companies that have violated provisions under the minimum alternate tax. Sources said the claim is not only for the current assessment year of 2009-10, wherein assessments are still going on, but also for previous four-five assessment years, which are under litigation either in courts or at appellate levels.

Also, for each year, cases have been re-opened for block assessment of the last four years preceding the assessment year in consideration.

According to Section 115JB, a company is required to pay tax under special provisions of ‘minimum alternate tax’ even if it does not make profit and its total income for the specific assessment year is less than 10 per cent of its book profit. Enacted in 2000-01 as Section 115JA, it was later amended to Section 115JB.

Sources said the violations were observed in most of the MAT paying companies, which had booked huge profits under assets sale. In most of the assessments under scrutiny, officials said the companies did not show the income in profit and loss account, but directly accounted it as reserves in balance sheet.

“While it is a clear violation of Companies Act, this also helps in under reporting taxable income,” sources added.

Registrar of Companies said inspections were done to check violations of Companies Act, and not revenue generation. Under MAT, accounts have to be prepared as per Companies Act.

I-T officials said most of the companies got reprieve from appellate authorities or courts in the plea that their I-T statements were made as per Companies Act and the RoC could neither find any violation in it nor qualify the balance sheet.

In order to tackle such violations in future and get revenue without any legal hassles, the Central Board of Direct Taxes has suggested that I-T authorities should have the power to qualify accounts for violation of Companies Act in cases pertaining to income tax.

These powers will help the I-T authorities to recover the amount even if balance sheets are not qualified by the RoC.

More Under Income Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

July 2021