Minimum Alternate Tax - Page 2

If Assessee is taxed under ‘MAT’ to ‘MAT’ – No Escapement, No Reopening

The AO is empowered to assess or reassess the total income of the Assessee by reopening the Assessment, invoking the provisions of section 148 of the Act. The authors have visualized in-depth manifestation with respect to the jurisdiction of the AO in reopening the Assessments of the ‘Companies’ where even after the reopening the ulti...

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FM justifies Minimum Alternate Tax on Special Economic Zones

Minimum Alternate Tax on Special Economic Zones Minimum Alternate Tax (MAT) has been levied on developers of Special Economic Zones (SEZs) and units operating in SEZs with effect from 1st April, 2012 vide Finance Act, 2011. Representations have been received from the business community and others regarding restoration of exemption from pa...

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Amendment in Condition for Claiming Credit of Alternate Minimum Tax

The existing provisions of sub-section (1) of section 115JEE of the Act provide that the provisions of Chapter-XI I BA shall be applicable to any person who has claimed a deduction under part C of Chapter VI-A or claimed a deduction u/s 1 0AA. Further the present provisions of sub-section (2) of section 1 15JEE […]...

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Section 115J, 115JA & 115JB may ultra vires Constitution of India & Income-tax Act, 1961

CA Dev Kumar Kothari Section 115J, 115JA and 115JB may be ultra vires the Constitution of India and the Income-tax Act,1961 – a study with reference to some very weakly prepared and contested cases about validity of provision for tax on book profit / minimum alternate tax (MAT) and some suggestions for tax payers and […]...

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MAT U/s. 115JB is payable even if Assessee is entitled to deduction U/s. 80-IB

Sankhla Polymers (P.) Ltd. Vs Income-tax Officer, Ward 12(2), Bangalore (Karnataka high Court)

Section 115JB, in fact, in no way either denies the benefit given under Section 80-IB or reduces the same. While the appellant-assessee can claim the benefit under Section 80-IB of the Act and it is not denied per se to the appellant-assessee, in the given case, the provisions of Section 115JB may be attracted or may not be attracted depe...

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Retrospective Amendment to s. 115JB vide FA 2009 is not ultra vires or unconstitutional

Whirlpool of India Ltd. Vs Union of India (Delhi High Court)

Section 115J/115JB targeted corporate entities for imposing a Minimum Alternate Tax on their book profit. It was noticed by the legislature that as a result of various tax concessions and incentives certain companies making huge profits and also declaring substantial dividends have been managing their affairs in such a way as to avoid pay...

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Non-life insurance companies demand relaxation from MAT

. Some of the participating CEOs raised tax related issues including non-applicability of MAT for non-life insurance sector at par with life insurance companies and zero rated service sector on crop insurance, tools, senior citizen policy, RSBY and other exempt categories. ...

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S. 115JB – MAT- Assessee not eligible for credit of Surcharge & Cess paid

Richa Global Exports Pvt. Ltd. Vs Assistant Commissioner of Income-tax (ITAT Delhi)

Therefore, it emerges that MAT payable u/s 115JB is only income tax and does not include surcharge or education cess. Therefore, if only income tax is paid under the provisions of section 115JB it is natural that tax credit u/s 115JAA will only be of income tax and not of surcharge and education cess. ...

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Alternate Minimum Tax (AMT) on all persons other than companies

Vide the Finance Bill, 2012, the heading of Chapter XII-BA regarding alternate minimum tax (AMT), in respect of persons other than a company, has been substituted by the words ‘Persons other than a company’, in place of the words ‘Limited liability partnerships’. As per amendment of the aforesaid Chapter, provisions of AMT have b...

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Posted Under: Income Tax |

S.115JB P/L a/c prepared under regulatory Acts to be basis for computing book profit for insurance,banking,electricity company

As per section 115JB, every company is required to prepare its accounts as per Schedule VI of the Companies Act, 1956. However, as per the provisions of the Companies Act, 1956, certain companies, e.g. insurance, banking or electricity company, are allowed to prepare their profit and loss account in accordance with the provisions specifie...

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MAT Payble on Gain from disposal of revalued asset even if Gain not credited to P/L a/c

It is, proposed to amend section 115JB to provide that the book profit for the purpose of section 115JB shall be increased by the amount standing in the revaluation reserve relating to the revalued asset which has been retired or disposed, if the same is not credited to the profit and loss account. ...

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Alternate Minimum Tax (AMT) on all persons other than companies

Under the existing provisions of the Income-tax Act, Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) are levied on companies and limited liability partnerships (LLPs) respectively. However, no such tax is levied on the other form of business organisations such as partnership firms, sole proprietorship, association of persons, ...

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Budget 2011-12 – Minimum Alternate Tax Rate (MAT) increased marginally

Minimum Alternate Tax :- Under the existing provisions of section 115JB(1), a company is required to pay a minimum alternate tax (MAT) on its book profit, if the income-tax payable on the total income, as computed under the Act in respect of any previous year relevant to the assessment year commencing on or after 1st April, 2011, is less ...

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Provision made for bad and doubtful debts to be included in the ‘Book Profit’ for the purpose of MAT

ADIT (Int. Tax) Vs. Bank International Indonesia (ITAT Mumbai)

ADIT (Int. Tax) v. Bank International Indonesia - ITAT held that provision made for doubtful debts will be required to be added back to the net profit as per the profit and loss account while computing the Book Profit for the purpose of determination of Minimum Alternate Tax , subsequent to the amendment to Explanation 1 to section 115JB...

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Provisions of Minimum Alternate Tax (MAT) do not apply to Banking Companies

Krung Thai Bank PCL Vs Joint Director of Income Tax – International Taxati on Circle 3(1) (ITAT Mumbai)

Recently in the case of Krung Thai Bank PCL v. Jt Director of Income-tax – International Taxation (ITA No. 3390/Mum/2009) (Mum), the Mumbai bench of the Income-tax Appellate Tribunal (the Tribunal) held that the provisions of Section 11 5JB of the Income-tax Act, 1961 (the Act) pertaining to Minimum Alternate Tax (MAT) would come into p...

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MAT is no more minimum alternate tax

When the first draft of the Direct Taxes Code (DTC) was released in August 2009, the provision dealing with Minimum Alternate Tax (MAT) was one of the most discussed and deliberated provision. It proposed to levy tax on the gross value of assets. There were certain drawbacks and limitations which were pointed out to the government, as a r...

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Posted Under: Income Tax |

Foreign company’s transfer of shares to wholly owned Indian subsidiary not taxable in India

In re M/s. Praxair Pacific Limited (Authority for Advance Ruling)

Authority for Advance Rulings (AAR) concluded that gains derived from the transfer of shares by a Mauritius company to its wholly owned subsidiary in India would not be taxable in India under the Indian Income Tax Act (ITA), nor would such gains be subject to the Minimum Alternate Tax (MAT) (Praxair Pacific Limited (A.A.R. No. 855/2009))....

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DTC Bill 2010 exempts companies converting into LLP from Minimum Alternate Tax and Dividend Distribution Tax

Chapter V of the Direct Taxes Code (DTC) seeks to levy a tax of 20 per cent on the book profits of every company. Profits of the company have to be prepared in the prescribed form in accordance with the provisions of parts II and III of Schedule VI t...

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MAT will take sheen off SEZs

Special Economic Zones are likely to lose their sheen, with Direct Taxes Code Bill proposing to introduce minimum alternate tax at 20 per cent on the book profit of developers as well as units from April 1, 2012....

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DTC – MAT rate on book profit will be 20 percent

The government on Monday proposed to raise minimum alternate tax (MAT) to 20 per cent on book profits but diluted the earlier proposal to impose it on gross assets that had drawn protests from firms. MAT was introduced in fiscal 1998 to address the inequity. Many companies, despite making book profits as per their profit and loss account,...

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Minimum Alternate Tax (MAT) provisions not applicable to foreign companies if no physical presence in India

In re The Timken Company (AAR Delhi)

The applicant is a company incorporated in the United States and is a leading manufacturer of engineered bearings, alloys etc. The applicant has a significant shareholding in an Indian listed company, which was initially set up as joint venture with Tata Iron and Steel Company....

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MAT U/s. 115JB of Income Tax not applicable to foreign company without presence in India

Re. The Timken Company (AAR)

The assessee, a foreign company, without a presence or PE in India, earned long-term capital gains which were exempt u/s 10(38). The assessee applied for a ruling on whether it was liable to pay Minimum Alternate Tax (MAT) u/s 115JB on the said gains. HELD ruling in favour of the assessee:...

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Minimum Alternate Tax provisions for A.Y. 2010-11 & A.Y. 2011-12

In the case of companies, if tax payable on its total income as computed under the I.T. Act, 1961 in respect of any previous years, is less than 15% (for assessment year 2010-11 and 18% from assessment year 2011-12) of its "book profit", then such book profit shall be deemed to be the total income of the company and tax shall be payable a...

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SEZ units and developers may come under MAT net under the DTC Regime

Although the revised draft Direct Taxes Code (DTC) has suggested the continuation of profit-linked incentives for existing SEZ units and developers, they are likely to come under the ambit of Minimum Alternate Tax (MAT). The revised draft of DTC has recommended the rate of MAT at 2 per cent of the value of gross assets as the final tax. T...

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Suggestions of the ICAI on the Revised Discussion Paper on the Direct Taxes Code

A Revised Discussion Paper (RDP) on Direct Taxes Code (DTC) has been released by the CBDT on 15th June, 2010, taking into consideration the vital and critical issues raised by the various stakeholders on the DTC. It is extremely satisfying to note that six of the eleven significant issues identified in the RDP are as per the specific sugg...

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Revised DTC draft will be put for public comments within a month

With the draft direct taxes code being criticised for its proposal to tax long-term savings among others, the finance ministry on Wednesday said a revised draft will be put for public comments within a month for addressing the concerns of all stakeholders....

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Government may scale down the Income Tax Slabs in Final Direct Tax code

People with more than Rs 10 lakh annual income may not get the tax relief originally proposed in the Direct Taxes Code, as the Finance Ministry is for tweaking slabs across the board to offset concessions elsewhere....

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It department looking to reopen Assessment of companies paying MAT

The Income Tax Department has decided to reopen assessments for three years, up to 2006-07, for companies paying the minimum alternate tax (MAT)., for companies paying the minimum alternate tax (MAT). MAT, inserted in the Income Tax Act in 1996-97, is meant to make those companies pay tax which earn profit and pay dividend to shareholders...

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Budget 2010: Direct and Indirect Tax Proposals for Oil and gas Sector

Last year's budget had introduced an investment linked tax incentive for specified business including the business of laying and operating a cross country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network. One condition for availing this benefit was...

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Special Economic Zones approved in States

In addition to the Seven Central Government SEZs and 12 State/ Private Sector SEZs set up prior to the enactment of SEZ Act, 2005, formal approval have been accorded to 571 proposals out of which 348 SEZs have been notified. A total of 105 SEZs are already exporting....

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CBDT decided to monitor advance tax payments by top companies

Big corporations will now find it difficult to defer their advance tax payments. In a bid to meet its revenue collection targets, the Central Board of Direct Taxes (CBDT) has decided to monitor advance tax payments by top companies and persuade them not to defer such payment as self-assessment tax for the next financial year....

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Direct tax code lack the focus on development

The tax code comes in the economic background of over 400 million people being below the poverty line; with many areas disturbed due to underdevelopment; sustained policies of inclusive growth having reduced the poverty ratio but not absolute numbers; and a huge lack of infrastructure....

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MAT provisions under direct tax code and its impact on tax liability

MAT – Making Companies slim Ms. Kareena Kapoor style Introduction: 1.0 The objective of new Direct Tax Code (DTC) as stated in the Discussion Paper (DP) published are broadening the base, minimize exemptions, horizontal and vertical equity etc. Since the proposed DTC touches all the aspects of taxation of income of all the types of [&he...

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Accounting and Provisions of Minimum Alternate Tax (MAT)

Chapter XIIB of the Income Tax Act, 1961 covers Minimum Alternate Tax U/s. 115JB, which covers cases under ‘Special Provision for Payment of tax by certain companies’.. The relevant extract of this section is produced below:...

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Income tax rates proposed in DTC for Partnership Firm, LLP, Foreign Companies, Domestic Companies, Individual and HUF

For Individuals and Hindu Undivided family The code proposes to exempt the general tax payer from paying income tax if his income is Rs 1,60,000 in a year. He would pay just zero tax till an income of Rs 1,60,000 per year. From income above Rs 1,60,000 till Rs 10 lakh (Rs 1 million), he […]...

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Major Changes / Amendments in Income Tax and Wealth-tax Made in Budget 2009-2010

No changes made in the Corporate Tax rates. For the Limited Liability Partnerships, the provisions of Income Tax are the same as applicable in the case of Partnership Firms formed as per the Indian Partnership Act’ 1932....

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Claim of depreciation as per I.T. Rules, for computation of book profit/ MAT Calculation U/s. 115JB

Under the provisions of section 115JB of the Income-Tax Act, 1961 (the Act), where in the case of a company, the income-tax payable on the total income in respect of any assessment year (AY), is less than ten percent of its book profit, such book profit shall be deemed to be the total income of the assessee and tax payable by the assessee...

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