Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: due date for vat payment :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: TDS :: articles on VAT and GST in India :: cpt :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: empanelment
News Headlines »
 How to claim income tax refund
 How to time your buys to have best of two tax regimes
 Here's why you must always check Form 26AS before filing tax return
 Want to file your income tax return after June 30? Having Aadhaar card is a must
 Timeline for filing of tax returns extended by two months
 Top 5 common mistakes to avoid while filing your income tax returns
 GST rollout on July 1: Deadline for filing tax returns extended
 What is GST?
 Income-tax (15th Amendment) Rules, 2017?
 Banks get a breather as GST Council extends deadline for tax filing
 Income Tax filing: Your easy guide in 7 steps

Is MAT liability subject to advance tax?
September, 26th 2006
The provisions relating to tax on book profits, generally referred to as minimum alternate tax (Mat), were first introduced in the Income Tax Act, 1961 (the Act) by the Finance Act, 1987, wef assessment year 1988-89, vide section 115J. Section 115J provides that where in the case of a company, the total income as computed under the Act is less than 30% of its book profit, the total income shall be deemed to be an amount equal to 30% of the book profit. As book profit can be computed only after the end of the year, a contention was raised by the assessees that in case tax is paid u/s 115J, the provisions relating to computation and payment of advance-tax are not applicable, and as a consequence, they are also not liable to interest under section 234B and 234C for non-payment/default and deferment of advance-tax. This contention was not accepted by Guwahati, Madras, Madhya Pradesh and Mumbai High Court which took a view that even in cases covered by section 115J, the assessees are liable to pay advance-tax. Punjab and Haryana High Court took similar view in case of section 115JA (Mat provision for assessment years 1997-98 to 2000-01). The rationale for arriving at such conclusion was, firstly, the expression current income, on which advance tax is payable u/s 207, refers to computation of total income under provisions of the Act which includes section 115J as well. Secondly, sections 234B and 234C do not exclude the applicability where tax is payable section 115J. Thirdly, an estimate of book profit can be made on basis of business projections and profit embedded in transactions effectuated during the year. Lastly, even prior to insertion of section 115J assessees have been estimating current income, after providing deductions admissible under the Act, and if they can do so, they can also estimate book profit. However, a division bench of the Karnataka High Court in the case of Kwality Biscuits Ltd v CIT (2000) 243 ITR 519, held that advance-tax related provisions would not apply to tax payable under section 115J since the entire exercise of computing income under section 115J can only be done at the end of the financial year, and the provisions relating to advance-tax cannot be made applicable until and unless the accounts are audited and the balance-sheet prepared. It also observed that section 115J is a deeming provision, and it should be carried to its logical conclusion but without creating further deeming fiction so as to include other provisions of the Act which are not specifically made applicable. Further, the words "for the purposes of this section" in the explanation to section 115J(1A) cannot be construed to extend beyond the computation of liability of tax. The Revenue's civil appeal against the Karnataka High Court judgment has been dismissed by the apex court on April 26, 2006 (284 ITR 434). A question now arises, in case the dismissal of civil appeal by the apex court is considered as law of the land under Article 141 of the Constitution, as to whether the reasoning as above in the context of section 115J shall also apply to section 115JB (Mat provision for assessment years 2001-02 onwards). It may be pertinent to note that, unlike section 115J, section 115JB contains a specific provision namely, sub-section (5), providing that save as otherwise provided in this section, all other provisions of the Act shall apply to every assessee, being a company, mentioned in the said section. Further, the Central Board of Direct Taxes (CBDT), in Circular No. 13 / 2001 dated November 9, 2001, have observed that section 115JB is a self-contained code, and referring to section 115JB(5), have observed that except for substitution of tax payable under the provision and the manner of computation of book profits, all the provisions of the tax including the provision relating to charge, definitions, recoveries, payment, assessment, etc, would apply in respect of the provisions of section 115JB. One may also note that section 2 of the annual Finance Acts enacted after the insertion of section 115JB, proceed on the premise that advance-tax is payable even in cases covered by section 115JB. Though there may be some force in the argument that section 115JB is triggered only after computing the book profit and the reasoning flowing from the division bench judgment of the Karnataka High Court in Kwality Biscuits' case (affirmed by the apex court) squarely applies, the legislative intent seems to be otherwise. RAVI PRAKASH AND RICHA SAWHNEY The authors are principal consultants, PricewaterhouseCoopers
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Integrated Software Solutions Integrated Software Development Integrated Software Services Integrated Software Solutions India Integrated Softw

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions