In a verdict that will benefit export houses and corporates with export income, a special bench of the Income-tax Appellate Tribunal (ITAT) has held that the Minimum Alternate Tax (MAT) cannot be levied on export income which till a couple of years ago was exempted from tax under the now extinct Section 80 HHC of the Income-tax Act.

However, this exemption of export income from MAT can be accorded only up to the period when the Section 80 HHC of I-T Act was in operation. Section 80 HHC expired in 2004.

The special bench held that export income could not be included while computing the taxable income under MAT. MAT was introduced in 1997-98 to bring under the tax net zero-tax companies who avoid tax through sharp tax planning.

Under MAT, if the taxable income of a company computed under this Act is less than 30% of its book profits, the income of the company chargeable to tax is determined as an amount equal to 30% of the companys book profits. The special bench of ITAT held that there were enough indications in the Income-tax Act and in the speech made by finance minister while introducing MAT that the MAT scheme should not take away the benefit given under 80 HHC.

The ITAT held the law itself has provided that in spite of the liability to pay tax under MAT scheme, the exporter is entitled to claim deduction under 80 HHC. The legislature itself has diluted the rigours of the law on the subject. The order was given in an appeal filed by income-tax department against Syncome Formulations.