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'Tax Payable' Meaning of the term used in Section 115JB

CA RAMESH KUMAR AHUJA (CA, DISA, LLB) (5452 Points)

30 January 2009

The definition of the terM AND EXPRESSION 'Tax Payable' as mentioned in Section 115JB of the Income Tax Act, 1961 has not been given anywhere in the Act.

In the case of a Company dealing in shares, a huge amount of STT was paid during FY 2006-07(AY 2007-08).

The company is elegible for a Rebate under section 88E and after claiming the rebate the tax liability is NIL.

Whether such rebate may be claimed from the MAT of 7.5% of the book profits. In other words the term Tax Payable as given in Section 115JB means the tax after rebate under section 88E or before that.

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4 Replies

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 30 January 2009

There is no scope for confusion.. Sec 115JB is attracted only if 10% of Book Profits is more than the normal tax liability....

Normal Tax Liability means tax payable as per the provisions of the IT ACT after rebate u/s 88E and tax relief u/s 90

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aakash jaiswal (CA final Student) (38 Points)
Replied 30 January 2009

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CA Anand Shukla (CA) (33 Points)
Replied 30 January 2009

Hi Ahuja Sir.. In my opinion the term ' tax payable' referred in 115JB refers to the gross tax payable and not the tax after the rebate under the other provisions. The provisions of MAT should be applied if and only if EFFECTIVE TAX PAYABLE TO GOVT IS LESS THAN 10% OF BOOK PROFIT. The rebate is the reduction from tax liability, it reduces the effective tax payable. However the sec 115JB is mechanism to compute the effective tax liability. It should be applied before allowing any rebate under the normal provisions.

Please let me know if u have any other opinion on the issue. THanks.

CA CS VINAYAK PATIL (CHARTERED ACCOUNTANT) (921 Points)
Replied 24 February 2009

Originally posted by :CA RAMESH KUMAR AHUJA
"	The definition of the terM AND EXPRESSION 'Tax Payable' as mentioned in Section 115JB of the Income Tax Act, 1961 has not been given anywhere in the Act. In the case of a Company dealing in shares, a huge amount of STT was paid during FY 2006-07(AY 2007-08). The company is elegible for a Rebate under section 88E and after claiming the rebate the tax liability is NIL. Whether such rebate may be claimed from the MAT of 7.5% of the book profits. In other words the term Tax Payable as given in Section 115JB means the tax after rebate under section 88E or before that.	"