export profits while computing MAT.........

Suresh Prasad (www.aubsp.com) (15630 Points)

18 December 2010  

Supreme Court rules on deductibility of export profits while computing MAT

 

In a recent ruling Supreme Court (SC) in the case of Ajanta Pharma Ltd. (Taxpayer) (Civil Appeal No. 7518 of 2010) on the issue of deductibility of export profits from the net profit while computing ‘book profit’ for determining minimum alternate tax (MAT) liability under the Indian Tax Law (ITL) ruled that, while computing ‘book profit’, the net profit has to be reduced by the amount of export profits ‘eligible’ for deduction in the computation under the normal provisions of the ITL (normal computation) and not by the ‘quantum’ of deduction under that provision. Thus, even though the quantum of deduction was phased out in the normal computation during the tax years 2000-01 to 2003-04, the Taxpayer was entitled to full deduction of such profit from ‘book profit’ for MAT purposes.