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MAT

Dhawal Mohnot (Practicing) (449 Points)

20 April 2010

During the current year the company has long term capital gain for a substantial amount. I understand that it is exempt u/s 10(38) and there wont be any MAT applicable for the same. Kindly Confirm.

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6 Replies

Amir (Learner) (4016 Points)
Replied 20 April 2010

Dear Dhawal,

For computing Book Profits under 115JB -

Income exempt u/s 10 has to be excluded except 10(38)...

Now this means though it is exempt but indirectly a company (liable to pay MAT) has to pay TAX on this beacuse it will remain included in the Book Profits...

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Dhawal Mohnot (Practicing) (449 Points)
Replied 20 April 2010

Sir,

The Section says that Books profits for this purpose is to be increased by

" The amount or amounts of of expenditure relatable to any income to which Section 10(Other than provisions contained in clause 38 thereof) section 11 or 12 apply."

Can u please explain the catch here.

Amir (Learner) (4016 Points)
Replied 20 April 2010

Bhai,

The provision which you have mentioned i:e the one related to expenditure is just a harmonious or a consequential provision.

Since "Income u/s Sec 10 {OTHER THEN 10(38)} has been excluded so ANY EXPENDITURE in relation to that income cannot find its place in Book Profit and it has also to be excluded..

Eg - Dividend of Rs. 1,000 is lying at the credit of P/L A/c & expenditure in relation to that Rs. 50 is debited to P/L/ a/c

Now if u want to exclude this transaction then u have to exclude both the item I mean Rs. 50 as well other wise there will be a mismatch....

If still have any doubt, then pls ask.