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Query on mat

CA Atihash Agarwal (CHARTERED ACCOUNTANT) (187 Points)

22 November 2011

In case of MAT, while calculating BOOK PROFITS, what is the treatment of long term capital gain.???

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7 Replies

Khushboo Somani (Business) (90 Points)
Replied 22 November 2011

According to the provisions of section 10(38) - income by way of long-term capital gains shall be taken into account in computing the book profit under section 115JB and for payment of income-tax under that section.

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CA student (CA Final) (404 Points)
Replied 22 November 2011

It should be considered for calculating book profit.

CA Atihash Agarwal (CHARTERED ACCOUNTANT) (187 Points)
Replied 22 November 2011

thanx khushboo.. but if we take ltcg into book profits, then wont be paying tax on ltcg also.. but ltcg are exempt as per tax provisions

Surendra Agarwal (MANAGER FINANCE AND BUSINESS PLANNIN) (289 Points)
Replied 22 November 2011

Yes , you are right dear that ltcg is exempt from tax so why should it be incorporated in calculation of mat. Basiclly provisons of mat is introduce to tax companies profits from books of which are laid before shareholder"s in AGM. companies shows higher profit in front of share holders and lower profit as per income tax provisons therefore to curb these presantation provisons of MAT introduced in mat companies taxed on book profit if profit as per income tax lower n mat credit given to companies up to ten years

Ankur A Mehta (CA) (375 Points)
Replied 23 November 2011

Long Term Capital Gain should be CONSIDERED for calculating book profit i.e Income to which section 10 (38) appy should not be reduced from book profit and Expense in relation to income to which section 10 (38) apply should not be added back to book profit.

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kiran (CA FINAL) (80 Points)
Replied 23 November 2011

Even Long Term Captal Gain Which is exempted u/s 10(38) companys liability to pay mat on LTCG will

not be exluded.

VISHNU HARIT (Assistant manager (management trainee)) (59 Points)
Replied 23 November 2011

hello, every one, as you all have expressed ur view on treatment of LTCG U/S10(38) for MAT Calculation purpose, i am also agree with almost all of u.

according to exlanation to sec 115JB the LTCG u/s 10(38) will be added to net profit shown in p&l a/c i.e.it will not be deducted from profit , if it is included in p&l a/c and so any expenditure u/s10(38) debited to p&l a/c is not to added for book profit calculation.it is an allowable expenditure for MAT.