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2011 (9) TMI 1101 - AT - Income TaxCompute tax on normal income before rebate u/s. 88E on book profit for applying provisions of section 115JB - whether CIT(A)-VI, has erred in law in directing to compare Tax on normal income before rebate u/s. 88E with 10% of Book Profit for applying Sec. 115JB? - Held that:- In present assessment year provisions of section 115JB of the Act provides for a minimum alternate tax for companies under this provision and company is required to pay at least 10% of its book profit as corporate tax and in case tax liability of a company under regular provision is more than this amount the provision of MAT will not apply and company will pay corporate tax as per regular scheme. Simultaneously, the assessee is eligible for rebate u/s. 88E (1) of the Act as is available to assessee whose total income in previous year includes any income chargeable under the head “profits and gains of business or profession” arising from taxable securities under sub-section (2) of Section 88E of the Act an assessee is eligible for deduction from the amount of income tax on such income arising from securities from such transactions computed in the manner provided in section 88E (2) of the Act of an amount equal to securities transaction tax paid by him in respect of taxable securities transaction entered into in the course of his business during the relevant previous year. It means that in case the assessee’s income under normal provisions is more than 10% of book profit, as is in the present case, MAT provision u/s. 115JB of the Act will not apply. In our view, the tax payable as referred to in section 115JB of the Act is gross tax payable and not the tax after rebate under other provisions of the Act. In view of the above, we are of the view that the tax payable on the income computed under normal provisions, in the case of the assessee, is much greater than 10% of book profit and, therefore, the findings of CIT(A) are clearly within the provisions of the Act. Appeal of the revenue is dismissed.
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