Romanccing The Superb Case law on MAT (For All Inter & Finals) Ester india vs Union of India

Ester india vs Union of India

Base:- Can Interest be allowed u/s 115JAA on MAT Credit and its constitutional Validity

IT : Provisions of sections 115JA and 115JAA are neither arbitrary nor unreasonable nor ultra vires to any provisions of the Constitution. The contention of the petitioner that the tax paid on the basis of computation under section 115JA of the Act amounts to a compulsory deposit on which no interest is paid to the assessee is also misconceived. The tax as payable on income as computed under section 115JA of the Act is a tax levied under the Act, albeit computed on the basis of the book profits of the assessee instead of under the normal computation provisions of the Act. The fact that section 115JAA of the Act provides for credit on account of tax paid against the tax payable for the subsequent years does not in any manner suggest that the levy on the basis of computation under section 115JA of the Act is not a tax under the Act (Because Interest is only available on TAX Refund and since it is not considered as Tax no question of Interest arise. )

section 115JA not violative of Article 14 of the constitution:
• Merely because section 115JA of the Act provides for an alternate method of calculating taxable income which is different from the normal computation provisions under the Act cannot render the tax based on such computation to be without the authority of law.

MAT not a compulsory interest-free deposit; It's a tax; section 115JAA not unconstitutional:
• The provisions of section 115JAA of the Act are provisions for the benefit of an assessee and are intended to give certain credit in computation of the taxes payable by an assessee in respect of any tax paid by the assessee under section 115JA of the Act. A set off in payment of income tax under section 115JAA is only available subject to the assessee paying the minimum tax for each year as computed on the basis of section 115JA. The credit can only be availed for a period of five succeeding years. This too does not in any manner indicate that the provisions of section 115JA are unconstitutional or arbitrary.

New Section 92BA in Transfer Pricing

Romancing the New Section

New Section 92BA

Specified Domestic Transaction (SDT)

This section provides that an SDT means any of the following transactions (not being an international transaction): 

• Expenditure for which payment is made to a related party as specified u/s 40A(2)(b);
• any transaction in relation to transfer of goods or services between various businesses of the same assessee as referred to in section 80A;
• any transfer of goods or services referred to in section 80-IA(8) – inter-unit transfers;
• any business transacted between the assessee (covered u/s 80IA) and its associated enterprise – section 80-IA;
• any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sections 80-IA(8) or 80IA(10) are applicable; or
• any other transaction as may be prescribed by the CBDT,

These provisions are applicable to an assessee only where the aggregate value of the above mentioned transactions exceeds rupees 5 crores during the relevant financial year and they come into effect from Assessment year 2013-14 relevant to the financial year 2012-13 onwards.