2017 (11) TMI 76 - HC - Income Tax

MAT provision applicability - Held that - As noted, in our order dated 18.07.2016, while setting aside the notice for reopening, this Court had made certain observations with respect to computing the petitioner s income as per the MAT provision, in case, by virtue of petitioner s success in appeal, the said provision became applicable. When the Assessing Officer, in view of such appeal, has issued a showcause notice calling upon the petitioner why the computation of income should not be done as per the MAT provision, we see no reason to interfere. It is always open for the petitioner to oppose such proposal by filing reply.

Summary

Issues: Challenge to show-cause notice for Minimum Alternative Tax (MAT) provision application based on income threshold and previous assessment order.

Analysis:
1. Challenge to Show-Cause Notice for MAT Provision Application:
The petitioner challenged a show-cause notice dated 12.06.2017, calling for justification on the application of the Minimum Alternative Tax (MAT) provision. Previously, the Assessing Officer had issued a notice for reopening the assessment, which was contested by the petitioner and upheld by the High Court. The High Court ruled that since the income of the petitioner was above the threshold limit as per the assessment order, there was no need to apply the MAT provision at that stage. The Court emphasized that if the petitioner succeeded in appeal and the normal tax computation fell below the prescribed limit, then the MAT provision could be applied as a consequence of the appellate order. The present show-cause notice was issued based on the income determined by the Commissioner of Income Tax (Appeals) for the assessment year 2010-11, which the Assessing Officer believed warranted the application of the MAT provision.

2. Observations on Computing Income as per MAT Provision:
In an earlier order dated 18.07.2016, the Court had set aside the notice for reopening and made observations regarding the computation of the petitioner's income under the MAT provision if it became applicable due to the success of the petitioner in appeal. The Court noted that when the Assessing Officer issued a show-cause notice based on the appeal outcome, calling for the computation of income as per the MAT provision, there was no reason for interference. The petitioner was granted the opportunity to oppose the proposal by filing a reply. Ultimately, the Court dismissed the petition, affirming the Assessing Officer's decision to issue the show-cause notice for the application of the MAT provision.

In conclusion, the judgment addressed the challenge to the show-cause notice for the application of the MAT provision, emphasizing the threshold income limit and the impact of appellate success on the computation of income. The Court upheld the Assessing Officer's decision to issue the notice based on the income determined by the Commissioner of Income Tax (Appeals) and allowed the petitioner to respond to the proposal.