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of <h1>Tribunal rules in favor of assessee on MAT liability issue under Income-tax Act.</h1> <h3>M/s. Viswabharathi Textiles P. Ltd. Versus The Commissioner of Income Tax - III Coimbatore.</h3> The Tribunal allowed the appeal of the assessee against the Commissioner's order regarding liability of Minimum Alternate Tax (MAT) under section 115JB of ... - Issues involved: Appeal against order u/s 115JB of the Income-tax Act, 1961 for the assessment year 2006-2007.Summary:The appeal was filed by the assessee against the order of the Commissioner of Income Tax -III, Coimbatore, regarding liability of Minimum Alternate Tax (MAT) u/s 115JB of the Income-tax Act, 1961. The main contention was whether the company is liable for MAT in the year it ceases to be a sick industrial company as per section 3(1)(o) of the Act.The Commissioner argued that the company was not a sick industrial company for the relevant year as its net wealth exceeded accumulated losses, and the Board for Industrial and Financial Reconstruction (BIFR) had discharged it from being a sick industrial company. Therefore, the company was not eligible for MAT exemption u/s 115JB of the Act.The assessee contended that as per clause (vii) to Explanation (1) of sub-section (2) of section 115JB, profits of a sick industrial company can be reduced from book profit until the net worth equals or exceeds accumulated losses. The Assessing Officer allowed this deduction for the relevant year.The Tribunal noted that the company was a sick industrial company until the assessment year in question when its net worth equaled or exceeded accumulated losses. The deduction under clause (vii) was permissible until the year in which the net worth became positive for a sick company. Therefore, the Tribunal held that the Commissioner was not justified in denying the deduction to the assessee and allowed the appeal.In conclusion, the Tribunal set aside the Commissioner's order and allowed the appeal of the assessee regarding MAT liability u/s 115JB of the Income-tax Act, 1961 for the assessment year 2006-2007.
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