The Income Tax (I-T) department on Tuesday said it will wait for the apex court’s ruling before pursuing the matter on minimum alternative tax (MAT) against Aberdeen Asset Management in the Bombay High Court (HC).
The SC is due to hear Mauritius-based Castleton’s plea on MAT levy in August.
Moreover, the decision on application of minimum alternative tax (MAT) prior to April 1, 2015 is also under review and currently pending before the law commission, headed by Justice AP Shah. The revenue department, therefore, has been asked to wait for the government’s final decision, the tax department’s standing counsel said before the two-member bench.
“…owing to the case of Castleton Investments which is pending before the SC and a decision on application of MAT prior to 01/04/2015 is also pending, we are requested to await the final outcome at SC and law commission before proceeding ahead in the present cases, including Aberdeen,” the tax department stated in an application sought by the HC.
Charanjeet Chanderpal, the standing counsel for the income tax department clarified that the decision to put the matter on hold does not imply the government’s proposal to withdraw tax demand. “Only the prosecution is stayed. The department wants to avoid any retrospective ruling by the government. The department wants to wait and watch and I have to follow their instructions,” Chanderpal added.
Last week, the tax department had argued that Aberdeen’s case should not be stayed as it had paid tax at 15% and only a marginal amount is outstanding. The two-member bench at HC directed the I-T’s counsel to file an application stating the department’s decision to simultaneously pursue the matter while the issue on MAT was being dealt at a larger level by the SC and government.
On May 6, Aberdeen received interim relief from the Bombay HC on technical grounds as the I-T department had not followed the correct procedure while issuing the notices. Aberdeen had argued that it was issued a final order without having been given a draft assessment order. A final order gives the department statutory powers to recover tax demands.