Lets say, a pvt ltd company has revenue of 50 lakhs of which 45 lakhs is business income and 5 lakhs is dividend income from debt mutual fund. Total expenses are 45 lakhs. Since dividend income is not taxable in the hands of the investor, the company will pay no tax. However, will this situation result in tax if calculated using MAT / Book Profit?
Thanks.
As per section 115JB of the oncome tax act your company has to add back dividends paid or proposed in your profit while calculating book proft for MAT .
Thanks for the reply. Please note that I am not referring to dividend payable by the pvt ltd company. I am referring to dividend income received by the company from its surplus funds parked in dividend paying mutual funds.
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