Making it clear that the government did not believe in retrospective taxation, and had also taken action in the matter, Finance Minister Arun Jaitley on Friday said past cases will be decided by the judicial process, even as it will await suggestions from an expert panel."I have already said old cases need to be resolved. The revenue department didn't do anything," the finance minister told a press conference here to mark one year of the National Democratic Alliance (NDA) government."There was one decision in 2010, and in 2012 the decision was reversed. I have already abolished it from April, 2015," he added. Saying that old issues need to be resolved through the judicial process, Jaitley pointed out that he had already constituted a high-level committee to look into the matter."Only the higher judicial authority can rectify the matter (of old cases)," Jaitley said.
Jaitley had in Budget 2015-16 announced exempting FIIs from paying MAT on the capital gains earned by them, but soon after the income tax department sent notices to at least 90 foreign portfolio investors (FPIs).The income tax department had sent notices to 68 foreign institutional investors (FIIs) demanding Rs.602.83 crore as MAT dues of previous years, with FIIs, in turn, moving the higher court challenging the demand.The Central Board of Direct Taxes (CBDT) earlier this month said it will not issue any new demands for payments, and will take no coercive action to pursue claims that have already been filed under the controversial minimum alternate tax (MAT).This follows Jaitley's announcement of a high-level committee to look into the issue of levy of MAT on FIIs.Replying to the debate on the Finance Bill 2015-16 in the Rajya Sabha last week, Jaitley said that he had received a large number of representations on MAT applicable to FIIs as well as a few other tax issues, which are essentially legacy issues, and these would be referred to a committee headed by Justice A.P. Shah, the chairman of the Law Commission.
With the uncertainty created by MAT, foreign investors sold around $630 million in Indian shares and bonds on May 6, marking the biggest single-day sales since January 2014.The government on Wednesday constituted the three-member A.P.Shah Committee that will look into MAT demands on foreign companies.The panel also comprises former chief economic advisor Ashok Lahiri and chartered accountant Girish Ahuja. Its term is one year.The Shah committee will examine MAT notices for the period before April 1, 2015, and it has been requested to "give its recommendations expeditiously".