New Delhi: In a relief to foreign investors, Government on Wednesday told the Supreme Court that it stood by its circular exempting them from paying minimum alternate tax (MAT) if they do not have a permanent establishment in India.
The government's stand before the apex court came as a succour to Mauritius-based foreign firm, Castleton Investment Ltd, which had filed an appeal against the Income Tax department over levy of MAT.
A bench of justices A K Sikri and R Nariman was informed by Attorney General Mukul Rohatgi that the government would abide by the decision taken in the circulars, ending speculation over the Castleton case.
The firm had approached the apex court challenging the August 14, 2012 judgement of the Authority of Advance Rulings, which required Castleton to pay MAT in India for transfer of shares from an entity in Mauritius to another one in Singapore.
The bench disposed of the appeal of Castleton in the light of the fact that both parties agreed to the government's circulars.
The first circular issued on September 2, accepting recommendations of the Justice A P Shah-led committee, said that MAT provisions would not apply to foreign institutional investors not having a permanent establishment in India.
On September 24, another press release issued followed which also applied to foreign companies.
The government had announced its intention to amend the Income Tax Act to exempt foreign companies without a permanent establishment in India and foreign portfolio investors from MAT.
The Finance Ministry had recently said the decision to exempt foreign companies, which do not have a permanent establishment in India, from payment of MAT will boost investor confidence.