MAT Not Applicable Post Liquidation Commencement

• Once a company enters liquidation proceedings, MAT under Section 115JB generally becomes inapplicable.
  
• This is because the company ceases normal business operations, and financial statements are no longer prepared under a going concern assumption.
  
• The company’s primary focus shifts to asset realization and debt settlement, not profit generation.
  
• Without standard profit and loss accounts, book profit cannot be computed in the prescribed manner.
  
• Hence, the basis for MAT calculation is no longer valid.
  

Legal and Practical Position

• Courts and tribunals have observed that companies under liquidation are not liable to MAT, as the intent of Section 115JB is to tax active, profit-making companies.
  
• Liquidation proceedings are governed by Insolvency and Bankruptcy Code (IBC) or Companies Act, where tax liabilities are handled as part of the settlement process.
  
• The tax authorities may submit claims as creditors, but MAT assessment is not separately pursued.
  
• Income tax officers generally do not impose MAT during the liquidation period.
  
• Tax dues, including MAT if any prior to liquidation, are settled as per priority in liquidation.
  

No Requirement for Form 29B or MAT Return

• Companies under liquidation are not required to furnish Form 29B, which certifies MAT computation.
  
• Nor are they expected to file MAT schedules in their income tax returns.
  
• Their returns are often filed under special formats reflecting liquidation status.
  
• The tax department may accept simplified filings based on asset distribution reports.
  
• This reflects the company’s non-operational and non-commercial nature.
  

MAT for Pre-Liquidation Periods

• MAT may apply for assessment years before liquidation proceedings commence, if the company had book profits.
  
• For those years, the company is treated like any other going concern.
  
• Book profit must be computed, and MAT paid accordingly if applicable.
  
• MAT credit earned prior to liquidation may remain unused unless transferred.
  
• Liability is recorded among dues payable during winding up.
  

Role of Liquidator

• The liquidator must inform the tax authorities of the liquidation and maintain a record of tax liabilities.
  
• They may be required to allocate proceeds toward tax dues (including MAT) arising before the liquidation.
  
• Post-liquidation, their responsibility is to distribute remaining assets after satisfying secured and statutory creditors.
  
• The Income Tax Department may lodge claims for unpaid MAT dues incurred before the liquidation order.
  
• However, no new MAT liability is created during or after liquidation.