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2013 (4) TMI 757 - AT - Income TaxMAT - Computation of Book Profit u/s. 115JB - Held that - No hesitation to hold that for the purpose of computing Book Profit u/s. 115JB of the Act, income has to be computed as per Parts of Schedule VI of Companies Act and not on basis of provisions of I.T. Act. Interest on deposits - eligible for deduction u/s. 10A - Held that - We find that the issue has been decided in favour of the assessee by the Tribunal in his own case allowing the claim of the assessee for treating the interest from fixed deposit as income falling under the head Profits & gains of business or profession eligible for deduction u/s. 10A of the Act. Facts being identical, respectfully following the decision of the Tribunal, we direct the AO to treat the interest from fixed deposits as income falling under the head Profits & gains of business or profession eligible for deduction u/s. 10A of the Act. Computation of profits of the business of the undertaking and amount of deduction u/s. 10A - Held that - We direct the AO to allow deduction u/s. 10A before setting of the brought forward unabsorbed depreciation and business loss. Charging of interest u/s. 234B - income of the assessee is taxable under the provisions of Sec. 115JB - Held that - The issue has been decided against the assessee by the Hon ble Supreme Court in the case of JCIT Vs Rolta India Ltd. (2011 (1) TMI 5 - SUPREME COURT OF INDIA) wherein held that interest u/s. 234B is payable on failure to pay advance tax in respect of tax payable u/s. 115JA of the Act.
Issues:
1. Computation of Book Profit u/s. 115JB of the Act. 2. Taxation of interest on deposits under different heads. 3. Computation of profits of the business of the undertaking and deduction u/s. 10A. 4. Charging of interest u/s. 234B of the Act. --- Issue 1: Computation of Book Profit u/s. 115JB of the Act: The appeal challenged the correctness of the order pertaining to A.Y. 2005-06, specifically regarding the computation of Book Profit u/s. 115JB of the Act. The Assessing Officer reduced the deduction u/s. 10A under normal provisions, while the assessee contended that Book Profit should be computed by reducing income credited to the profit and loss account under Sec. 10A. The Tribunal referred to judicial pronouncements, including decisions in Moser Baer India Ltd, Roxy Investments, and Ajanta Pharma Ltd, to conclude that Book Profit u/s. 115JB should be based on Schedule VI of the Companies Act, not the IT Act. Thus, Ground No. 1 & 2 were allowed. Issue 2: Taxation of Interest on Deposits: The second issue concerned the taxation of interest on deposits under different heads. The lower authorities taxed it under "Income from other Sources," but the assessee argued it should be under "Profits & gains of business or profession" for deduction u/s. 10A. Referring to a previous Tribunal decision, the Tribunal directed the AO to treat the interest from fixed deposits as income under "Profits & gains of business or profession" eligible for deduction u/s. 10A. Consequently, Ground Nos. 3 & 4 were allowed. Issue 3: Computation of Profits and Deduction u/s. 10A: The third issue involved the computation of profits of the business of the undertaking and the deduction u/s. 10A, particularly regarding the setting off of unabsorbed depreciation. Citing the decision in CIT VS Black And Veatch Consulting Pvt. Ltd., the assessee argued that deduction u/s. 10A should be allowed before setting off brought forward business loss and unabsorbed depreciation. The Tribunal, following the jurisdictional High Court's decision, directed the AO to allow deduction u/s. 10A before setting off unabsorbed depreciation and business loss, thus allowing Ground No. 5 to 9. Issue 4: Charging of Interest u/s. 234B of the Act: The final grievance related to charging interest u/s. 234B of the Act. The assessee contended that no interest should be levied under this section as the income was taxable under Sec. 115JB. However, considering the decision in JCIT Vs Rolta India Ltd., the Tribunal dismissed this ground of the assessee. In conclusion, the appeal was partly allowed based on the detailed analysis and application of relevant legal provisions and judicial precedents to each issue raised by the assessee.
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