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2012 (12) TMI 491 - AT - Income TaxMinimum Alternate Tax (MAT) on SEZ units - Addition of profit u/s.10A unit located in SEEPZ Mumbai to arrive at book profit u/s.115JB of the Act. - while computing tax liability u/s.115JB of the Act, deducted the income of Rs. 10,86,10,248 in respect of Mumbai Division from book profit as per the provisions of section 115JB(6) of the Act. - held that - It is evident from above that an existing SEZ unit will also be governed by Special Economic Zones Act, 2005. Therefore, we are of the considered view that the benefits which are to be provided to the newly established unit in SEZ as per section 10AA of the Act will also be available to the existing units in SEZ. Moreover, section 4(1) of SEZ Act provides that an existing SEZ unit shall be deemed to have been notified and established in accordance with provisions of SEZ Act and the provisions of Special Economic Zones Act shall apply to such existing SEZ units. It is also observed that by the SEZ Act, sub-section (6) to section 115JB was also inserted providing that provisions of section 115JB shall not apply to the income accrued or arisen on or after 1.4.2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic Zone, as the case may be. Hence, income of units located SEZ will not be included while computing book profit for the purpose of MAT as per section 115JB(6) of the Act. Authorities below were not justified to include the book profit in respect of SEZ unit at Mumbai of the assessee while computing book profit u/s.115JB of the Act for assessment year 2008-09. - Decided in favor of assessee.
Issues Involved:
1. Addition under Section 14A of the IT Act. 2. Set off of brought forward assessed business loss and unabsorbed depreciation against the current year's Business Income. 3. Set off of brought forward assessed unabsorbed depreciation against the current year's Income from Other Sources. 4. Addition of Profit of 10A Unit located in SEZ Mumbai to arrive at the Book Profit under Section 115JB. Detailed Analysis: 1. Addition under Section 14A of the IT Act: The assessee disputed the confirmation of an addition of Rs. 2936/- under Section 14A of the IT Act made by the Assessing Officer (AO). However, during the hearing, the assessee's representative submitted that this ground was not pressed. Consequently, the Tribunal rejected Ground No.1 for the assessment year 2008-09. 2. Set off of Brought Forward Assessed Business Loss and Unabsorbed Depreciation: The assessee contested the AO's decision not to allow the set off of brought forward assessed business loss and unabsorbed depreciation from the previous assessment year 2004-05 against the current year's Business Income. The Tribunal considered the submissions and referenced its earlier decision in the assessee's own case, where it had followed the jurisdictional High Court's decision in Hindustan Unilever Ltd. v. Dy. CIT and ITAT Pune Bench's decision in Patni Computer Systems Ltd. v. Dy. CIT. The Tribunal allowed Ground Nos. 2 & 3 for the assessment year 2008-09, subject to the final figures of loss after giving effect to earlier years' orders. 3. Set off of Brought Forward Assessed Unabsorbed Depreciation Against Income from Other Sources: Similar to the issue of set off against Business Income, the assessee also contested the non-allowance of set off of brought forward assessed unabsorbed depreciation against the current year's Income from Other Sources. The Tribunal, following its earlier order and the jurisdictional High Court's decision, allowed the set off, subject to the final figures of loss after giving effect to earlier years' orders. 4. Addition of Profit of 10A Unit Located in SEZ Mumbai to Arrive at the Book Profit under Section 115JB: The assessee challenged the AO's addition of profit from its 10A unit located in SEZ Mumbai to the book profit for the purpose of Section 115JB. The Tribunal noted that the assessee's unit in Mumbai was located in SEZ and referenced Section 115JB(6), which provides that MAT provisions do not apply to income from any business carried on in a unit located in SEZ. The Tribunal held that the authorities below were not justified in including the book profit of the SEZ unit while computing book profit under Section 115JB for the assessment year 2008-09. The Tribunal reversed the orders of the authorities below and allowed Ground No.4 for the assessment year 2008-09. Common Order for Assessment Years 2008-09 and 2009-2010: The Tribunal noted that the facts and grounds of appeal for the assessment year 2009-2010 were similar to those for the assessment year 2008-09. Therefore, it applied the same decisions mutatis mutandis for the assessment year 2009-2010. Specifically: - Ground No.1 for the assessment year 2009-2010, related to the addition of profit of the 10A unit in SEZ Mumbai to the book profit under Section 115JB, was allowed based on the same reasoning as for the assessment year 2008-09. - Ground No.2 for the assessment year 2009-2010, related to the set off of brought forward assessed business loss and unabsorbed depreciation, was also allowed based on the same reasoning as for the assessment year 2008-09. Conclusion: - The appeal for the assessment year 2008-09 was allowed in part. - The appeal for the assessment year 2009-2010 was allowed in full.
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