2016 (1) TMI 77 - AT - Income Tax

MAT computation - exclusion of income of SEZ unit while computing Book Profit u/s115JB - Held that - In view of the decision of the co-ordinate bench of the Tribunal in assessee s own case 2012 (12) TMI 491 - ITAT MUMBAI holding that book profit computed under section 115JB will not include income of SEZ Unit, we do not see any infirmity in the order of the learned Commissioner (Appeals) in directing the Assessing Officer to exclude the income of the SEZ Unit while computing book profit under section 115JB of the Act. - Decided against revenue.

Summary

Issues:
1. Whether the income of SEZ unit should be excluded while computing Book Profit under section 115JB of the IT Act?

Analysis:
1. The Department appealed against an order directing the exclusion of SEZ unit income while computing Book Profit under section 115JB for the assessment year 2010-11. The Department argued that the amendment by Finance Act, 2007 brought profits of 10A & 10B units under Minimum Alternate Tax (MAT) purview. The Assessing Officer increased the book profit by including SEZ unit profits, leading to an appeal by the assessee.

2. The assessee, an IT solutions company, filed returns for the assessment year with SEZ unit profit excluded from book profit under section 115JB. The Assessing Officer disagreed, citing the Finance Act, 2007 amendment. The Commissioner (Appeals) directed exclusion based on a previous Tribunal decision favoring the assessee's claim that SEZ unit profits should not be part of book profit.

3. The Tribunal upheld the Commissioner's decision, citing a previous ruling that SEZ unit income should be excluded from book profit calculation under section 115JB. The Tribunal emphasized that the SEZ Act provisions exempt SEZ unit income from MAT applicability, despite amendments related to 10A & 10B units. The Tribunal dismissed the Department's appeal, affirming the exclusion of SEZ unit income from book profit calculation.

In conclusion, the Tribunal maintained that SEZ unit income should be excluded while computing Book Profit under section 115JB of the IT Act, based on the SEZ Act provisions and previous Tribunal decisions. The Department's appeal was dismissed, upholding the exclusion of SEZ unit income from book profit calculation.