2011 (1) TMI 1163 - HC - Income Tax

Whether Tribunal was right in law in holding that the profits eligible for deduction u/s 80IA and 80IB of the Act should be included in the computation of Book Profits for the levy of MAT as per the provisions of section 115JB of the Act Held that - amounts which are required to be reduced from the net profit as shown in the profit and loss account while computing the book profit are specifically laid down in section 115JB, which interalia, include the amount of profits eligible for deduction under section 80-HHC, section 80-HHE and section 80-HHF of the Act in the manner provided thereunder. Section 80-IB of the Act does not find reference in the categories enumerated therein, in the light of the provisions of sub-section (5) of section 115JB, the other provisions of the Act except as provided in the said section would not be applicable while computing book profit for the purposes of section 115JB of the Act. Thus, reliance placed by the appellant on sub-section (5) of section 115JB of the Act is misconceived. The Tribunal was, therefore, justified in holding that the petitioner is not entitled to deduction under section 80IB of the Act while computing its book profits under section 115JB of the Act Whether, in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in holding that interest is leviable u/s 234B and 234C of the Act in case of assessment order being framed on Book Profits u/s 115JB of the Act - Held that - in the case of M/s. Rolta India Ltd. (2011 - TMI - 201466 - SUPREME COURT OF INDIA) , interest under sections 234B and 234C is payable on failure to pay advance tax in respect of tax payable under section 115JA/115JB of the Act. Thus, it is apparent that the controversy raised vide the said question stands concluded against the assessee by the said decision. In the circumstances, it is not necessary to set out the facts and contentions in detail, no legal infirmity in the impugned order of the Tribunal, appeals are accordingly dismissed

Summary

Issues Involved:
1. Inclusion of profits eligible for deduction under sections 80IA and 80IB in the computation of "Book Profits" for the levy of MAT under section 115JB of the Income Tax Act.
2. Levy of interest under sections 234B and 234C when the assessment order is framed on "Book Profits" under section 115JB.

Detailed Analysis:

Issue 1: Inclusion of Profits Eligible for Deduction under Sections 80IA and 80IB in Book Profits for MAT Levy under Section 115JB

Facts and Contentions:
The appellant, a public limited company engaged in housing projects, contested the inclusion of profits eligible for deduction under sections 80IA and 80IB in the computation of "Book Profits" for the levy of Minimum Alternate Tax (MAT) under section 115JB. The appellant argued that such profits should be excluded based on sub-section (5) of section 115JB.

Tribunal's Decision:
The Tribunal rejected the appellant's contention, holding that the profits eligible for deduction under sections 80IA and 80IB should be included in the computation of "Book Profits" under section 115JB.

Court's Analysis:
The court examined the provisions of section 115JB, particularly the explanation defining "book profit" and the specific items that can be reduced from the net profit. The court noted that sections 80IA and 80IB were not included in the list of deductions under section 115JB, indicating the legislature's intention to exclude such deductions from the computation of "Book Profits."

The court further clarified that sub-section (5) of section 115JB, which states "save as otherwise provided in this section," implies that other provisions of the Act are not applicable if section 115JB provides otherwise. Since section 115JB specifically outlines the computation of "Book Profits," the deductions under sections 80IA and 80IB do not apply.

Conclusion:
The court upheld the Tribunal's decision, affirming that the appellant is not entitled to exclude profits eligible for deduction under sections 80IA and 80IB from the computation of "Book Profits" under section 115JB.

Issue 2: Levy of Interest under Sections 234B and 234C on Book Profits under Section 115JB

Facts and Contentions:
The appellant challenged the levy of interest under sections 234B and 234C on the grounds that the assessment was based on "Book Profits" under section 115JB.

Supreme Court's Precedent:
The appellant's counsel referenced a Supreme Court judgment in the case of Joint Commissioner of Income Tax, Mumbai vs. M/s. Rolta India Ltd., which held that interest under sections 234B and 234C is payable on failure to pay advance tax in respect of tax payable under sections 115JA/115JB.

Court's Analysis:
The court acknowledged the Supreme Court's decision, which conclusively resolved the issue against the appellant. The court noted that the Supreme Court's ruling established the applicability of interest under sections 234B and 234C for taxes computed under section 115JB.

Conclusion:
The court upheld the Tribunal's decision, confirming that interest is leviable under sections 234B and 234C when the assessment order is framed on "Book Profits" under section 115JB.

Final Judgment:
The appeals were dismissed, with the court finding no legal infirmity in the Tribunal's order. The court concluded that the Tribunal's decisions on both issues were justified and did not raise any substantial question of law warranting intervention.