2017 (1) TMI 782 - AT - Income Tax

MAT applicability - Requirement to pay taxes on Book Profits as per the provisions of section 115JB - exclusion provided under section 115JB(6) - AO rejected the contention of the assessee and applied the provisions of section 115JB of the Act calculating tax under MAT and levied the same - Held that - The assessee conceded that the findings of the Ld. CIT (Appeals), that the assessee did not qualify as an entrepreneur or developer as defined under SEZ Act, nor was situated in a unit or Special Economic Zone as defined under the Act, was correct. In view of the above admission made by the Ld. Counsel for the assessee, we find no reason to interfere in the order of the CIT(A), holding that the assessee is not covered under the exclusionary provisions of section 115JB(6) of the Act, and is thus liable to pay tax on its Book Profits as per the provisions of section 115JB of the Act. We therefore uphold the order of the Ld. CIT (Appeals) on this ground, and dismiss the ground raised by the assessee.

Summary

Issues:
Claim of exemption from Minimum Alternate Tax (MAT) under section 115JB(6) of the Income Tax Act, 1961.

Analysis:
The appeal involved the issue of whether the assessee was required to pay taxes on its Book Profits under the provisions of section 115JB of the Act, specifically focusing on the claim of exemption provided under section 115JB(6) of the Act. The assessee, a developer of housing projects, declared income in its return of income for the assessment year but did not pay tax on the book profit under MAT, citing exclusion under section 115JB(6). The Assessing Officer rejected this claim, levying tax under MAT. The CIT (Appeals) upheld the Assessing Officer's decision, stating that the assessee did not qualify as an entrepreneur or developer as defined under the Special Economic Zones (SEZ) Act, and thus was not covered under section 115JB(6) of the Act. The CIT (Appeals) emphasized that the exception under section 115JB(6) applied only to concerns situated in a Unit or SEZ as defined under the SEZ Act, which did not include the assessee. The Appellate Tribunal concurred with the CIT (Appeals) decision, noting that the assessee did not qualify for the exclusionary provisions of section 115JB(6) and was liable to pay tax on its Book Profits under section 115JB of the Act. Consequently, the appeal of the assessee was dismissed.

This case highlights the importance of correctly interpreting statutory provisions and understanding the scope of exemptions provided under the law. The Tribunal's decision underscores the specific requirements for availing exemptions under section 115JB(6) of the Act, emphasizing that the assessee must meet the defined criteria as per the SEZ Act to qualify for exclusion from MAT. The judgment serves as a reminder for taxpayers to carefully assess their eligibility for exemptions and comply with the relevant legal provisions to avoid tax liabilities.