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2018 (10) TMI 121 - AT - Income TaxMAT computation - Bringing to tax the Net Profit declared in the Profit Loss Account as Book Profit under the provisions of section 115JB - Held that - As in CAIRN EXPLORATION (NO. 7) LTD 1 VERSUS UNION OF INDIA 2 2010 (10) TMI 1182 - GUJARAT HIGH COURT similar issue has already decided the issue raised in the appeal in its case against the assessee. The Court in above case does not find the impugned provision to be in any manner unconstitutional, hence, the question of reading it down to save its constitutional validity does not arise, Besides, the provisions of clause (iii) of the Explanation to section 115JB are clear and ambiguous and it is not possible to take two views as to the meaning of the statutory language. Hence, the request to read down the provision also does not merit acceptance. Consequently, the question of directing the respondents to allow reduction of the brought forward losses of the petitioner company from the net profit in order to compute book profits under section 115JB of the Act in absence of any unabsorbed depreciation in the assessment year under consideration, also cannot be accepted - Decided in favour of revenue
Issues Involved:
1. Challenge to the order of the Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act. 2. Taxation of Net Profit declared in the Profit & Loss Account as Book Profit under section 115JB of the Act. 3. Eligibility to claim brought forward losses of the earlier year under section 115JB of the Act. Analysis: Issue 1: Challenge to CIT(A) Order The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the assessment order passed under section 143(3) of the Income Tax Act, 1961. The appellant contended that the order was bad in law. The appellant raised specific grounds challenging the actions of the Assessing Officer and the Commissioner of Income Tax (Appeals) in relation to the assessment. Issue 2: Taxation of Net Profit under section 115JB The appellant disputed the inclusion of Net Profit declared in the Profit & Loss Account as Book Profit under section 115JB of the Act. The appellant argued that the purpose of section 115JB was to tax companies with substantial book profits and no taxes under normal provisions of the Act. The appellant contended that the consideration in the Profit & Loss Account did not constitute real profit taxable under section 115JB. Issue 3: Claiming Brought Forward Losses The appellant challenged the decision that it was not eligible to claim brought forward losses of the earlier year under section 115JB of the Act due to NIL 'unabsorbed depreciation'. The appellant argued for the reduction of brought forward losses from the net profit to compute book profits under the Minimum Alternate Tax (MAT) provisions of the Act. The Hon'ble Gujarat High Court had previously addressed similar issues raised by the appellant in a Special Civil Application. The High Court dismissed the petition filed by the appellant, upholding the provisions of section 115JB of the Act. The High Court stated that the appellant, despite not being able to set off losses against income, was liable to pay income tax under section 115JB based on book profits. The High Court rejected the challenge to the constitutionality of the provisions and ruled against reading down the statute. In the present case, the Tribunal noted that the issue raised by the appellant was already decided against them by the Hon'ble Gujarat High Court. Considering the High Court's decision, the Tribunal found no reason to interfere with the Commissioner of Income Tax (Appeals) finding. Consequently, the Tribunal dismissed the grounds of appeal filed by the appellant, resulting in the dismissal of the appeal. In conclusion, the Tribunal upheld the decision based on the High Court's ruling and dismissed the appeal filed by the appellant.
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