2021 (12) TMI 588 - AT - Income Tax

Levying MAT u/s 115JB - 100% reduction of the profit u/s. 80IB(10) - while computing the book profit u/s. 115JB appellant had reduced it from book profit and claimed that it was not liable for tax under, this Section - As per AO assessee is not entitled to reduce the book profit by claiming such deduction - HELD THAT - For claiming deduction u/s. 80IB(10) from book profit, no case has been made out that this adjustment to book profit under 115JB falls under any of the adjustments mandated in section 115JB Explanation (1). Only reason given by the assessee for the purpose is that sub-section (5) mentions, save as otherwise provided in this section, all other provisions of this act shall apply to every assessee being a company, mentioned in this section. A bare reading of the above clearly shows that sub-section (5) clearly provides that save as otherwise provided in this section all the provisions of the I.T. Act will be applicable to the computation governed by section 115JB. Hence, this clearly means that what has been provided in this section shall prevail and thereafter all other provisions shall apply. Hence, explanation (1) to section 115JB clearly provides what can be adjusted from book profit. Hence, sub-section (5) duly saves the prescription of Explanation (1). Hence, this explanation (5) does not help the assessee to claim that section 80IB deduction permissible under the I.T. Act should be adjusted from book profit As decided in APOLLO TYRES LTD. VERSUS COMMISSIONER OF INCOME TAX 2002 (5) TMI 5 - SUPREME COURT clearly shows that there is no bar on making adjustments to book profit as per law. The above pleading is absolutely not sustainable. Hon'ble Apex Court has clearly provided that except as provided in section 115J no adjustment to the book profit can be done. The said decision of Hon'ble Apex Court is clearly applicable as noted by us hereinabove. Insertion of sub-section (5) in section 115JB in no way dilutes prescription of Explanation (1) to section 115JB which clearly specifies adjustment being made in the book profit. We are conscious that other High Courts have taken different view in this context. However, Hon'ble Bombay High Court in several decisions has followed the aforesaid decision of Hon'ble Apex Court and held that profit shown in book profit cannot be tinkered or adjusted in any manner otherwise than the manner which is mandated in the said section of the Act. Even in cases where the assessee has taken capital receipt directly to the capital reserve without routing it through profit and loss account, Hon'ble Bombay High Court has held that the Assessing Officer cannot tinker the book profit duly disclosed in the profit and loss account on the touchstone of Hon'ble Supreme Court decision in the case of Apollo Tyres Ltd. (supra). No tinkering to the book profit is permitted except as provided in Explanation (1) of Section 115JB of the Act. Various ITAT and other High Court decisions quoted by learned counsel cannot take precedence over Hon'ble Bombay High Court decision referred hereinabove. It is settled law that the decisions of other High Courts have persuasive value but decision of Hon'ble Jurisdictional High Court is binding upon all subordinate courts and Tribunals. In accordance with the discussion and precedent hereinabove we do not find any infirmity in the orders of authorities below. Hence, we uphold the same.

Summary

Issues Involved:
1. Levy of Minimum Alternate Tax (MAT) under Section 115JB.
2. Charge of interest under Sections 234B and 234C.

Detailed Analysis:

A. Levy of Minimum Alternate Tax (MAT) under Section 115JB:

1. Confirmation of MAT Levy:
The CIT(A) confirmed the AO's order levying MAT of ?9,35,53,237/- under Section 115JB for AY 2011-12. The assessee argued that the provisions of Section 115JB(5) require the deduction allowable under Section 80IB(10) to be reduced from the net profit for computing book profit. However, the AO and CIT(A) disagreed, stating that the deduction under Section 80IB(10) is not exempt but allowable, and thus cannot be reduced from the book profit.

2. Provisions of Section 115JB:
The CIT(A) clarified that Section 115JB mandates that book profit must be computed as per the Companies Act, and only specific adjustments mentioned in Explanation 1 to Section 115JB are permissible. The assessee's argument that Section 115JB(5) allows for the deduction under Section 80IB(10) to be reduced from book profit was rejected, as the deduction under the Income Tax Act is separate from the ascertainment of book profit under the Companies Act.

3. Case Laws and Circulars:
The CIT(A) noted that various case laws cited by the assessee, including JCIT vs. Rolta India Ltd., were not applicable to the facts of the case. The CIT(A) emphasized that the provisions of Section 115JB are clear and specific, and the book profit must be computed as per the Companies Act without any adjustments for deductions under Section 80IB(10).

4. Tribunal's Decision:
The Tribunal upheld the CIT(A)'s decision, agreeing that Section 115JB is a self-contained code and that book profit must be computed strictly as per the provisions of the Companies Act and Explanation 1 to Section 115JB. The Tribunal noted that the decision in Rolta India Ltd. related to the charge of interest under Sections 234B and 234C, and did not address adjustments to book profit under Section 115JB.

B. Charge of Interest under Sections 234B and 234C:

1. Confirmation of Interest Charge:
The CIT(A) confirmed the AO's order levying interest under Sections 234B and 234C amounting to ?2,72,19,415/- and ?52,28,525/- respectively. The assessee contended that based on the Supreme Court's judgment in Kwality Biscuits Ltd., the company was not required to pay MAT in advance during FY 2010-11.

2. Tribunal's Decision:
The Tribunal noted that the decision in Rolta India Ltd. by the Supreme Court clarified that interest under Sections 234B and 234C is payable on failure to pay advance tax under Section 115JB. The Tribunal upheld the CIT(A)'s decision, confirming the charge of interest under Sections 234B and 234C.

Conclusion:
The Tribunal dismissed the assessee's appeal, upholding the orders of the AO and CIT(A) regarding the levy of MAT under Section 115JB and the charge of interest under Sections 234B and 234C. The Tribunal emphasized that Section 115JB is a self-contained code, and no adjustments to book profit are permissible except as explicitly provided in Explanation 1 to Section 115JB. The decision of the Supreme Court in Rolta India Ltd. was found not applicable to the issue of adjustments to book profit under Section 115JB.