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TMI Blog2013 (6) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 80-IB of the Act is concerned. Section 80-IB operates in a particular sphere and section 115JB is operative in a totally different sphere. It is not the case of the appellant-assessee that section 80-IB is not operated or given effect to. While this is not in any way denied to an assessee, section 115JB is a special charging section for regulating tax liability of companies in general and made applicable in particular and is confined to the assessee-companies whose tax liability, when computed in the normal manner falls short of the liability as computed under this provision. Therefore, we are of the view that there is absolutely no question of section 80-IB having any bearing or effect or control over the provisions of section 115JB of the Act. A budgetary speech while will have some significance for understanding a provision if there is any ambiguity, in the wake of clear language of section 115JB, in the first instance there is no ambiguity, in the second instance, the ambiguity sought to be introduced on certain premise which is not apparent and is only on a limited reading of the budget speech, at any rate a budget speech in itself cannot regulate or control th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the appeals is with regard to the assessee-company's liability for payment of tax for the three assessment years in question, as levied under the provisions of section 115JB of the Act. The provisions of section 115JB though had come on the statute book with effect from April 1, 2000, as per the Finance Act, 2000, and is applicable for the assessment year 2001-02 onwards, it was amended by the Finance Act, 2002, and was made operative from April 1, 2001, and the amending Act though, in fact, received the assent of the President only on May 11, 2002, it is being made applicable from an anterior date, i.e., from April 1, 2001, itself. To this extent, the question arises for the assessment year 2002-03 with regard to the application and operation for this assessment year. The amendment was for making the book profits as deemed taxable income of the assessee-company under the circumstances explained and this income was to be charged at seven and half per cent. of such income.Prior to this amendment, while the charge was with reference to the amount of book profit, i.e., seven and half per cent. of the book profit, a possible apprehension that a reference only to the book profit as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as bad in law, etc. The appeals to the Appellate Commissioner and further appeals to the Income-tax Appellate Tribunal in respect of all the three years having failed, the assessee is in appeal before this court. The appeals had been admitted to examine the following substantial questions of law: "(1) Whether the Tribunal was justified in law in holding that the provisions of minimum alternative tax under the provisions of section 115JB are applicable to the appellant on the facts and circumstances of the case ? (2) Whether the Tribunal erred in not adjudicating the contentions of the appellant in respect of exempted income under the provisions of section 80-IB should have been reduced while computing the books profit under section 115JB of the Income-tax Act ? (3) Whether the Tribunal erred in not adjudicating the ground regarding chargeability to interest under the provisions of sections 234B and 234C especially in relation to the provisions of section 115JB on the facts and circumstances of the case ?" We have heard Sri A. Shankar, learned counsel for the appellant-assessee and Sri M. Thirumalesh, learned standing counsel for the respondents Revenue. Sri Shankar has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made."and it is submitted that with the presence of a non obstante clause, both in section 80-IB, as incorporated with reference to section 80-IA, and section 115-JB of the Act, the non obstante clause as incorporated in section 80-1B should prevail, as it is in consonance with the intention of the Legislature in granting exemption in respect of the income earned by the assessee from out of the establishment of industrial unit in a backward State, as notified, and this should be given effect to and in support of this submission, reliance is placed on the decision of the Supreme Court in the case of Central Bank of India v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g declared and it is only in respect of such companies, the provisions of section 115J or section 115JA were sought to be operated upon, whereas the assessee-company is not one such company ; that it is not a "certain company", as is referred to in section 115JB for the reason that it has not declared dividends for the assessment years in question. What is highlighted is a tax under section 115JB is not on all companies but only in respect of "certain companies" and when as per the budget speech and as per the circular issued by the Board, though in the context of section 115JA of the Act, is, nevertheless, applicable in respect of the provisions of section 115JB also and, therefore, submits that the Assessing Officer and the appellate authorities could not have held that the assessee-company is liable to tax under section 115JB of the Act. The submission of Sri Shankar, by drawing our attention to the Board circular, is that the principle is well settled by the judicial authorities and, therefore, no exception can be taken in the present case. The submission is that the provisions of section 115JB which follows the provisions of section 115JA and section 115JB had been introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article 14 and the rule of fairness has been re-stated by this court in Bannari Amman Sugars Ltd. v. CTO [2005] 139 STC 86 (SC) ; [2005] 1 SCC 625. It was observed in paragraphs 8 and 9 : 'A person may have a "legitimate expectation" of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past practice. The doctrine of legitimate expectation has an important place in the developing law of judicial review. It is, however, not necessary to explore the doctrine in this case, it is enough merely to note that a legitimate expectation can provide a sufficient interest to enable one who cannot point to the existence of a substantive right to obtain the leave of the court to apply for judicial review. It is generally agreed that 'legitimate expectation' gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation to be confined mostly to right of a fair hearing before a decision which results in negativing a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2), as increased by- (a) the amount of income-tax paid or payable, and the provision therefor ; or (b) the amounts carried to any reserves, by whatever name called, other than a reserve specified under section 33AC ; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities ; or (d) the amount by way of provision for losses of subsidiary companies ; or (e) the amount or amounts of dividends paid or proposed ; or (f) the amount or amounts of expenditure relatable to any income to which section 10 or section 10A or section 10B or section 11 or section 12 apply,if any amount referred to in clauses (a) to (f) is debited to the profit and loss account, and as reduced by,- (i) the amount withdrawn from any reserves or provisions (excluding a reserve created before the 1st day of April, 1997, otherwise than by way of a debit to the profit and loss account), if any such amount is credited to the profit and loss account : Provided that where this section is applicable to an assessee in any previous year, the amount withdrawn from reserves created or provisions made in a previous year relevant to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-IB of the Act should be read into this provision to effectuate the benefit conferred on the assessee under section 80-IB of the Act when it conflicts with section 115JB and for this reason also, no tax can be levied under section 115JB of the Act. It is, therefore, submitted that the authorities below are in error, particularly the Tribunal, in holding that the assessee is liable to pay tax under section 115JB of the Act and the questions posed for examination should be answered in favour of the assessee and against the Revenue and the appeals should be allowed. Such arguments are countered by Sri Thirumalesh, learned standing counsel for the respondent-Revenue, and it is firstly contended that a non obstante clause assuming that there is one such in sub-section (5) of section 80-IA, to which reference is made, is only for the purpose of quantifying deduction that qualifies under this provision and it is for the limited purpose and not as though it can be a non obstante clause to prevail over all other provisions of the Act. The submission is that the non obstante clause is for the limited purpose of ascertaining the amount qualified for deduction under section 80-IB of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... get speech being only an introductory to the Bill in Parliament and that in itself is not an end. Though many decisions are roped in for interpreting this, we find there is no scope for interpretation in the present situation, as the provision of the statute should be given effect to, as it occurs and if there is only any ambiguity in understanding the statute then only the tool of interpretation should be called in aid. We do not find any competing or derogatory provision in section 115JB vis-a-vis section 80-IB of the Act is concerned. Section 80-IB operates in a particular sphere and section 115JB is operative in a totally different sphere. It is not the case of the appellant-assessee that section 80-IB is not operated or given effect to. The grievance of the assessee is that because of the operation of section 115JB, the benefit of section 80-IB is taken away. Section 115JB occurring in a taxing statute is in the nature of a charging section and that too a special charging section, exemption or concession or any other benefit sought should come from within the provisions of section 115JB itself, which occurs in Chapter XII-B of the Act. Section 80-IB is a provision which oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present situation. A budgetary speech while will have some significance for understanding a provision if there is any ambiguity, in the wake of clear language of section 115JB, in the first instance there is no ambiguity, in the second instance, the ambiguity sought to be introduced on certain premise which is not apparent and is only on a limited reading of the budget speech, at any rate a budget speech in itself cannot regulate or control the statutory provision, more so a charging section in a revenue yielding statute, we are of the clear opinion that the provisions of section 115JB should be given full effect to without being influenced or guided or regulated by the budget speech of the Finance Minister. The Board circular being in the context of the earlier provisions, but, nevertheless more by way of extraction of the budget speech, that by itself cannot have any special significance, as the Board circular does not in any way seeks to clarify the levy and rate of levy as provided in section 115JB of the Act. Levy and rate of tax alone is what matters for the purpose of section 115JB of the Act. Arguments are advanced by Sri Shankar, learned counsel for appellant ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-companies who have to pay tax under section 115JB of the Act, but have no concession available under section 80-IB, whereas the tax liability of the person under section 115JB of the Act, who can claim concession under section 80-IB of the Act gets reduced for the purpose of section 115JB of the Act. It is, therefore, to avoid section 115JB being rendered discriminatory and unconstitutional being violative of article 14 of the Constitution of India, the contention of Sri Shankar for reading down or reading up the provisions of section 115JB of the Act, particularly by adding to different situations mentioned in the Explanation, to be expanded by including reference to section 80-IB of the Act cannot be accepted. A statutory provision cannot be so read down to render it unconstitutional, but reading down a statutory provision is to make it constitutional and not otherwise. Therefore, the arguments fail. However, in so far as the levy of interest under sections 234B and 234C, liability for the assessment year 2002-03 is concerned, in the light of the decision of this court in the case of Jupiter Bio-Science Ltd. (supra) and the view which is supportive of taken by the Calc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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