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TMI Blog2019 (10) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that profits eligible for deduction under section 80IB(10) of the Act were to be reduced for arriving at the book profits of the assessee were also dismissed relying on the decision of the Hon'ble Uttarakhand High Court in the case of SIDCUL Industrial Association Vs State of Uttarakhand [ 2010 (11) TMI 671 - UTTARKHAND HIGH COURT] Interest leviable u/s 234B and 234C - HELD THAT:- Apex Court in CIT Vs Kwality Biscuits Ltd. [ 1999 (11) TMI 48 - KARNATAKA HIGH COURT] has unambiguously held that interest under sections 234B and 234C of the Income-tax Act, 1961 cannot be levied on a company whose income is computed u/s 115J. Accordingly, in the face of the clear legal position as settled in the aforesaid decision, there cannot be any ambiguity. - ITA No. 4/CHD/2019 (Assessment Year : 2011-12) - - - Dated:- 14-8-2019 - SMT. DIVA SINGH, JM AND SMT.ANNAPURNA GUPTA, AM Assessee by: Shri Nikhil Goyal, CA Revenue by: Shri Chandrajeet Singh, CIT-DR ORDER PER DIVA SINGH The present appeal has been filed by the assessee wherein the correctness of the order dated 22.10.2018 of CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the CIT(A). However, conceded in all fairness that no distinguishing facts or position of law was being referred to for consideration of the Bench. 6. The ld. CIT-DR in the light of the arguments advanced on behalf of the assessee placed reliance upon the impugned order and stated that the issue is fully covered in favour of the Revenue. 7. We have heard the rival submissions and perused the material available on record. A perusal of record shows that the issue has been decided by the CIT(A) relying upon the decision of the ITAT in 2008-09 and 2009-10 assessment years. The relevant facts with respect thereto as discussed in the order read as under: 3.2 Ground of Appeal No. 2 pertains to levy of tax under Section 115JB (i.e. tax under MAT). The AO has assessed the total income for assessment year under consideration at ₹ 8,02,43,860/- with tax calculated under section 115JB at ₹ 2,92,01,760/-. The AO has derived strength from the Hon'ble ITAT, Chandigarh order in ITA No. 422 423/Chd/2016 for A.Y. 2008-09 2009-10 respectively in assessee's own case. The facts of the case, the charging of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of the assessee defies the logic of enacting the amended provisions of section 115JB . The exception cannot be as large as the main provision so such so to nullify the legislative intent of imposing tax on specified companies u/s 115JB. In the circumstances, there is no merit in AR's claim on the issue. Hence the action of the A.O. in charging the MAT in this case is sustained. Accordingly, this ground of appeal is dismissed. 5. I have heard Id. Representatives of both the parties and perused the material on- record. The Ld. Counsel for the assessee reiterated the submissions made before authorities below. The Ld. Counsel for the assessee admitted that assessee is a company .having business income as developer. The Id. counsel for the assessee also admitted that assessee does not exist in Special Economic Zone and no business has been carried out in any Special Economic Zone. The Ld. Counsel for the assessee also admitted that assessee being a company is liable to pay tax under the provisions of Section 115JB (MAT). The Ld. Counsel for the assessee also submitted that computation of deduction under section 80IB(10) of the Act is not in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h vide its order mentioned above and hence respectfully following the order of the Hon'ble ITAT and for the reasons mentioned in the appellate order dated 10.02.2016 for assessment years 2008-09 2009-10, the ground of appeal raised by the assessee is not found sustainable and the action of the AO in applying the provisions of section 115JB of the Act and calculating the tax at ₹ 2,92,01,760/- at the income of ₹ 8,02,43,860/-, is found as per law and hence upheld. Accordingly, this ground of appeal is dismissed. 7.1 Our attention has also been invited to the consolidated order dated 30.04.2019 in ITA 422,423,780/CHD/2016 pertaining to A.Y. 2008-09 to 2010-11, ITA 781/CHD/2016 A.Y. 2012-13 and ITA 765/CHD/2016 A.Y. 2012-13. A perusal of the same shows that the ITAT was seized of the issues once again in view of the remand back of the order of the ITAT by the decision of the jurisdictional High Court dated 26.04.2017 in ITA 417 418 of 2016 (O M). This fact is emerging from paras 1 and 2 of the aforesaid order dated 30.04.2019 of the ITAT : The above captioned appeals and cross appeal relate to the same ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding that it was exempt from paying tax under MAT, as per section 115JB(6) of the Act. The Ld.CIT(A) , dismissed the contention of the assessee and upheld the order of the AO. 7.1.2 The submissions of the parties before the Bench have been encapsulated in the following paras: 7. Before us, primarily two alternate contentions were raised by the Id. counsel for the assessee against the levy of tax u/s 115JB of the Act : i) That it qualified for exemption from payment of MAT as per Section 115JB(6) of the Act; and alternately ii) That deduction u/s 80IB(10) was to be allowed while computing book profits for the purpose of payment of tax under MAT. 7.1.3 After hearing both the parties and the relevant provisions, the Co-ordinate Bench summed up the respective arguments advanced on behalf of the assessee and the revenue in paras 18-19 of the order as under : 18. Before us, the Ld. Counsel for the assessee has referred and relied upon subsection (6) of section 115JB of the Act, claiming that it is exempt from payment of MAT as per the said sub-section, since it is carrying on the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15JB of the Act, by way of clause (h) which reads as under:- (h) in section 115JB, after sub-section (5), the following subsection shall be inserted, namely:- (6) The provisions of this section shall not apply to the income accrued or arising on or after the 1st day of April, 2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic Zone, as the case may be. ITA Nos.422,423,780,781 765 CHD/2018 Page 16 of 31 22. Reading section 27 of the SEZ Act along with the second schedule thereto, it is clear, that the SEZ Act made the provisions of the Income Tax Act, 1961, applicable to developers and entrepreneurs carrying out authorized activities in SEZ s and Units and the SEZ Act modified the provisions of the Income Tax Act by exempting developers and entrepreneurs from payment of MAT by inserting sub section (6) to section 115JB.Thus the SEZ Act is the main Act which has brought about the impugned amendment to the Income Tax Act. The harmonious interpretation of the sub section (6) to section 115JB, therefore requires it to be read in conformity and in sync with the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn: When a single section of an Act of Parliament is introduced into another Act, I think it must be read in the sense it bore in the original Act from which it was taken, and that consequently it is perfectly legitimate to refer to all the rest of that Act in order to ascertain what the section meant, though those other sections are not incorporated in the new Act (p. 244). Once we have ascertained the object behind the legislation and held that the provisions of s. 205 quoted hereinabove stand bodily lifted and incorporated into the body of s. 115J of the IT Act, all that we have to do is to read the provisions plainly and apply rules of interpretation if any ambiguity survives. Sec. 205(1), proviso cl. (b), of the Companies Act brings out the unabsorbed portion of the amount of depreciation already provided for computing the loss for the year. The words the amount provided for depreciation and arrived at in both cases after providing for depreciation made it abundantly clear that in this clause loss refers to the amount of loss arrived at after taking into account the amount of depreciation provided in the P L a/c. 24. We find that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant in this respect which read as under: 57. With effect from such date as the Central Government may by notification appoint, the enactments specified in the Third Schedule shall be amended in the manner specified therein: Provided that different dates may be appointed on which the amendments specified in the Third Schedule shall apply to a particular Special Economic Zone or a class of Special Economic Zones or all Special Economic Zones. After going through the relevant provisions of the above statutes, we find that the SEZ Act is the main Act under provides to give certain incentives to the SEZ units. To give ITA Nos.422,423,780,781 765 CHD/2018 Page 19 of 31 effect to the provisions of the SEZ Act, corresponding amendments have been made in the relevant provisions of various related Acts as mentioned in the Third Schedule to the Act, relaxing the conditions or providing for incentives or deductions to the SEZ units. It is to be mentioned here that Income Tax Act 1961 inter alia is also included in the Third Schedule and it has also been provided as to what amendments are made into the provisions of the Income Tax Act to give effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the SEZ Act, 2005. Having said so, the definition of the different terms used in sub section (6) of 115JB, in section 2 of the SEZ Act, we find is as under:- (g) Developer means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-section (10) of section 3 and includes an Authority and a Co-Developer. (z) services means such tradable services which,- (i) are covered under the General Agreement on Trade in Services annexed as IB to the Agreement establishing the World Trade Organisation concluded at Marrakes on the 15' day of April, 1994; (ii) may be prescribed by the Central Government for the purposes of this Act; and (i) earn foreign exchange; ITA Nos.422,423,780,781 765 CHD/2018 Page 21 of 31 (j) entrepreneur means a person who has been granted a letter of approval by the Development Commissioner under sub-section (9) of section 15. (zc) Unit means a Unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit, an Offsho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessee that profits eligible for deduction under section 80IB(10 ) of the Act were to be reduced for arriving at the book profits of the assessee also, we find that the Ld. Counsel for the assessee for this purpose has relied heavily on the provisions of section 115JB(5) of the Act, pointing out that as per the said sub-section, all other provisions of the Act would apply to the assessee and, therefore, the provisions of section 80IB(10) of the Act would also apply to it requiring it to be deducted /reduced for arriving at the taxable book profits. 30. We do not find any merit in this contention of the Ld. Counsel for the assessee also. The reasoning is as follows. Section 115JB of the Act is a charging section for collecting minimum taxes from corporates, which though are apparently prosperous showing profits in their Profit and Loss account and paying dividends, yet not paying taxes as per the Income Tax Act. Under the section, taxes at a specified rate are levied on the Book Profits of the corporate where they exceed the tax payable on its total income as computed under the Income Tax Act after availing various concessions and deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, if it is a company, will be liable to pay income-tax to be ascertained in the manner and to the extent prescribed in s. 115JB. Since these two sections deal with two different situations, they play their role in two different situations and, accordingly, should be read to ascertain the purpose thereof as depicted by the clear words mentioned therein. Whereas s. 80- IC grants deduction to all assessees and, accordingly, a company is also entitled to such deduction, s. 115JB applies only to a company and comes into play only when, after such deduction, income-tax payable by it is less than what has been mentioned therein and thereupon fastens a totally new incometax liability to the extent mentioned therein. 18. It is true that when s. 115JB was inserted, there was no contemplation that, in future, s. 80-IC would be inserted. Therefore, at the time when s. 115JB was inserted, it was not intended to control s. 80-IC. However, a look at s. 115JB would make it amply clear that, from the day one, s. 115JB controlled income-tax payable on the total income as computed under the Act and, in the matter of computing income-tax on the total income, after insertion of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly an introductory to the bill in the Parliament and that in itself is not an end. 28. 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. 29. 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 appellantassessee that Section 80- IB is not operated or given effect to. Grievance of the assessee is that because of the operation of Section 115-JB, 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 another 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are afraid the judgment will not advance the case of the assessee in the present situation. 33. A budgetary speech while will have some significance for understanding a provision if there is any ambiguity, in the wake of clear language of the 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, never the less 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unconstitutional. If the argument of Sri Shankar, learned counsel for the appellant, is to be accepted, then it will result in a discrimination against such 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 leading down or reading up the provisions of Section 115-JB 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. 33. In view of the above, we dismiss the contentions of the Ld. Counsel for the assessee that ded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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