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TMI Blog2021 (11) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax return for the assessment year 2002-03 declaring total loss of Rs. 3,59,10,946/-. The Assessing Officer (AO) through assessment order dated 3.3.2005 made under Sec.143(3) of the Act computed the total income of assessee at Rs. 2,99,81,060/-. The assessee filed appeal before the Commissioner of Income Tax (Appeals) (for short 'CIT') in ITA No.1/R-I/CIT-II/05-06 and the CIT (Appeals) through order dated 30.3.2006 partly allowed the appeal. Since the CIT (Appeals) partly allowed the appeal and the assessee pursuaded the further remedy of appeal before ITAT in Appeal No.326/Coch/2006, the ITAT through the order impugned in the appeal allowed the appeal of the assessee in part. Hence the appeal by the revenue and the following questions of law are raised for consideration. 1. Whether, on the facts and in the circumstances of the case and also in the light of Section 80AB the Tribunal is right in holding that while computing the book profit under Section 115JB, the deduction under Section 80HHC is to be computed as per MAT provisions and not as per the normal provisions of the Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he levy and demand of excise duty on dicalcium phosphate. The assessee, therefore, has written back in the previous year corresponding to the present assessment year and as follows: Sl.No. Assessment year Amount credited (Rs.) (written back) 1 2001-02 2,12,27,493 2 2002-03 3,29,27,056 6. The assessee while working the book profit under Section 115JB reduced the sum of Rs. 3,29,27,056/- claiming reduction under clause 1 of explanation to Section 115JB of the Act. The AO noted that reduction for provision written back is available if at the time of creation of provision, the provision was added to the net profit under Section 115JA or 115JB of the Act. The provisions of Section 115JA were not applied to the case on hand by the A.O. in computing the total income and tax payable for assessment years 1997-98 and 1998-99 yet was determined. The total income charged to tax for both the years was the income computed under the normal provisions of the Act. In other words, the speical provisions under Sections 115JA or 115JB were not applied to the computation of income. The provisions created were disallowed in the assessment year under the normal provisions of the Act. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny is liable to pay income-tax as per the provisions of section 115JB. Sub section (2) to section 115JB provides the method for computation of the book profit. Explanation is also provided to the said sub section but from the language used by the legislature, the said explanation is applicable to section 115JB as such, more particularly in the context of book profit. The explanation is divided into two parts. Part I consists of clauses (a) to (g) and it is provided that book profit means the net profit as shown in the profit and loss account which shall be increased by the amount specified in clauses (a) to (g). In part 2 of the said Explanation, book profit is to be reduced by certain amounts as specified in clauses (i) to (vii). As per clause (i), more particularly in respect of the provision made earlier and amount written back by crediting th same to the profit and loss account and in consequence of which the net profit as shown in the profit and loss account is increased, then the said amount is to be reduced from the net profit in the process of computing the book profit. By virtue of proviso to clause (i) to the Explanation, even if the amount is written back from the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and secondly, considered by the AO in any manner. In the absence of consideration of book profits for the purpose of Sec.115JB, unless and until it is shown that in the corresponding applicable previous year to the assessment year the provision has been added, the provision now sought to be written back cannot be deducted while computing the book profit of the assessee under section 115JB of the Act. The Tribunal has presumed and assumed that the normal computation and finalisation of the return of the assessee is by taking note of the effect of the provision made towards disputed levy and demand of excise duty. Therefore the finding recorded by the Tribunal is perverse and presumptuous. Hence it is argued that substantial question No.3 and reframed question Nos.2 and 3 may be answered in favour of revenue and against the assessee. 10. Senior Adv.Joseph Markose prefaces his argument, by keeping in view the authoritative pronouncement of the Supreme Court in Ajanta Pharma Ltd., that Section 115JB is a self contained code. The assessment has been made under Sec.143(3) of the Act. Computation of book profit for the purposes of special provisions and comparing such compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normal provisions of the Act and the necessity to refer to special provisions was not noticed by the AO. The AO, as is clear from the respective assessment orders, did not find a case for applying minimum alternate tax i.e. Special Provisions as applicable to the assessee for the first AY 1997-98; 1998-99 referred to above. The AO as well as the CIT have proceeded on the reasoning that unless and until book profits under section 115JA or 115JB are established as duly computed by the AO, the claim for writing back cannot be allowed in the subject assessment years. The reasoning of the primary authority and the first appellate authority is untenable in our consideration of the circumstances of the case and scheme of the Act. We are of the view that once the return was filed by the assessee , it is the responsibility on the AO to compute the income of assessee under normal provisions and special provisions. The income tax is collected on the income whichever is higher in these two methods i.e. either normal provision or special provision. Had it been a case where the AO has omitted or failed to do comply with Section 115JB the remedy available to revenue is different to work out the g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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