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TMI Blog2021 (12) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 Ape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Rolta India Ltd [2011] 330 ITR 470 (SC), wherein it has been clearly held that all other provisions of the Act, shall apply to MAT company, in view of the provisions of sections 115JA(4) and 115JB(5) of the Act. 4. The Id CIT(A) also failed to appreciate that even as per Circular No.13 of 2001, dt.9.11.2001, it has been clearly pointed out that in view of section 115JB(5), all the provisions of the Act, including the provision relating to charge, definitions, recoveries, payment, assessment, etc, would apply in respect of the provisions of section 115JB of the Act. B. Regarding charge of interest under sections 234B and 234C 5. The CFT(A) erred in confirming the order of the AO, levying interest under sections 234B and 234C of the Act, to the extent of Rs,2,72,19,415/- and ₹ 52,28,525/-, respectively. 6. The Id CIT(A) failed to appreciate the fact that during the financial year (FY) 2010-11, relevant to AY 2011-12, the aforesaid judgement of the Supreme Court, in the case of Kwality Biscuits Ltd prevailed and therefore, the appellant Company was not required to pay MAT in advance. 3. At the outset it is noted that the appeal was disposed of by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its book profit, such book profit shall be deemed to be total income of the assessee and the tax payable by such assessee on such total income shall be the amount of income tax @15%. Sub-Section 2 of Section 115JB provides that every assessee, being a Company, shall, for the purpose of section 115JB, prepares its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and HI of Schedule VI to the Companies Act 1956. Thus, it is very obvious that book profit has to be ascertained as per the Companies Act and thereafter certain modification is to be made as per explanation I to this Section. Thus, it is very obvious that taxation u/s.115JB is as per the book profit. The accounts of the appellant shows the book profit of ₹ 51,97,40,207/-, hence same is to be taxed u/s.115JB. Assessing Officer has rightly done so. Here, it is relevant to mention that there is no dispute regarding such book profit. The only contention of the appellant is that because of subsection 5, appellant is entitled for deduction from the book profit because, according to the appellant, under subsection 5, there is law that all other provisions of the I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly, the decision of Hon'ble Supreme Court in the case of CIT vs. D.P. Sandhu Brothers 273 ITR 1 (SC) is not applicable to the facts of the case. Further, the decision of the Hon'ble Supreme Court in the case of JCIT vs. Rolta India Ltd. (2011) 330 ITR 470 (SC), is in respect of charge of interest u/s.234B and 234C and Hon'ble Supreme Court has held that interest under these sections shall be payable on failure to pay advance tax u/s. 115JB Thus, these case laws does not help appellant to presume that because of subsection (5) of Section 115JB, it is not liable for tax on book profit. 3.5 Thus, in the background of above discussion, applicability of law and non-relevance of various case laws relied upon by the Ld. A.R., I reach to the conclusion that appellant is liable for tax u/s.115JB on its books profit which is of ₹ 51,97,40,207/-, hence, the assessment so made by the Assessing Officer by computing book profit is sustained. 6. Against the above order assessee is in appeal before us. 7. We have heard both the parties and perused the records. At the outset learned Counsel of the assessee submitted that decision of Reliance Industries Ltd. (ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an enabling provision, which makes all the provisions of the Act, save as otherwise provided, applicable for proceedings for block assessment. 8. Further it has been submitted that Hon'ble Apex Court in the case of Rolta India Ltd. [2011 (1) TMI 5] had occasion to interpret the same phrase like 115JB(5) and held it to be enabling provision, which makes all the provisions of the Act, save as otherwise provided applicable. In respect of section 115JB(5) thus captures the claim u/s. 80IB(10) as nothing otherwise is provided u/s. 115JB with respect to claim u/s. 80IB. Further it has been claimed that the decision of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (122 Taxman 562) and Hon'ble Bombay High Court decision in Veekaylal Investment Co.(P) Ltd. [249 ITR 597) are not applicable to the facts of the present case. It has been submitted that the above decisions in the context of sub-section 115J and did not have any provisions corresponding to the present subsection (5) of section 115JB of the Act. 9. Per contra, learned CIT-DR relied upon the decision of learned CIT(A) and submitted that as per scheme of the Act in section 115JB no adjustment in book pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 129 of the Companies Act, 2013 (18 of 2013) is applicable, shall, for the purposes of this section, prepare its statement of profit and loss for the relevant previous year in accordance with the provisions of the Act governing such company: Provided that while preparing the annual accounts including statement of profit and loss,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including statement of profit and loss; (iii) the method and rates adopted for calculating the depreciation, shall be the same as have been adopted for the purpose of preparing such accounts including statement of profit and loss and laid before the company at its annual general meeting in accordance with the provisions of section 129 of the Companies Act, 2013 (18 of 2013) : Provided further that where the company has adopted or adopts the financial year under the Companies Act, 2013 (18 of 2013), which is different from the previous year under this Act,- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including statement of profit and loss; (iii) the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in clause (xvii) of section 47; or (fd) the amount or amounts of expenditure relatable to income by way of royalty in respect of patent chargeable to tax under section 115BBF; or (g) the amount of depreciation, (h) the amount of deferred tax and the provision therefor, (i) the amount or amounts set aside as provision for diminution in the value of any asset, (j) the amount standing in revaluation reserve relating to revalued asset on the retirement or disposal of such asset, (k) the amount of gain on transfer of units referred to in clause (xvii) of section 47 computed by taking into account the cost of the shares exchanged with units referred to in the said clause or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through statement of profit and loss, as the case may be; if any amount referred to in clauses (a) to (i) is debited to the statement of profit and loss or if any amount referred to in clause (j) is not credited to the statement of profit and loss, and as reduced by,- (i) the amount withdrawn from any reserve or provision (excluding a reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in clause (xvii) of section 47; or (B) notional gain resulting from any change in carrying amount of said units; or (C) gain on transfer of units referred to in clause (xvii) of section 47, if any, credited to the statement of profit and loss; or (iif) the amount of loss on transfer of units referred to in clause (xvii) of section 47 computed by taking into account the cost of the shares exchanged with units referred to in the said clause or the carrying amount of the shares at the time of exchange where such shares are carried at a value other than the cost through statement of profit and loss, as the case may be; or (iig) the amount of income by way of royalty in respect of patent chargeable to tax under section 115BBF; or [(iih) the aggregate amount of unabsorbed depreciation and loss brought forward in case of a company against whom an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016). Explanation.-For the purposes of this clause, the expression Adjudicating Authority shall have the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. Explanation.-For the purposes of this clause, net worth shall have the meaning assigned to it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986); or (viii) the amount of deferred tax, if any such amount is credited to the statement of profit and loss. Explanation 2.-For the purposes of clause (a) of Explanation 1, the amount of incometax shall include- (i) any tax on distributed profits under section 115-O or on distributed income under section 115R; (ii) any interest charged under this Act; (iii) surcharge, if any, as levied by the Central Acts from time to time; (iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and (v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time. Explanation 3.-For the removal of doubts, it is hereby clarified that for the purposes of this section, the assessee, being a company to which the second proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to profit or loss ; (b) decreased by all amounts debited to other comprehensive income in the statement of profit and loss under the head Items that will not be re-classified to profit or loss ; (c) increased by amounts or aggregate of the amounts debited to the statement of profit and loss on distribution of non-cash assets to shareholders in a demerger in accordance with Appendix A of the Indian Accounting Standards 10; (d) decreased by all amounts or aggregate of the amounts credited to the statement of profit and loss on distribution of non-cash assets to shareholders in a demerger in accordance with Appendix A of the Indian Accounting Standards 10: Provided that nothing contained in clause (a) or clause (b) shall apply to the amount credited or debited to other comprehensive income under the head Items that will not be re-classified to profit or loss in respect of- (i) revaluation surplus for assets in accordance with the Indian Accounting Standards 16 and Indian Accounting Standards 38; or (ii) gains or losses from investments in equity instruments designated at fair value through other comprehensive income in accordance with the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t not including the following:- (A) amount or aggregate of the amounts adjusted in the other comprehensive income on the convergence date which shall be subsequently re-classified to the profit or loss; (B) revaluation surplus for assets in accordance with the Indian Accounting Standards 16 and Indian Accounting Standards 38 adjusted on the convergence date; (C) gains or losses from investments in equity instruments designated at fair value through other comprehensive income in accordance with the Indian Accounting Standards 109 adjusted on the convergence date; (D) adjustments relating to items of property, plant and equipment and intangible assets recorded at fair value as deemed cost in accordance with paragraphs D5 and D7 of the Indian Accounting Standards 101 on the convergence date; (E) adjustments relating to investments in subsidiaries, joint ventures and associates recorded at fair value as deemed cost in accordance with paragraph D15 of the Indian Accounting Standards 101 on the convergence date; and (F) adjustments relating to cumulative translation differences of a foreign operation in accordance with paragraph D13 of the Indian Accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstituted. Explanation.-For the purposes of this sub-section,- (a) International Financial Services Centre shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); (b) unit means a unit established in an International Financial Services Centre; (c) convertible foreign exchange means a foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules made thereunder. 11. A reading of the above shows that section talks about the book profit as disclosed in Company s annual accounts. The section provides that book profit means profit as shown in the statement of profit and loss account for the relevant previous year prepared under the said section (2) as increased by various items mentioned therein Explanation (1). Further it mentions that book profit to be reduced by specific amounts mentioned therein Explanation (1). For claiming deduction u/s. 80IB(10) from book profit, no case has been made out that this adjustment to book profit under 115JB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation (5) saves the same. 14. We further note that the assessee has quoted following from Hon'ble Supreme Court decision in the case of Apollo Tyres Ltd. (supra) :- Inspite of all these procedures contemplated under the provisions of the Companies Act, we find it difficult to accept the argument of the Revenue that it is still open to the assessing officer to re-scrutinize this account and satisfy himself that these accounts have been maintained in accordance with the provisions of the Companies Act. In our opinion, reliance placed by the Revenue on Sub-section (1A) of Section 115-J of the IT Act in support of the above contention is misplaced. Sub-section (1A) of Section 115-J does not empower the assessing officer to embark upon a fresh inquiry in regard to the entries made in the books of account of the company. The said subsection, as a matter of fact, mandates the company to maintain its account in accordance with the requirements of the Companies Act which mandate, according to us, is bodily lifted from the Companies Act into the IT Act for the limited purpose of making the said account so maintained as a basis for computing the company's income for levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Alok Industries Ltd. (ITA. No. 900 to 906/Mum/2019 dated 16.7.2020 has held as under :- Upon careful consideration, we find ourselves in agreement with the submission of the learned Departmental Representative that the ITAT orders relied upon by the learned counsel of the assessee do not consider aforesaid Hon'ble Jurisdictional High Court decision. It is without any doubt that the decision of Hon'ble Jurisdictional High Court is exactly on the same subject as is being discussed hereunder. Furthermore, the proposition that book profit is not to be tinkered with is duly supported by Hon'ble Jurisdictional High Court decision in further following decisions: - 1. Pr. CIT vs. Bhagwan Industries Ltd in ITA No. 436 of 2015 vide order dated 18.07. 2017. 2. CIT vs. Akshay Textile Trading Agencies Pvt Ltd 304 ITR 401 (Bom). 3. CIT vs. Adbhut Trading Co. Pvt. Ltd. (2011) 338 ITR 94 (Bom) Furthermore, we note that Hon'ble Supreme Court in the case of ACIT vs Saurashtra Kutch Stock Exchange Ltd., 305 ITR 227 (SC) has expounded that non- consideration of jurisdictional High Court decision can render a decision of the Tribunal suffering fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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