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TMI Blog2022 (5) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Roorkee undertaking to Rs.3,11,49,011/- instead of profits from eligible undertaking at Rs.7,57,11,731/-. 4. Succinctly, the facts of the case are that the assessee is engaged in manufacture of Auto Electrical and Electronics components for two and three wheelers. Return of income was filed on 30-11-2013 declaring total income under normal computation at Nil. In such computation, the assessee claimed deduction u/s.80IC of the Act amounting to Rs.3,11,49,011/- from the gross total income of Rs.3,11,49,011/-. The Assessing Officer (AO) observed that the assessee was having two plants located at Pune and Roorkee in Uttarakhand. There was profit of Rs.7.57 crore in the eligible Roorkee unit and loss of Rs.4.26 crore in Shirwal, non-eligible unit. The assessee claimed that the entire profit from Shirwal unit was eligible for deduction u/s.80IC of the Act. The AO noticed that the gross total income of the assessee was only to the tune of Rs.3,11,49,011/- and hence, the amount of deduction u/s.80IC r.w.s. 80A(2) was to be restricted to that level. The ld. CIT(A) countenanced the decision of the AO, against which the assessee has approached the Tribunal. 5. We have heard both the si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o loss so as to allow carry forward of the amount of deductions under this Chapter to the next year. The Hon'ble Supreme Court in M/s. Synco Industries Ltd. Vs. AO and another (2008) 299 ITR 444 (SC) has also laid down to this extent. 6. Adverting to the facts of the instant case, it is seen that the assessee's final gross total income was Rs.3,11,49,011/-. Thus, the total amount of deductions under Chapter VI could not have breached the amount of gross total income. The authorities have rightly restricted the amount of deduction u/s 80IC to the extent of gross total income computed at Rs.3.11 crore. The ld. AR was fair enough to accept this position against the assessee. The ground is thus dismissed. 7. The assessee had on an earlier occasion filed application raising additional ground, which reads as under: "Appellant contends that Appellant is eligible to claim deduction u/s.80IC of ITA, 1961 while computing book profit u/s.115JB of the ITA, 1961 considering presence of section 115JB(5) and keeping reliance on following decisions : a) Neha Home Builders Private Limited V. CIT - 195 TTJ 506 (Mumbai) b) CIT V. Metal & Chromium Platers P. Ltd. - 415 ITR 123 (Madras). c) B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item". Answering the question posed before it in affirmative, their Lordships held that on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee and the Tribunal has jurisdiction to examine the same. We find that the additional ground raised before the Tribunal involves a pure question of law and no fresh investigation of facts is necessary for its determination. As such, the additional ground is admitted and espoused for disposal on merits. 10. We have heard the rival submissions on the additional ground and gone through the relevant material on record. Section 115JB of the Act is a special provision for payment of tax by certain companies. Sub-section (1) of section 115JB provides that: `Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier rate of 30%. This deciphers that in the computation of income-tax payable u/s.115JB, the statute has not provided for reducing the amount of book profit with the amount of deductions under Chapter VIA which includes section 80IC also. Since the term `book profit' has been defined in an exhaustive manner and sub-section (1) provides for charging tax at 18.5% by deeming such book profit as total income and further this is locked with the nonobstante clause in sub-section (1) qua any other provision of the Act, the sequitur is that determination of tax liability by applying the specified rate on the book profit of a company attains finality in this manner alone and cannot be subjected to any other provision of the Act insofar as these two aspects of book profit and the rate to be applied thereon are concerned. 12. The ld. AR has invoked the provisions of sub-section (5) of section 115JB for claiming reduction in the amount of book profit on account of amount of deduction u/s.80IC. Sub-section (5) provides: "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". The salient feature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s extent and not to deduction u/s 80IC of the Act. If the contention of the ld. AR about the applicability of sub-section (5) also to the determination of book profit in sub-section (1) of section 115JB is taken to a logical conclusion and it is supposed that the legislature intended granting benefit of all the deductions in the computation of book profit also u/s.115JB, then there was no need to specifically retain clause (ii) to Explanation 1 providing for reduction of the income u/ss.10, 11 and 12 from the amount of profit as per the profit and loss account. In that case, sub-section (5) would have also governed sections 10, 11 and 12, thereby rendering this clause redundant. The presence of clause (ii) in Explanation 1 to section 115JB and omission of other clauses which were there in section 115JA providing for reducing some of the deductions under Chapter VI-A, clearly shows that the intention of the legislature is to continue with the reduction of income u/ss. 10 to 12 in the era of section 115JB and omit the reduction of some of the deductions under Chapter VIA in the computation of book profit. 15. Now we turn to the decisions relied by the ld. AR in support of the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid. In Sankhla Polymers (P) Ltd. (supra), the assessee claimed deduction u/s.80IB in the computation of income u/s.115JB, which was not allowed by the AO and the action of the AO was approved in the consecutive two appeals. The Hon'ble High Court, on a comparative reading of section 80IB as well as section 115JB, held that section 115JB is a special charging section and section 80-IB does not control the provisions of Section 115JB of the Act. It further laid down that: `The benefit under Section 80-IB is not denied, it works as it is. It is only because the assessee happens to be a company to which the provisions of Section 115JB is also attracted, levy as indicated therein becomes operative'. Similar view was earlier taken by the Hon'ble Uttarakhand High Court in Sidcul Industrial Association vs. State of Uttrakhand (2011) 331 ITR 491. These judgments make it palpable that deduction u/s.80B/80IC is not available in the computation of book-profit u/s.115JB of the Act. 18. In view of the foregoing discussion, it is clear that for the purpose of calculation of tax liability u/s.115JB of the Act, there is no scope for reducing book profit by the amount of deduction u/s.80IC. The Mu ..... 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