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TMI Blog2005 (2) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... . The income was computed at Rs. 1,73,880 in the said intimation. Subsequently it was noticed that the book profit as per the provision of s. 115JA of the Act is more than the income assessed and accordingly the intimation under s. 143(1)(a) was sought to be rectified. The AO in the order under s. 154 dt. 24th March, 2000 computed the income under s. 115JA being 30 per cent of the book profit at Rs. 6,38,865. Interest under s. 234B was also charged. The said interest under s. 234B was later cancelled in view of the decision of Hon'ble Karnataka High Court. Learned CIT(A) held that income as per the provision of s. 115JA is computed correctly and no two views are possible in this regard. Hence this appeal. 4. Learned counsel for assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any is distributing dividend. In the present case, the company is not distributing dividend and hence the provision of s. 115JA is not applicable. He submitted that the intention of legislature has been reflected in the Board circular cited. It is settled law that circular issued by CBDT is binding upon the IT authorities. For this proposition he relied upon the decision of Hon'ble Supreme Court in UCO Bank vs. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC) and the case of Ellerman Lines Ltd. vs. CIT 1972 CTR (SC) 71 : (1971) 82 ITR 913 (SC) and Navnit Lal C. Javeri vs. K.K. Sen, Asstt. CIT (1965) 56 ITR 198 (SC). Thus to invoke the provision of s. 115JA as interpreted by CBDT so long as the company is not distributed dividend the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He relied upon the decision in the case of Nicco Corporation Ltd. vs. CIT (2005) 194 CTR (Cal) 59 : (2005) 272 ITR 58 (Cal). 5. We have carefully considered the relevant facts and arguments advanced. The Finance (No. 2) Bill, 1996, introduced in the Lok Sabha on 22nd July, 1996, explained the intention of s. 115JA as thus : "In recent times, the number of zero-tax companies and companies paying marginal tax has grown. Studies have shown that in spite of the fact that companies have earned substantial book profits and have paid handsome dividends, no tax has been paid by them to the exchequer. The new proposal provides for those companies to pay tax on 30 per cent of the book profits, whose total income as computed under the IT Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led that out of 217 companies which showed good profits of Rs. 5813 crores for asst. yrs. 1991-92 to 1993-94, that is three assessment years, no corporation tax was paid as the return or the assessed taxable income was computed as nil. However, out of the big profits of Rs. 5813 crores, dividends at varying rates were declared and distributed by many of these companies." From the above it is seen that the minimum alternate tax was sought to be introduced in respect of those companies where even though there is book profit and companies who pay dividend, tax is not payable as per the provision of the Act. This is how the law is interpreted by CBDT in its Circular No. 762 dt. 18th Feb., 1998. It is settled law that benevolent circular issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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