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TMI Blog2007 (11) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... its, referred to in sub-s. (1B). In view of this, only 80 per cent of export profit would be eligible for reduction. 3. Assessee preferred an appeal before the CIT(A) with the submission that s. 115JB is a specific charging section wherein the company is required to pay Minimum Alternate Tax (MAT) on its book profits. Such book profit is calculated in accordance with the provisions of Parts II and III of Sch. VI under Companies Act. As book profit is computed based on net profit as per audited P&L a/c, thereafter the adjustment relating to profit from export as per P&L a/c is allowable as reduction. Provisions of s. 115JB refer about 'book profit' and adjustment of additions or reduction as disclosed by the P&L a/c. Accordingly such reduction cannot relate to quantum of deduction computed under s. 80HHC and the same is required to be considered as per the P&L a/c. He has also placed reliance upon the CBDT Circular No. 680 dt. 21st Feb., 1994 reported at (1994) 117 CTR (St) 215 : (1994) 206 ITR (St) 297 and the judgment of the apex Court in the case of Apollo Tyres Ltd. vs. CIT (2002) 174 CTR (SC) 521 : (2002) 255 ITR 273 (SC). The CIT(A) re-examined the issue in the light of CBDT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dy. CIT vs. Govind Rubber (P) Ltd. (2004) 82 TTJ (Mumbai) 615 and by Kerala High Court in the case of CIT vs. G.T.N. Textiles Ltd. (2000) 164 CTR (Ker) 185 : (2001) 248 ITR 372 (Ker). 8. Further, the intention of the legislation can be drawn from the Speech given by Hon'ble Finance Minister while presenting Union Budget, 2000 which reads that 'I would add that exporters would continue to enjoy exemption from MAT till the full phase out.' Accordingly, I hold that the entire profits earned from exports as computed under cls. (a) to (c) of s. 80HHC(3) are eligible for reduction under cl. (iv) of Explanation to s. 115JB'. The learned AO is directed to allow the reduction of Rs. 6,64,25,939 as profit from exports while computing the book profits under s. 115JB of IT. Act. 1961." 4. Now the Revenue has preferred an appeal before the Tribunal and during the course of hearing the learned Departmental Representative has placed heavy reliance upon the assessment order. He has also placed reliance upon the order of the Tribunal in the case of Brook Crompton Greaves Ltd. vs. ITO (2007) 107 TTJ (Pune) 642 : (2007) 105 ITD 146 (Pune) with the submission that the impugned issue is squarely cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce upon the order of the Tribunal in the case of Dy. CIT vs. Govind Rubber (P) Ltd. (2004) 82 TTJ (Mumbai) 615 in which it has been held that while determining the book profit for the purpose of s. 115J the profit eligible for deduction under s. 80HHC computed as per the provisions of s. 80HHC(3) was allowed as deduction under Explanation (iii) to s. 115J even though the assessee has not been allowed deduction under s. 80HHC as there was a loss. 7. The learned counsel for the assessee further placed heavy reliance upon the order of the Special Bench of the Tribunal in the case of Dy. CIT vs. Syncome Formulations (I) Ltd. (2007) 108 TTJ (Mumbai)(SB) 105 in which the Special Bench of the Tribunal in its para 59 has categorically observed that in the case of s. 115JB the Finance Act has made it very clear that deduction under s. 80HHC would be available in its entirety to an assessee even if the relief under s. 80HHC is being eliminated in a phased manner. 8. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the lower authorities. the relevant provisions of s. 80HHC and s. 115JB and also the judgments referred to by the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee; Meaning thereby the profits derived by the assessee from the export of such goods is onething and the deduction to be allowed in computation of total income of the assessee under s. 80HHC is a different thing. After introduction of sub-s. (1B) to s. 80HHC by the Finance Act, 2000 w.e.f. 1st April, 2001 the entire profit derived from the export of goods or merchandise is not available for deduction under s. 80HHC as it is being phased out in a piecemeal manner over a period of four years and no deduction would be allowed in respect of assessment year beginning on 1st April, 2005 and in any subsequent assessment years. Sec. 115JB was also introduced by the Finance Act, 2000 w.e.f. 1st April, 2001. In sub-s. (1) of s. 80HHC the legislature has used the words "for determining the quantum of deduction" to the extent of profit referred to in sub-s. (1B) but while coming to cl. (iv) of Explanation to s. 115JB the legislature has used the words "the amount of profit eligible for deduction under s. 80HHC"; Meaning thereby the words "the amount of profit eligible for deduction" used in cl. (iv) do not have the same meaning as the words "deduction to the extent of profit referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the extent of profit or the extent of deduction of the profit', but for determining the profits eligible for deduction this type of terminology was not used by the legislature; Meaning thereby the amount of profit eligible for deduction is an amount of export profit which is eligible for deduction irrespective of the fact that the entire amount mayor may not be allowed for deduction under s. 80HHC of the Act after the introduction of sub-s. (1B) of s. 80HHC. Had it been the intention of the legislature that only deduction amount is allowed to be reduced from the net profit shown in the P&L a/c prepared as per provisions of Parts II and III of the Sch. VI to Companies Act for computing book profit under s. 115JB, similar words as used in ss. 80HHC(1) and (1B) would have been used here. But in cl. (iv) of Explanation to s. 115JB the legislature has, used the words "amount of profit eligible for deduction under s. 80HHC computed under the cl. (a) or cl. (b) or cl. (c) of sub-s. (3) or sub-s. (3A)". As such, while computing ,the profit eligible for deduction under cl. (a), (b) or (c) of sub-s. (3) or (3A) no restriction was imposed in computing the profit eligible for deduction. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and purpose of particular provisions. It was considered in the context of interpretation of Interest-tax Act, 1991. In fact, the Supreme Court was following its own earlier decision in the case of K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC)." 11. We have also examined the order of the Tribunal in the case of Dy. CIT vs. Govind Rubber (P) Ltd. in which the Tribunal has held that for the purpose of determining book profit under s. 115J the assessee was entitled for deduction of profit attributable to export under s. 80HHC even though the assessee was denied deduction under s. 80HHC because of the proviso to s. 80A as income computed for the assessment year under consideration was negatived though the book profit attributable to export under s. 80HHC was positive. Similar analysis should be applied to the present situation. 12. Keeping in view the totality of the facts and circumstances of the case we are of the opinion that for computing the book profit for the purpose of s. 115JB the net profits shown in the P&L a/c prepared as per its sub-s. (2), are to be reduced by the amount of profits eligible for deduction under s. 80HHC irrespective of the fact ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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