Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2006 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2006 (8) TMI 234 - AT - Income TaxComputation of profit under MAT u/s 115JB - Charging of interest u/s 234B and 234C are attracted while determining the book profit u/s 115JA during the processing the returns u/s 143(1)(a) - HELD THTA:- It is pertinent to note that earlier for the assessment years 1988-89 to 1990-91, section 115J was also in the nature of overriding effect. As far as section 115J is concerned, the provision in the form of sub-section (4) to section 115JA was not in the said section. Section 115JA had come for judicial scrutiny of the Hon'ble High Court of Kerala in the case of Apollo Tyres Ltd.[2002 (5) TMI 5 - SUPREME COURT]. Hence, it is a well settled position of law that section 115JA is pari materia to section 115J of the Act. After examining this issue in the backdrop of the legal principles laid down by the Hon'ble Supreme Court as well as other High Courts, we are of the opinion that the legal principles in the case of Kwality Biscuits Ltd.[2006 (4) TMI 121 - SC ORDER] are squarely applicable to the provisions of section 115JA and hence, if the income of the assessee company is determined by invoking section 115JA, then no interest under sections 234B and 234C can be charged. As far as the issue of prima facie adjustment is concerned, we are of the opinion that the law declared by the Supreme Court was always the law in existence. Hence, the Assessing Officer was not competent to charge the interest u/s 234B or 234C of the Act when the income is determined on the basis of book profit computed u/s 115JA. We, therefore, allow the appeals by the assessee for the assessment years 1997-98, 1998-99, 1999-2000 and 2001-02. Hence, this common issue is decided in favour of the assessee and against the revenue. Levy of surcharge - HELD THAT:- In our opinion, though the assessee is required to pay the surcharge, still by virtue of the provisions of section 115JA, the assessee is entitled to get relief in respect of the extra payment of surcharge due to determination of his income u/s 115JA. The ld. counsel has referred to sections 112 and 113 of the Act but there is a difference between sections 112 and 113 and section 115JA, as in these sections in the Act itself special rates of tax have been prescribed. Therefore, in our opinion, at the regular assessment stage when the income is determined on the basis of book profit as per provisions of section 115JA, surcharge is leviable. We, therefore, decide this issue against the assessee and in favour of the revenue. Treatment to be given to the arrears of depreciation - HELD THAT:- On the perusal of the reasons given by the Assessing Officer as well as the CIT(Appeals) for adding back the arrears of depreciation which was provided due to the change in the method of working of the depreciation, it appears that both tried to distinguish sections 115J and 115JA. We have already expressed that sections 115J and 115JA both are deeming provisions and book profit is to be worked out as per the provisions of the Companies Act. What is to be added back to the book profit has been specifically provided by Explanations (a) to (f) to section 115JA in which there is no reference in respect of the treatment to be given to the arrears of depreciation provided in case the assessee changes the method of depreciation which is debited to the profit and loss account. In our opinion, the principles laid down by the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. [2002 (5) TMI 5 - SUPREME COURT] are squarely applicable for working out the book profit u/s 115JA also. We, therefore, direct the Assessing Officer to delete the sum which represents the arrears of depreciation included in the depreciation debited to the profit and loss account for the reasons stated hereinabove and set aside the order of the CIT(Appeals) on this issue. In the result, the assessee's appeals are allowed. The revenue's appeal is dismissed.
|