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2008 (12) TMI 251 - AT - Income TaxLiability to pay book profit u/s 115JB - interest earned on income-tax refunds - Business income or other sources - business of generation and selling of power - prepaid taxes claimed to be refundable - Assessee filed an appeal before the CIT(A) and reiterated its contentions, which he found to militate against the intention and purpose of section 115JB - He also upheld the AO’s view that the interest income was to be assessed only under the head “Income from other sources” and not under the head “Profits and gains of business” HELD THAT:- The assessee, in the present case, has made substantial book profit which according to its balance sheet. However, by virtue of the relief available u/s 80-IA, it has claimed the entire business profits to be exempt from tax with the result that its total income became nil and no tax was payable. This is exactly the situation contemplated by the section for which provision has been made to the effect that the company should pay tax on its book profit and, thus, contribute to the exchequer. Therefore, there can be no escape from the position that the assessee-company is caught within the mischief of section 115JB, notwithstanding that the tax payable by it on its total income computed under the normal provisions of the Act is Rs. Nil. It would be anomalous to hold that where tax of Re. 1 is payable on the total income computed under the normal provisions of the Act, then section 115JB would be attracted, but it would not be attracted when the tax payable on the total income is Rs. Nil either because the total income is nil or is a negative figure. It is well-settled that the section has to be interpreted in such a manner as to avoid absurdity and also in such a manner as to advance the cause and suppress the mischief. For the above reasons, we are unable to give effect to the argument of the assessee that the tax payable on the total income computed under the normal provisions of the Act being Rs. Nil, section 115JB cannot be applied to its case. We are unable to accept the contention of the assessee that the interest earned on income-tax refunds was assessable as part of the profits and gains of the power generation business. In our view, the interest was assessable under the head “Income from other sources” as rightly assessed by AO. If that is so, some tax is payable on the interest income which would be admittedly less than the book profit tax payable u/s 115JB. The assessee is, therefore, liable to pay book profit tax under the section as demanded by the AO. The appeal of the assessee is, accordingly, dismissed with no order as to costs.
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