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2007 (7) TMI 434 - AT - Income TaxValidity of assumption of jurisdiction for framing reassessment u/s 147 - Minimum alternate tax u/s 115JB - Income escaping assessment - exemption u/s 10A - manufacture and sale of optical/magnetic storage media products, viz., CDs and floppies - 100 per cent EOU units - notice u/s 148 issued seeking to reopen the assessment - HELD THAT:- The Assessing Officer in the impugned reassessment has only varied the conscious stand originally taken while concluding the original assessment u/s 143(3) of the Act after due application of mind, without any fresh material/information coming his possession such circumstances, the reopening is based on mere change of opinion and cannot be sustained. Hon’ble Delhi High Court did not concur with the view adopted by Hon’ble Gujarat High Court in the case of Praful Chunilal Patel [1998 (2) TMI 538 - GUJARAT HIGH COURT], Hon’ble Delhi High Court in the case of KLM Royal Dutch Airlines [2007 (1) TMI 138 - DELHI HIGH COURT] did not approve its own judgment in the case of Consolidated Photo & Finvest Ltd. v. Asstt. CIT [1998 (5) TMI 20 - DELHI HIGH COURT] and held the same as not laying down the correct law. We accordingly find merit in the submission of Ld Counsel for assessee that the impugned reassessment was without any fresh material/information in the possession of Assessing Officer and only on the mere change of opinion. Thus there is no valid assumption of jurisdiction u/s 147 and hence reassessment framed u/s 147 has to be cancelled. We hold so. As regards merits of the MAT - The book profit gets substituted for the total income as computed under the Act. The book profit has therefore to be wholly quarantined from the said total income. For the determination of book profits thus any mode and manner of computation of total income under the Act has not to be applied unless specifically provided, as held by the Apex Court in Apollo Tyres Ltd. v. CIT [2002 (5) TMI 5 - SUPREME COURT] and as clarified in the Memorandum explaining Provisions of the Finance Bill, 2000. The major difference in the basis adopted by the appellant and the Assessing Officer is on account of adjustment of depreciation. In the books of account, depreciation has been calculated on Straight Line Method (SLM) and the book profit has been computed taking into account the aforesaid basis of book depreciation in terms of clear and unambiguous mandate contained in clause (iii) of the proviso to sub-section (2) of section 115JB providing that methods and rates adopted for calculating depreciation would be the same as have been adopted for preparing the accounts that are laid before annual general meeting convened as per the provisions of section 210 of the Companies Act. The Assessing Officer on the other hand has sought to exclude depreciation calculated on the basis of written down value as provided in section 32 of the Act while adding back book depreciation. As a consequence of the aforesaid, exclusion of income net of expenses relatable to units eligible for deduction u/s 10A/10B of the Act has been taken by the Assessing Officer at Rs. 9,825.14 lakhs as against Rs. 13,343.61 lakhs excluded by the appellant. The action of the Assessing Officer is contrary to the scheme of section 115JB of the Act, the unambiguous provisions of clauses (f) and (ii) of Explanation thereto and the settled judicial precedent in this regard. In the case of Asstt. CIT v. Varinder Agro Chemicals Ltd. [2007 (1) TMI 201 - ITAT CHANDIGARH-A], the Tribunal following the decision in the case of G.T.N. Textile Ltd. [2000 (8) TMI 35 - KERALA HIGH COURT], held that for the purpose of clause (iv) of section 115JA(2) of the Act, what is deductible from the net profits, is not the actual deduction of the eligible undertaking u/s 80-IA of the Act, but the profit of the eligible undertaking computed as per the profit and loss account prepared in accordance with Parts II & III of Schedule VI to the Companies Act, 1956. Following the decisions squarely apply to the case of the appellant and the adjustment, in terms of clause (ii)/(from) of Explanation to section 115JB of the Act has to be for the amounts credited/debited to the profit and loss account. As the case may be. We accordingly hold that while computing book profit the amount of Rs. 133.43 crores as claimed by the assessee shall be reduced from the book profit and not the sum of Rs. 98.25 crores as computed by the Assessing Officer. In the result the appeal is allowed.
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