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2013 (7) TMI 323 - HC - Income TaxConstitutionality of Section 115J and 115JA - Minimum Alerter Tax (MAT) - Whether, these sections arbitrary and violative of Article 14 of the Constitution of India - Held that:- Introduction of a minimum tax on profit making companies was considered necessary as certain companies were declaring high profits but not paying any taxes on account of deductions available under the normal computation provisions of the Act including set off of carried forward depreciation - It is settled law that Article 14 does not forbid reasonable classification and the question whether any classification is reasonable has to be tested on the basis of whether the same bears a reasonable nexus with the object of the statute. Section 115JA of the Act was to ensure that all corporate assessees pay tax at least on 30% of the book profits declared by them. In this respect, section 115JA of the Act affected only those companies who declared large profits, however, as per the normal provisions of the Act, were liable to pay tax less than that as calculated on 30% of the declared profits. Treating such companies as a separate class has a direct nexus with the object of ensuring that all corporate assessees having profits pay at least the minimum specified tax - Upon a plain reading of section 115J of the Act, the income calculated on the basis of book profits squarely falls within the definition of total income as defined under the Act. Section 115JA only provides for an alternate method for calculating tax and thus, provides a measure for purposes of levying tax. The same cannot be confused with the subject matter of the levy which continues to be tax on income - Section 115J of the Act only creates a legal fiction to supplant the measure of total income which is chargeable to tax. The non obstante clause indicates that the provisions of 115JA of the Act would override the other provisions of the Act for computation of taxable income in certain cases falling within the sweep of section 115JA. Section 115JA of the Act is a special provision to calculate taxable income in certain cases. The levy of income tax is under Section 4 of the Act, which is the charging section. Section 115J of the Act only creates a legal fiction to supplant the measure of total income which is chargeable to tax. Thus, indisputably, tax as computed on the basis of Section 115J of the Act is a tax on income. Provisions of Sections 115JA and 115JAA of the Act are neither arbitrary nor unreasonable. Following decisions of ITO v. N. Takin Roy Rymbai [1976 (2) TMI 2 - SUPREME Court], East Indian Tobacco Co. v. State of Andhra Pradesh [1962 (4) TMI 57 - SUPREME COURT OF INDIA], Budhan Choudhry v. State of Bihar[1954 (12) TMI 17 - SUPREME COURT], National Thermal Power Corporation Ltd v. Union of India & Ors. [1991 (4) TMI 97 - DELHI High Court] and State of West Bengal v. Kesoram Industries Limited [2004 (1) TMI 71 - SUPREME Court] - Decided against assessee.
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