TMI Blog2010 (11) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of sec-tion 115JB to the extent mentioned therein. - Decided against the assessee - WP NO 1/10 (M/B), WP NO 2/10 (M/B), WP NO 3/10 (M/B) - - - Dated:- 26-11-2010 - BARIN GHOSH and NIRMAL YADAV, JJ. Judgment: Barin Ghosh C. J.- Chapter II of the Income-tax Act, 1961 (hereinafter referred to as the "the Act") provides the basis of charge. Section 4, con-tained therein, is the charging section. The said section, amongst others, prescribes that income-tax shall be charged in accordance with and subject to the provisions of the Act, in respect of total income. Section 5, also con-tained in Chapter II, defines the scope of total income. 2. Chapter III of the Act brings forth such incomes, which do not form part of total income. Chapter IV, while defines the nature of different heads of income, prescribes computation of total income under those heads, indi-vidually as well as collectively. One of the heads of income is "Profits and gains of business or profession". Chapter VI-A prescribes the deductions to be made in computing total income. 3. Chapter XII-B contains special provisions relating to certain companies. Section 115JB is contained in Chapter X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance and Company Affairs (Department of Revenue) to amend the Act/Rules/Notifications etc. and issue necessary instructions for giving effect to the decisions contained in the said Office Memorandum. 6. Subsequent thereto, by the Finance Act, 2003, section 80-IC was inserted in the Act. The said section became effective with effect from April 1, 2004. In terms thereof, an assessee, whose total income includes any profits and gains derived by an undertaking or an enterprise from any busi-ness referred to in sub-section (2) of the said section, became entitled to a deduction from such profits and gains, as specified in sub-section (3) thereof, in computing its total income. In sub-section (2) of the said sec-tion, it has been provided that the said section applies to any undertaking or enterprise, which has begun or begins to manufacture or produce any article or thing, or which manufactures or produces any article or thing and undertakes substantial expansion during the period beginning on January 7, 2003 and ending before April 1, 2012 in those areas as notified by the Board in the State of Himachal Pradesh or the State of Uttaranchal, pro-vided the article or thing is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India, is that, as yet, assessment of tax liability of any of the companies, being the petitioner in one writ peti-tion and represented by the other petitioners, has not yet been done and the letter of the Central Board of Direct Taxes dated June 5, 2008, being clarificatory in nature, the writ petitions are premature. 11. We think, in the facts and circumstances of the case as depicted above, and when it was clearly depicted in the policy, referred to above, that even a company will be entitled to 100 per cent. income-tax exemption for the first five years and 30 per cent., thereafter, for the next five years of the profits and gains made by it by manufacturing or producing any article or thing through new industrial units or existing industrial units on their substantial expansion, defined and set up in the areas mentioned in the said policy and situated in the State of Uttarakhand, it became entitled to approach the court to determine, in the backdrop of what has been done in terms of the directions contained in the said policy by inserting section 80-IC, whether such income-tax exemption is available to them or not and, accordingly, an attempt made to know the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of income-tax. The policy has been made by the Executive Government. The Act nowhere authorises the Government or the Executive Government to exempt income-tax. In other words, the Legislature, while making the Act, did not authorise the Executive Government to exempt any assessee from paying income-tax. The policy to exempt income-tax, propounded by the Execu-tive Government, was, therefore, subject to acceptance thereof by the Legislature. The policy also made the same clear. 15. The Legislature, while enacting section 80-IC, made it a part of Chapter VI-A of the Act, where provisions have been made for deductions to be made in computing total income. Section 80-IC also, in so many terms, allows deductions to be made in computing total income. If the assessee is a company and comes within the purview of section 80-IC, it is entitled to deductions, to the extent specified therein, to be made in computing its total income. Section 80-IC does not exempt an assessee, covered by the said section, from paying income-tax. In the premises, action of the Legislature, while inserting section 80-IC, should be deemed to be an action contrary to what had been provided in the said pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income-tax payable on the total income as computed under the Act and, in the matter of com-puting income-tax on the total income, after insertion of section 80-IC, all assessees, including a company, became entitled to deductions pres-cribed in section 80-IC. Therefore, even after insertion of section 80-IC, when the total income, as computed after taking into consideration all deductions, including the deductions available under section 80-IC of the Act, is less than what has been mentioned in section 115JB, it would be the obligation of the assessee-company to pay such tax as mentioned in section 115JB. 19. Had the Legislature exempted an assessee from paying income-tax, the matter would have been different. But that has not been done. The Legislature allowed a deduction. If, after such deduction, income-tax pay-able is less than what has been mentioned in section 115JB, by reason of the plain words used in section 115JB, an assessee, being a company, is liable to pay such tax as mentioned in section 115JB. In the circumstances, I am of the view that if by virtue of section 80-IC, no income-tax is payable by an assessee, being a company, it would be liable to pay income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as computed under the Act, obviously after the deductions are allowed. In such situation, that case has no application to the present case. 24. For the purpose of highlighting that equitable considerations will prevail in certain cases, when the court can modify the language of a statutory provision, the learned counsel for the petitioners cited a judgment of the hon'ble Supreme Court rendered in the case of CIT v. J. H. Gotla reported in [1985] 156 ITR 323 ; [1985] 4 SCC 343. In that case, though profit and loss from the business of the assessee's wife or minor child was to be included in the total of the assessee, it was held by the Assessing Officer that the same cannot set off the business loss of the assessee. In that back-ground, two sections were read in conjunction so as to not to make the statute a mockery. In the instant case, having regard to the plain and clear words used in the statute, there is no necessity of giving any meaning to any of the sections under consideration, nor is there any obligation to read them in conjunction, for one gives deductions and the other deals with a situation when tax liability, after such deductions, is less than what had been provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the peti-tioners, the hon'ble Supreme Court was concerned with resolution of con-flict between the Central and State legislations, with which, we are not concerned in the instant case. 29. The learned counsel for the petitioners, lastly, cited the judgment of the hon'ble Supreme Court rendered in the case of R. S. Raghunath v. State of Karnataka reported in AIR 1992 SC 81. In that case too, the hon'ble Supreme Court was concerned with two enactments. It was held, one of those enactments was special and the other was a general and the non obstante clause, in the general statute, did not affect the special statute. It was contended that since section 80-IC is a special provision, section 115JB does not affect the same. Section 115JB, being a part of Chapter XII-B of the Act, is also a special provision contained in the later part of the statute and, unless the context otherwise requires, should be deemed to control section 80-IC. Furthermore, as aforesaid, while section 80-IC, as a special provision, allows deductions, section 115JB, as a special provision, imposes a tax liability on an assessee, being a company, if its tax liability, assessed after grant of such deductions, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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