TMI Blog2019 (9) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13 onwards. Therefore, provisions of sub-section (5) is subject to provisions of sub-section (6) of section 115JB and reading both the provisions harmoniously, it is clear that the income of the assessee company shall be subject to the provisions of MAT under section 115JB In the instant case, the assessee company is eligible for relief under Section 10AA of the Act however the sub-section (6) specifically provides that MAT provisions continue to apply to the assessee company beginning assessment year 2012-13 onwards. In other words, the application of other provisions of the Act as so provided in sub-section (5) has been barred by virtue of sub-section (6) to section 115JB of the Act. None of these decisions, the provisions as contained in sub-section (6) to section 115JB have been examined and/or discussed which clearly provides that the MAT provisions will be applicable to income from business carried on by the assessee company in its SEZ unit. Therefore, in view of the specific provisions so contained in sub-section (6) of section 115JB, these decisions doesn t support the case of the assessee company. - Decided against assessee - ITA No. 769/JP/2018 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2015. Accordingly, order u/s 143(3) was rectified u/s 154 dated 01.06.2016 and book profit u/s 115JB determined at ₹ 6,83,86,428/- was brought to tax, the same being higher than the income assessed under the normal provisions of the Act. 3. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A). As per ld. CIT(A), with effect from the assessment year 2012-13, the provisions of section 115JB was made applicable to the SEZ unit vide sub section (6) and proviso thereto. It was held that for the relevant assessment year, MAT was chargeable on the appellant company and not tax under normal provisions of the Act and accordingly, the action of the AO in rectifying the assessment order u/s 154 was upheld following the order of the Hon ble Karnataka High Court in case of CIT vs Sankala Polymers [2012] 20 taxmann.com 378 and the decision of the Coordinate Bench in case of S.I.J Chains (P) ltd vs ACIT, Jalandhar 100 ITD 379 (Asr). Against the said finding of the ld. CIT(A), the assessee is now in appeal before us. 4. During the course of hearing, the ld. AR submitted that the assessee company started its operation in the AY 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. It was further submitted that the decisions relied upon the ld. CIT(A) are distinguishable on facts and therefore should not be applied in the instant case. It was further submitted that the issue under consideration is whether an undertaking which is claiming its 100% of the profits and gains derived from exports as exempt u/s 10AA will be liable to pay the tax on the entire book profit as per the provisions of section 115JB or not. It was submitted that the action of the AO which was confirmed by the ld. CIT(A) in taxing that portion of the assessee s income which was exempt u/s 10AA under the provisions of section 115JB is bad in law and therefore, deserves to be quashed. 9. It was further submitted that whether income which was otherwise exempt can be charged to tax u/s 115JB is debatable issue and is beyond the scope of rectification u/s 154 of the Act. In support, the reliance was placed on the Hon ble Supreme Court decision in case of ITO vs. Volkart Brothers [1971] 82 ITR 50 (SC). It was submitted that various judicial decisions referred above make it clear that although the decisions have been rendered in favour of the assessee comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, under section 80-IAB. a deduction of hundred per cent is allowed in respect of profits and gains derived by an undertaking from the business of development of an SEZ notified on or after 1st April, 2005 from the total income for any ten consecutive assessment years out of fifteen years beginning from the year in which the SEZ has been notified by the Central Government. 19.1.3 Under the existing provisions of sub-section (6) of section 115JB, an exemption is allowed from payment of minimum alternate tax (MAT) on book profit in respect of the income accrued or arising on or after 1st April, 2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic Zone (SEZ), as the case may be. 19.1.4 Further, under the existing provisions of sub-section (6) of section 115-O, an exemption is allowed from payment of tax on distributed profits [Dividend Distribution Tax (DDT)] in respect of the total income of an undertaking or enterprise engaged in developing or developing and operating or developing, operating and maintaining a Special Economic Zone for any assessment year on any amount decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the provisions of Section 115JB of the Act. On bare reading of provisions of subsection (6) to section 115JB, it is crystal clear that provisions of section 115JB will apply to the assessee company for the assessment year beginning assessment year 2012-13 onwards. Therefore, while passing the assessment order u/s 143(3), where the Assessing officer has forgot to invoke the provisions of section 115JB of the Act, the matter clearly falls within purview of section 154 of the Act and the same can be rectified as mistake apparent from record. 15. Now, coming to another contention of the ld AR that in view of subsection (5) to section 115JB of the Act, the entire income of the assessee cannot be brought to tax under Section 115JB given that the income of the assessee company is exempt as per the provisions of section 10AA of the Act. In this regard, we refer to sub-section (5) to section 115JB of the Act which reads as under: (5) Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section. 16. The above provisions thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment and the levy of tax is on the book profits after effecting various adjustments as set out in terms of explanation thereto. It was further held that provisions of sub-section (5) of section 115JB open the assessment to the application of all other provisions contained in the Income Tax Act except specifically barred by that section itself. It was accordingly held that section 115JB admits grant of relief under section 54EC of the Act. In the instant case, the assessee company is eligible for relief under Section 10AA of the Act however the sub-section (6) specifically provides that MAT provisions continue to apply to the assessee company beginning assessment year 2012-13 onwards. In other words, the application of other provisions of the Act as so provided in sub-section (5) has been barred by virtue of sub-section (6) to section 115JB of the Act. Therefore, this decision of the Hon ble Madras High Court doesn t support the case of the assessee company rather our reading of the provisions of sub-section (5) to section 115JB has been fortified by this decision. 19. In case of Neha Home Builders (P) Ltd vs CIT (Supra), the issue for consideration before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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