TMI Blog2018 (7) TMI 2082X X X X Extracts X X X X X X X X Extracts X X X X ..... on and not exemption provision as contended by the assessee. The provisions of sec. 115JB prescribes exclusion of certain exempted income and do not provide deduction given u/s 80IB(10) of the Act. The Hon ble Karnataka High Court has made this point very clear in the case of in the case of Sankhla Polymers P. Ltd. [ 2013 (6) TMI 310 - KARNATAKA HIGH COURT] as held that provisions of Section 115JB would apply to the assessee who is claiming deduction under Section 80IB of the Act and deduction under Section 80IB(10) of the Act cannot be allowed while computing book profit under Section 115JB The contention of the learned A.R. that provisions of Section 80IB(10) would fall under the category of all other provisions of the Act as mentioned in Section 115JB(5) is liable to be rejected. Accordingly we hold that the assessee is not entitled to claim deduction u/s 80IB(10) of the Act from the Net profit for the purpose of computing Book Profit u/s 115JB of the Act. Accordingly we confirm the order passed by Ld CIT(A) on this issue. Interest under Sections 234B and 234C - HELD THAT:- There is no dispute that interest u/s 234B and 234C is chargeable on the tax payable u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted while computing book profit under Section 115JB of the Act. The learned CIT(A) also noticed that identical view has been expressed by the Ahmedabad Bench of the Tribunal in the case of Ganesh Housing Corporation Ltd. vs. ACIT (2009) 32 SOT 207. Accordingly the learned CIT(A) rejected the claim of the assessee. 5. The assessee also contended before Ld CIT(A) that the interest under Sections 234B and 234C of the Act should not be levied on the income tax charged on book profit. The learned CIT(A) rejected the same by following the decision rendered by the Hon'ble Bombay High Court in the case of CIT vs. Kotak Mahindra Finance Ltd. (2003) 183 CTR 491. The assessee is aggrieved by the decision rendered by the learned CIT(A) on both the issues, referred above. 6. The first issue relates to the claim for deduction u/s 80IB(10) of the Act, while computing book profit u/s 115JB of the Act. The learned A.R. submitted that provisions of Section 115JB(5) of the Act, which reads as under:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was entitled to deduction under Section 80IB(10) of the Act while computing book profit under Section 115JB of the Act. 8. On the contrary, the learned D.R. submitted the provisions of Section 115JB of the Act is applicable to all companies mentioned therein and hence the contentions of the learned A.R. that it would cover only certain companies is not in accordance with the mandate of the provisions. She further submitted that provisions of Section 115JB is an alternate tax mechanism brought into statute to collect tax from companies covered by the Section and the income tax so paid can be adjusted by the assessee from the liability to pay income tax in subsequent years under normal provisions of the Act. She further submitted that provisions of Section 115JB prescribe the method of computation of book profit. As per the method so prescribed, certain items of expenditure debited to the Profit Loss Account has to be added to the net profit and certain types of income credited to the Profit Loss Account has to be reduced from the net profit. Except the adjustments so provided, the assessee is not entitled to claim any other deduction. 9. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 115JB of the Act. 11. We have heard the parties on this issue and perused the record. As submitted by the learned D.R., provisions of Section 115JB prescribe the methodology to collect minimum amount of tax and hence the tax so collected was called Minimum Alternate Tax. This provision is successor to sec. 115JA and sec. 115J, which were brought into the statute by the Parliament on noticing that certain companies are declaring huge book profits, but are not paying income tax under the normal provisions of the Act by availing various deductions and exemptions. The minimum alternative tax is levied on the amount of Book Profit computed as per the provisions of Section 115JB of the Act. This section prescribes a methodology to compute book profit as per which the financial statements has to be prepared in accordance with the provisions of Companies Act and the net profit should be arrived at. Thereafter certain items of expenditure debited to Profit Loss Account has to be added to the net profit and certain items of income credits to the Profit Loss Account has to be reduced, meaning thereby, the book profit has to be computed in accordance with the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of charging of interest u/s 234B of the Act. Admittedly provisions of Section 115JB does not provide for charging interest corresponding to sec. 234B and hence the Hon ble Supreme Court held that the provisions of sec. 234B shall apply to the tax payable on the Book profit computed u/s 115JB of the Act, since sec. 115JB(5) states that all other provisions the Act shall apply . There was no occasion for the Hon ble Supreme Court to interpret the first portion of sec. 115JB(5), which states that Save as otherwise provided in this section . Admittedly the methodology for computing book profit is provided only in Section 115JB of the Act and is saved by the provisions of Section 115JB(5) of the Act. 14. There should not be any dispute that the methodology provided in sec. 115JB for computing book Profit did not prescribe for reducing the amount eligible for deduction u/s 80IB(10) of the Act from the Net Profit. 15. We also notice that the assessee has considered sec. 80IB(10) of the Act as an exemption provision. It is well settled proposition that the deductions prescribed in Chapter VIA are deductions provision and they shall be allowed only if the Gross Total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not an end. 28. Though many decisions are roped in for interpreting this, we find there is no scope for interpretation in the present situation, as the provision of the statute should be given effect to, as it occurs and if there is only any ambiguity in understanding the statute then only the tool of interpretation should be called in aid. We do not find any competing or derogatory provision in Section 115JB vis- -vis Section 80-IB of the Act is concerned. 29. Section 80-IB operates in a particular sphere and Section 115JB is operative in a totally different sphere. It is not the case of the appellant-assessee that Section 80- IB is not operated or given effect to. Grievance of the assessee is that because of the operation of Section 115JB, the benefit of Section 80-IB is taken away. Section 115JB occurring in a taxing statute is in the nature of a charging section and that too a special charging section, exemption or concession or any other benefit sought should come from within the provisions of Section 115JB itself, which occurs in Chapter XII-B of the Act. Section 80-IB is a provision which occurs in Chapter VI-A of the Act and a chapter which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 33. A budgetary speech while will have some significance for understanding a provision if there is any ambiguity, in the wake of clear language of the Section 115JB, in the first instance there is no ambiguity, in the second instance, the ambiguity sought to be introduced on certain premise which is not apparent and is only on a limited reading of the budget speech, at any rate a budget speech in itself cannot regulate or control the statutory provision, more so a charging section in a revenue yielding statute, we are of the clear opinion that the provisions of Section 115JB should be given full effect to without being influenced or guided or regulated by the budget speech of the finance minister. The board circular being in the context of the earlier provisions, but, nevertheless more by way of extraction of the budget speech, that by itself cannot have any special significance, as the board circular does not in any way seeks to clarify the levy and rate of levy as provided in Section 115JB of the Act. Levy and rate of tax alone is what matters for the purpose of Section 115JB of the Act. 34. Arguments are advanced by Sri Shankar, learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted, then it will result in a discrimination against such assessee- companies who have to pay tax under Section 115JB of the Act, but have no concession available under Section 80-IB, whereas the tax liability of the person under Section 115JB of the Act, who can claim concession under Section 80-IBof the Act gets reduced for the purpose of Section 115JB of the Act. It is, therefore, to avoid Section 115JB being rendered discriminatory and unconstitutional being violative of Article 14 of the Constitution of India, the contention of Sri Shankar for reading down or reading up the provisions of Section 115JB of the Act, particularly by adding to different situations mentioned in the explanation, to be expanded by including reference to Section 80-IB of the Act cannot be accepted. A statutory provision cannot be so read down to render it unconstitutional, but reading down a statutory provision is to make it constitutional and not otherwise. Therefore, the arguments fail. 17. The Ahmedabad bench of Tribunal also considered an identical issue in the case of Ganesh Housing Corporation Ltd vs. ACIT (2009)(32 SOT 207), wherein it was held as under:- 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit has to be reduced by the amount of profit eligible for deduction under section 80HHC, under section 80HHE and under section 80HHF, respectively. Clauses (i) to (viii) under Explanation 1 nowhere provides for the reduction of the deduction allowable under section 80-IB out of the book profit. Sub-section (3) states that the provisions of section 115JB(1) will not affect the determination of the amounts in relation to the relevant previous years to be carried forward to the subsequent year or years under section 32(2) or 32A(3) or 72(1) or 73 or 74A(3). Section 115JB(4) makes it mandatory on the part of the assessee-company to whom section 115JB is applicable to furnish a report in the prescribed form from the Chartered Accountant certifying that the book profit has been computed in accordance with the provisions of this section and such report should be furnished along with the return of income filed under section 139(1) or in response to a notice under section 142(1)(i). Sub-section (5) provides that all the provisions of this Act shall apply to every assessee being a company except to the extent otherwise provided in this section. The crux of the arguments of the learned AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal with the aggregation of the income and set-off and carry-forward of the losses while computing the total income of the assessee. However, Chapter VI-A deals with various provisions relating to the deductions to be made in computing the total income of the assessee. These deductions are to be made out of the gross total income. Gross total income is defined under section 80B(5) to mean the total income computed in accordance with the provisions of the Income-tax Act before making any deduction under Chapter VIA. The deduction under section 80-IB is allowable to the assessee on the profits of the eligible business included in the gross total income out of the gross total income and falls under Chapter VI-A. Section 80A(1) provides in computing the total income of an assessee, there shall be allowed from his gross total income in accordance with and subject to the provisions of this Act, the deduction specified in sections 80C to 80U. Thus, the income computed prior to the deduction under Chapter VI-A has to be regarded to be the gross total income and once the deductions under Chapter VI-A are allowed, the total income is arrived at. On this total income, the tax is computed subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0IB(10) of the Act from the net profit, while computing book profit u/s 115JB of the Act. The Ld CIT followed the decision rendered by Hon ble Karnataka High Court and Ahmedabad bench of Tribunal (both the cases referred above) and held that the assessee cannot claim deduction u/s 80IB(10) of the Act while computing book profit. The Tribunal took the view that the AO has taken a possible view and accordingly set aside the revision order. The Tribunal has taken the view that the decision rendered by non-jurisdictional High Court cannot trigger revision proceedings u/s 263 of the Act. Since the decision has been rendered by the Tribunal in the context of provisions of sec.263 of the Act, we are of the view that the assessee cannot place reliance on this decision rendered by the co-ordinate bench. 20. In view of the foregoing discussions, in our considered view, the contention of the learned A.R. that provisions of Section 80IB(10) would fall under the category of all other provisions of the Act as mentioned in Section 115JB(5) is liable to be rejected. Accordingly we hold that the assessee is not entitled to claim deduction u/s 80IB(10) of the Act from the Net profi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
