TMI Blog2022 (5) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... duced from it to find out the total income. If however, the aggregate amount of deductions under this Chapter happens to be more than the gross total income, then such aggregate amount of deductions gets restricted to the amount of the gross total income with the effect that the total income is reduced to Nil and is not converted into loss so as to allow carry forward of the amount of deductions under this Chapter to the next year. The Hon ble Supreme Court in M/s. Synco Industries Ltd. Vs. AO and another [ 2008 (3) TMI 13 - SUPREME COURT] has also laid down to this extent. Adverting to the facts of the instant case, it is seen that the assessee s final gross total income was Rs.3,11,49,011/-. Thus, the total amount of deductions under Chapter VI could not have breached the amount of gross total income. The authorities have rightly restricted the amount of deduction u/s 80IC to the extent of gross total income computed at Rs.3.11 crore. The ld. AR was fair enough to accept this position against the assessee. The ground is thus dismissed. Deduction u/s.80IC be allowed in the computation of book profit u/s.115JB of the Act in the light of sub-section (5) thereto - HELD T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is consolidated order. 2. The appeal for the A.Y. 2013-14 is time barred by 128 days. The assessee has filed an affidavit indicating reasons for the belated filing of the appeal. We are satisfied with such reasons. The delay is condoned and the appeal is admitted for hearing. 3. The only issue raised by the assessee in its appeal is against restricting the deduction u/s.80IC of the Income-tax Act, 1961 (hereinafter also called the Act ) on the profits of Roorkee undertaking to Rs.3,11,49,011/- instead of profits from eligible undertaking at Rs.7,57,11,731/-. 4. Succinctly, the facts of the case are that the assessee is engaged in manufacture of Auto Electrical and Electronics components for two and three wheelers. Return of income was filed on 30-11-2013 declaring total income under normal computation at Nil. In such computation, the assessee claimed deduction u/s.80IC of the Act amounting to Rs.3,11,49,011/- from the gross total income of Rs.3,11,49,011/-. The Assessing Officer (AO) observed that the assessee was having two plants located at Pune and Roorkee in Uttarakhand. There was profit of Rs.7.57 crore in the eligible Roorkee unit and loss of Rs.4.26 crore in Shirwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gross total income is more than the aggregate amount of deductions under Chapter VI-A, then such total amount of deductions is reduced from it to find out the total income. If however, the aggregate amount of deductions under this Chapter happens to be more than the gross total income, then such aggregate amount of deductions gets restricted to the amount of the gross total income with the effect that the total income is reduced to Nil and is not converted into loss so as to allow carry forward of the amount of deductions under this Chapter to the next year. The Hon ble Supreme Court in M/s. Synco Industries Ltd. Vs. AO and another (2008) 299 ITR 444 (SC) has also laid down to this extent. 6. Adverting to the facts of the instant case, it is seen that the assessee s final gross total income was Rs.3,11,49,011/-. Thus, the total amount of deductions under Chapter VI could not have breached the amount of gross total income. The authorities have rightly restricted the amount of deduction u/s 80IC to the extent of gross total income computed at Rs.3.11 crore. The ld. AR was fair enough to accept this position against the assessee. The ground is thus dismissed. 7. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) has observed that: the purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item . Answering the question posed before it in affirmative, their Lordships held that on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee and the Tribunal has jurisdiction to examine the same. We find that the additional ground raised before the Tribunal involves a pure question of law and no fresh investigation of facts is necessary for its determination. As such, the additional ground is admitted and espoused for disposal on merits. 10. We have heard the rival submissions on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emptions u/ss.10 to 12 as per clause (ii). However, the rate of tax u/s.115JA was 30% of its book-profit. When section 115JB was inserted, it did away with specific deductions, such as, sections 80IB, 80IA, 80HHC and 80HHE which were there u/s.115JA but retained the exemptions u/ss.10 to 12 for the purposes of determination of book-profit. The list of reductions was curtailed in view of the slashing of the rate of tax to 18.50% payable on the amount of book profit as against the earlier rate of 30%. This deciphers that in the computation of income-tax payable u/s.115JB, the statute has not provided for reducing the amount of book profit with the amount of deductions under Chapter VIA which includes section 80IC also. Since the term `book profit has been defined in an exhaustive manner and sub-section (1) provides for charging tax at 18.5% by deeming such book profit as total income and further this is locked with the nonobstante clause in sub-section (1) qua any other provision of the Act, the sequitur is that determination of tax liability by applying the specified rate on the book profit of a company attains finality in this manner alone and cannot be subjected to any other pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of book profit and the determination of income-tax liability thereon as per sub-section (1) attains finality on its computation itself and hence, that cannot be subjected to other provisions of the Act including the deduction u/s.80IC of the Act. The very fact that Explanation 2 to section 115JB specifically provides for the reduction of the amount of income u/ss.10,11 and 12 etc., itself evidences that the intention of the legislature is to allow reduction from the book profits only to this extent and not to deduction u/s 80IC of the Act. If the contention of the ld. AR about the applicability of sub-section (5) also to the determination of book profit in sub-section (1) of section 115JB is taken to a logical conclusion and it is supposed that the legislature intended granting benefit of all the deductions in the computation of book profit also u/s.115JB, then there was no need to specifically retain clause (ii) to Explanation 1 providing for reduction of the income u/ss.10, 11 and 12 from the amount of profit as per the profit and loss account. In that case, sub-section (5) would have also governed sections 10, 11 and 12, thereby rendering this clause redundant. The pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idity of the provisions of section 115JB of the Act on the ground that it did not provide for deduction u/s.80IB and the assessee had set up its unit in the eligible area for availing benefit u/s.80IB. Dismissing the writ petition, the Hon ble High Court held that the curtailment of the benefit earlier granted by legislative Act cannot be invalidated on the principles of promissory estoppel. In other words, the benefit of section us.80IB which was available u/s.115JA but taken away by section 115JB, was declared as valid. In Sankhla Polymers (P) Ltd. (supra) , the assessee claimed deduction u/s.80IB in the computation of income u/s.115JB, which was not allowed by the AO and the action of the AO was approved in the consecutive two appeals. The Hon ble High Court, on a comparative reading of section 80IB as well as section 115JB, held that section 115JB is a special charging section and section 80-IB does not control the provisions of Section 115JB of the Act. It further laid down that: `The benefit under Section 80-IB is not denied, it works as it is. It is only because the assessee happens to be a company to which the provisions of Section 115JB is also attracted, levy as indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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