Appeal partially allowed on deduction under Section 80IB(10) & interest under Section 234C

The Tribunal partly allowed the appeal, upholding the decision that the deduction under Section 80IB(10) is not allowable when computing book profit under Section 115JB. However, it directed the Assessing Officer to correctly apply interest under Section 234C based on the returned income.

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Issues Involved:
1. Deduction under Section 80IB(10) while computing book profit under Section 115JB.
2. Interest under Sections 234B and 234C on book profit.

Issue-wise Detailed Analysis:

1. Deduction under Section 80IB(10) while computing book profit under Section 115JB:
The assessee, engaged in construction and sale of buildings, claimed a deduction under Section 80IB(10) while computing total income under normal provisions, which was allowed by the AO. However, while computing book profit under Section 115JB, the AO did not allow this deduction. The CIT(A) upheld the AO's decision, referencing the Karnataka High Court's decision in Sankhla Polymers P. Ltd. vs. ITO and the Ahmedabad Tribunal's decision in Ganesh Housing Corporation Ltd. vs. ACIT, which both held that deductions under Section 80IB are not allowable while computing book profit under Section 115JB.

The assessee argued that Section 115JB(5) implies that all provisions of the Act, including Section 80IB, should apply while computing book profit. However, the CIT(A) and the Tribunal rejected this, emphasizing that Section 115JB provides a specific methodology for computing book profit, which does not include deductions under Section 80IB(10).

The Tribunal noted that the purpose of Section 115JB is to ensure that companies showing substantial book profits still pay a minimum tax, and the methodology prescribed does not allow for the deduction under Section 80IB(10). The Tribunal cited the Karnataka High Court's decision in Sankhla Polymers P. Ltd., which clarified that Section 80IB operates in a different sphere from Section 115JB, and the latter's specific provisions take precedence.

The Tribunal also addressed the argument that Section 80IB(10) should be considered an exemption rather than a deduction, stating that Chapter VIA deductions, including Section 80IB(10), are not exemptions but deductions from gross total income, which do not apply to the computation of book profit under Section 115JB.

2. Interest under Sections 234B and 234C on book profit:
The assessee contended that interest under Sections 234B and 234C should not be levied on the tax computed on book profit. The CIT(A) rejected this, following the Bombay High Court's decision in CIT vs. Kotak Mahindra Finance Ltd., which upheld the levy of interest under these sections on book profit.

The Tribunal confirmed that interest under Sections 234B and 234C is chargeable on the tax payable under Section 115JB, as per the Supreme Court's decision in Rolta India Ltd. However, the Tribunal acknowledged the assessee's submission that interest under Section 234C should be charged on the returned income and directed the AO to ensure this is correctly applied.

Conclusion:
The appeal was partly allowed. The Tribunal upheld the CIT(A)'s decision that the deduction under Section 80IB(10) is not allowable while computing book profit under Section 115JB. However, it directed the AO to correctly apply the interest under Section 234C based on the returned income.

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