2018 (8) TMI 1316 - HC - Income Tax

Judgment affirms constitutionality of Income Tax Act sections, dismissing challenge on minimum tax imposition.

Bishnu Krishna Shrestha, S/o Late Shri Ganesh Chand Shrestha, M/s. S.B.L. Private Limited, Formerly Known As M/s. S.B.L Industries Ltd. Versus Deputy Commissioner of Income Tax

Bishnu Krishna Shrestha, S/o Late Shri Ganesh Chand Shrestha, M/s. S.B.L. Private Limited, Formerly Known As M/s. S.B.L Industries Ltd. Versus Deputy ... Issues Involved:1. Constitutionality of Section 115JB and Section 80IC of the Income Tax Act, 1961.2. Alleged discrimination under Article 14 of the Constitution of India.3. Applicability of Section 115JB to companies availing benefits under Section 80IC.4. Jurisdiction and procedural aspects concerning the filing of the petition.Detailed Analysis:1. Constitutionality of Section 115JB and Section 80IC:The petitioners challenged the provisions of Section 115JB and Section 80IC of the Income Tax Act, 1961, arguing that the benefits granted under Section 80IC cannot be withdrawn by the introduction of Section 115JB. Section 80IC allows deductions for certain undertakings in special category states, whereas Section 115JB imposes a minimum tax on book profits for companies. The court examined the provisions and found that Section 115JB is a special provision introduced to ensure that companies pay a minimum tax on their book profits, irrespective of the deductions available under other sections, including Section 80IC.2. Alleged Discrimination under Article 14:The petitioners contended that the application of Section 115JB results in discrimination against companies benefiting from Section 80IC, violating Article 14 of the Constitution. They argued that while Section 80IC applies to all categories of assessees, Section 115JB specifically targets companies, creating an unequal tax burden. The court held that there is a reasonable classification between individual assessees and companies, and the imposition of a minimum tax on companies' book profits under Section 115JB does not violate Article 14. The classification was deemed reasonable and in line with the objective of ensuring that profitable companies contribute a minimum tax.3. Applicability of Section 115JB to Companies Availing Benefits under Section 80IC:The petitioners argued that Section 80IC, being a special provision, should override Section 115JB, and companies enjoying deductions under Section 80IC should not be subjected to the minimum tax under Section 115JB. The court referred to previous judgments, including the Uttarakhand High Court's decision and the Supreme Court's directive, which clarified that Section 115JB, being a special provision for minimum tax, applies even to companies availing benefits under Section 80IC. The court emphasized that Section 115JB ensures that companies pay a minimum tax on their book profits, thus maintaining the legislative intent behind its introduction.4. Jurisdiction and Procedural Aspects:The respondents argued that the petition should have been filed in Uttarakhand, where the company's registered office is located. The court noted that the petitioners had previously approached the Uttarakhand High Court, and the Supreme Court had directed them to pursue the matter through normal statutory remedies. The court found that the current petition was filed with a significant delay and reiterated that the appropriate forum for such disputes is the appellate authority under the Income Tax Act.Conclusion:The court dismissed the petition, upholding the constitutionality of Section 115JB and Section 80IC. It held that Section 115JB's imposition of a minimum tax on book profits for companies, including those availing benefits under Section 80IC, does not violate Article 14 of the Constitution. The court emphasized the legislative intent behind Section 115JB to ensure that profitable companies contribute a minimum tax, thereby rejecting the petitioners' arguments of discrimination and procedural irregularities.