Appeal dismissed on MAT levy but interest charges allowed; assessee not exempt; Supreme Court ruling applied.

The appeal was dismissed concerning the levy of Minimum Alternative Tax (MAT) under section 115JB of the Income Tax Act, as the assessee did not qualify for the exemption under sub-section (6) of section 115JB. However, the additional ground regarding the charging of interest under sections 234B and 234C was allowed in favor of the assessee based on the Supreme Court's ruling. The final order was pronounced on 14th Aug., 2019.

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Issues Involved:
1. Levy of Minimum Alternative Tax (MAT) under section 115JB of the Income Tax Act.
2. Charging of interest under sections 234B and 234C of the Income Tax Act.

Comprehensive, Issue-Wise Detailed Analysis:

1. Levy of Minimum Alternative Tax (MAT) under section 115JB of the Income Tax Act

The primary issue in the appeal was whether the assessee was liable to pay Minimum Alternative Tax (MAT) under section 115JB of the Income Tax Act. The assessee contended that as per sub-section (6) of section 115JB, the provisions of MAT were not applicable to it. The Assessing Officer (AO) had calculated tax under section 115JB at Rs. 2,92,01,760 on an income of Rs. 8,02,43,860. The CIT(A) upheld the AO's decision, relying on previous ITAT decisions for assessment years 2008-09 and 2009-10, which had similarly ruled against the assessee.

The ITAT examined the provisions of sub-section (6) of section 115JB, which were inserted by the Special Economic Zones Act, 2005. The sub-section exempts income from any business carried on by an entrepreneur or a developer in a Unit or Special Economic Zone from MAT. The assessee argued that it was a developer and thus qualified for this exemption. However, the CIT(A) and ITAT noted that the exemption applied only to units or developers within Special Economic Zones (SEZ) as defined under the SEZ Act, 2005. The assessee did not fall within this definition as it was not situated in a SEZ.

The ITAT further referenced the decision in Surana Steels Pvt. Ltd. Vs DCIT 237 ITR 777 (S.C), which held that provisions incorporated from another Act must be interpreted in the context of that Act. The ITAT concluded that the exemption under sub-section (6) of section 115JB was intended only for SEZ units or developers, and not for any other entities. Therefore, the assessee was liable to pay MAT.

2. Charging of Interest under sections 234B and 234C of the Income Tax Act

The assessee raised an additional ground, arguing that interest under sections 234B and 234C should not be charged as per the Supreme Court's decision in Kwality Biscuits Ltd. 284 ITR 434. The Supreme Court had held that interest under these sections is not leviable on a company whose income is computed under section 115J, as the computation can only be done at the end of the financial year.

The CIT-DR did not object to the admission of this additional ground. The ITAT, relying on the Supreme Court's decision, agreed with the assessee that interest under sections 234B and 234C could not be charged. Thus, this additional ground was decided in favor of the assessee.

Conclusion

- The appeal regarding the levy of MAT under section 115JB was dismissed, upholding the AO's and CIT(A)'s decisions that the assessee did not qualify for the exemption under sub-section (6) of section 115JB.
- The additional ground regarding the charging of interest under sections 234B and 234C was allowed in favor of the assessee, based on the Supreme Court's ruling in Kwality Biscuits Ltd.

Final Order

The appeal of the assessee was dismissed concerning the levy of MAT, but the additional ground regarding interest under sections 234B and 234C was allowed. The order was pronounced in the Open Court on 14th Aug., 2019.

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