2011 (9) TMI 238

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....rofit under section 115JB in the manner laid down by the special bench. 2. Therefore, the question that arise for consideration is whether for determining book profits in terms of section 115JB net profits as shown in the profit and loss a/c have to be reduced by the amount of profits eligible for deduction under section 80HHC or by the amount of deduction under section 80HHC. This question is now decided by the Apex Court in the case of Ajanta Pharma Ltd. v. CIT [2010] 327 ITR 305, the Apex Court has held as under : "8. By the Finance Act, 2000, Section. 115JB was inserted w.e.f. 1st April, 2001 providing for levy of MAT on certain companies. Sec. 115JB, though structured differently, stood inserted to provide for payment of advance ....

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....are entitled to such special deduction under section. 80HHC(1). A bare reading of Section. 80AB shows that computation of deduction is geared to the amount of income, but Section. 80HHC(3), which refers to quantification of deduction is geared to the exports turnover and not to the income. On the other hand, Section. 115JB refers to levy of MAT on the deemed income. The above discussion is only to show that ss. 80HHC and 115JB operate in different spheres. Thus, two essential conditions for invoking Section. 80HHC(1) are that assessee must be in the business of export and secondly that sale proceeds of such exports should be receivable in India in convertible foreign exchange. Hence, Section. 80HHC(1) refers to "eligibility" whereas Section....

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.... cent as "eligible profits" and that the same cannot be reduced to 80 per cent by relying on Section 80HHC(1B). Thus, for computing "book profits" the downward adjustment, in the above example, would be Rs. 100 crores and not Rs. 90 crores. The idea being to exclude "export profits" from computation of book profits under Section 115JB which imposes MAT on deemed income. The above reasoning also gets support from the Memorandum of Explanation to the Finance Bill, 2000. 10. If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then Section 115JB will cease to be a self-contained code. In Section 115JB, as in Section 115JA, it has been clearly stated that the relied will be computed under Section....