TaxTMI 
TaxTMI 
2010 (11) TMI 671
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....es the deductions to be made in computing total income. 3. Chapter XII-B contains special provisions relating to certain companies. Section 115JB is contained in Chapter XII-B. The said section was inserted by the Finance Act, 2000, with effect from April 1, 2001. In terms thereof, notwithstanding anything contained in any other provision of the Act, if the assessee is a company and the income-tax payable by it on the total income, as computed under the Act, in respect of any previous year relevant to the assessment year commencing on or after April 1, 2007, is less than 10 per cent. of its book profit, such book profit shall be deemed to be the total income of the assessee and tax payable by the assessee, on such total income, shall be at the rate of 10 per cent. The section, therefore, contains a non obstante clause as well as a deeming clause. 4. Therefore, if a company, as entitled to, makes deductions to be made in computing the total income in terms of various provisions contained in the Act, including those permissible under Chapter VI-A, and accordingly, income-tax payable by it on the total income, thus computed, is less than 10 per cent. of its book pr....
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....ginning on January 7, 2003 and ending before April 1, 2012 in those areas as notified by the Board in the State of Himachal Pradesh or the State of Uttaranchal, pro-vided the article or thing is not specified in the Thirteenth Schedule. In terms of sub-section (3) of the said section, such an undertaking or enter-prise is entitled to deduction of 100 per cent. of such profits and gains for five assessment years commencing with the initial assessment year and, thereafter, 25 per cent. or 30 per cent. where the assessee is a company, of such profits and gains. 7. Therefore, in terms of section 80-IC, an assessee-company, which begins to manufacture or produce, or being a manufacturer or producer, undertakes substantial expansion, during the period between January 7, 2003 and April 1, 2012 through an undertaking or an enterprise situated in the notified areas of the State of Uttaranchal (now Uttarakhand), is entitled to 100 per cent. deduction in computing its total income of the profits and gains made therefrom for the first five assessment years and, thereafter, 30 per cent. thereof. 8. On February 20, 2008, the Principal Secretary, Industrial Development, Uttara....
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....n the backdrop of what has been done in terms of the directions contained in the said policy by inserting section 80-IC, whether such income-tax exemption is available to them or not and, accordingly, an attempt made to know the same cannot be said to be a premature attempt. 12. It is the contention of the petitioners that at the time of pronouncement of the said policy, section 115JB was already a part of the Act. Despite that, it was announced that 100 per cent. tax exemption for first five years and, thereafter, 30 per cent., shall be available to the companies, who would set up new industrial units or who, having existing industrial units, would carry out substantial expansion thereof. The policy directed the Ministry of Finance and Company Affairs to amend the Act/Rules/Notifications etc. and to issue necessary instructions for giving effect to the decision to give such exemption. It is the contention of the petitioners that in terms thereof, section 80-IC was inserted in the Act. While section 80-IC was inserted, it was declared to be a special provision. It was contended that section 115JB is not notwithstanding the provisions contained in the Act, which were part ....
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....ome. Section 80-IC does not exempt an assessee, covered by the said section, from paying income-tax. In the premises, action of the Legislature, while inserting section 80-IC, should be deemed to be an action contrary to what had been provided in the said policy of the Executive Government. In the premises, while interpreting section 80-IC of the Act, the contents thereof cannot be influenced by the provisions of the said policy. 16. On and after insertion of section 80-IC, the companies, which are enti-tled to the benefits thereof, became entitled to deduct the income made by them from the profits and gains derived by them from an undertaking or an enterprise of the nature mentioned in the said section. As a result of such deduction, if a company has only such profits and gains as mentioned in section 80-IC, that company would not be liable to pay any income-tax, but by virtue of section 115JB, if the same is applicable to the company, it will be liable to pay such tax as mentioned in section 115JB. The contention appears to be that in such view of the matter, section 80-IC and section 115JB cannot be read harmoniously and as the incorporating part of section 80-IC is cl....
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....ords used in section 115JB, an assessee, being a company, is liable to pay such tax as mentioned in section 115JB. In the circumstances, I am of the view that if by virtue of section 80-IC, no income-tax is payable by an assessee, being a company, it would be liable to pay income-tax to the extent as mentioned in section 115JB and that was and still is the very object of inserting section 115JB in the Act. 20. It was urged that the Central Government is estopped by principles of promissory estoppel to claim any income-tax after having expressly granted 100 per cent. exemption from paying income tax for the first five years. A promise made contrary to statute is not enforceable. At the time such promise was made, the Executive Central Government had no authority to exempt payment of income-tax by any class of assessee. The promise, to that effect, was subject to acceptance thereof by the Legislature, as was clearly depicted in the policy. The Legislature did not accept the same. To that extent, the promise is not enforceable. 21. It was contended that a company will be liable to pay tax despite getting 100 per cent. deduction, but as against that, any other asses....
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....ar words used in the statute, there is no necessity of giving any meaning to any of the sections under consideration, nor is there any obligation to read them in conjunction, for one gives deductions and the other deals with a situation when tax liability, after such deductions, is less than what had been provided therein. 25. For the proposition that where two interpretations are possible, one favourable to the assessee should be preferred, learned counsel for the petitioners cited a judgment of the hon'ble Supreme Court in the case of CIT v. J. K. Hosiery Factory reported in [1986] 159 ITR 85 (SC) ; [1986] (Supp) SCC 104. In the instant case, there is no scope of two interpreta-tions of either of the sections under consideration. 26. The hon'ble Supreme Court, in the case of KSL and Industries Ltd. v. Arihant Threads Ltd. reported in [2008] 9 SCC 763, as cited by the learned counsel for the petitioners, dealt with non obstante clauses contained in two different statutes, which has no application to the present case. In Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326 (SC) ; [1979] 2 SCC 409, as cited by the learned counsel for....