TaxTMI 
TaxTMI 
2012 (9) TMI 64
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....ax (A) has erred in holding that on merits the action of the Assessing Officer is also incorrect as Assessing Officer has not applied provisions of section 10B(6) as per which the provisions of section 32(2) are not relevant for the purpose of computation of benefit u/s. 10B of the IT Act, 1961. iv) On the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (A) has erred by directing the Assessing Officer to apply the provision of section 10B(6) and that if depreciation pertains to A.Y. ending a April, 2001 then such depreciation will not be part of current year depreciation and thus almost restore back the issue to the Assessing Officer which is not permissible as per law. v) The appellant craves to lave, to add, alter or amend any ground of appeal raised above at the time of the hearing." 3. In this case Assessing Officer observed that vide questionnaire dated 9.11.2009, assessee was required to explain as to why the amount of brought forward depreciation was not be set off along with the current years depreciation against the allowable business profits before allowing exemption u/s. 10B and why the amount of brought forward depreciation ma....
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....:- Amount of exemption u/s. 10B (Not Available to the assessee Rs. 1,70,38,715/- Rs.19,86,98,306/- Book profit Rs. 2,05,10,176/- Tax due @ 7.5% thereof Rs. 15,38,263/- Add: S.C. Rs. 38,456/- Total tax liability Rs. 15,76,719/- 4. Against the above order the assessee was in appeal before the Ld. Commissioner of Income Tax (A). Ld. Commissioner of Income Tax (A) noted that in this case Assessing Officer observed that income u/s. 115JB has not been correctly computed as the exemption u/s. 10B has not been correctly worked out and adjusted. Ld. Commissioner of Income Tax (A) further noted that Assessing Officer has further observed that for the purpose of working out exemption u/s. 10B, unabsorbed depreciation of earlier years has to be adjusted first and only if there is any resultant income, same is to be computed u/s. 10B for the purpose of assessment under the normal provisions or for the purpose of computation of income u/s. 115JB. 4.1 As regard the issue of jurisdiction in this case Ld. Commissioner of Income Tax (A) noted that there was no failure or omission on the part of the asses....
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....f sec. 10(B), sub clause 6 have no relevance is highly arbitrary and misconceived. The Assessing Officer has made reference to decision of Supreme Court in the case of CIT Vs. Isthmain Steamshiplines 201 ITR 572 and CIT Vs. Jaipuria Claymines Ltd. 59 ITR 555. These judgments are relevant to normal provisions of the act and has no bearing to the provisions of sec. 10(B) as referred to and clarified above. It was submitted that Section 10(B) is an independent code and it has been intended to provide incentive to the tax payers who are engaged in the business of exports and as such provisions have to be applied so as to advance spirit and objective of the section. It was further submitted that these are incentive provisions and these provisions have to be considered in a liberal manner so as to advance the objection and spirit of the provisions and not to deprive the assessee of the statutory benefit on technical ground. Reference was made to decision of Supreme Court in the case of Bajaj Tempo Ltd. 196 ITR 189. BAJAJ TEMPO LTD. Vs. CIT 196 ITR 189 (SC) A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; a....
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....ection 10B(6), as per which the provision 32(2) are not relevant for the purpose of computation of benefit u/s. 10B of the I.T. Act. In this regard, we can gainfully refer to the Tribunal decision in assessee's own case for the preceding assessment year, which read as under:- "5. We have heard both the parties and gone through the facts of the case as also the aforesaid decision of Hon'ble Kerala High Court relied upon by the Ld. AR. Indisputably, determination book profits u/s 115JB of the Act does not form part of the assessment order dated 31st March, 2005. It appears that the assessee in their computation u/s 115JB of the Act, reduced the book profits by an amount of Rs. 2,83,97,520/- on account of deduction u/s 10B of the Act while under the normal provisions such benefit worked out to Rs. 140,34,521/- due to difference in rates of depreciation in accordance with IT Rules,1962 vis-a-vis provided in the Companies Act, 1956. The AO, in the reassessment proceedings, validity of which is not in question before us nor the ld. CIT(A) adjudicated the legal ground, restricted the deduction u/s 10B of the Act to an amount of Rs. 1,40,34,521/- while determining book profits u/s 115JB....
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....n the Act so that all profitable companies pay some tax. This does not seem to have helped and is being withdrawn. I now propose to introduce a provision whereby every company will have to pay a 'minimum corporate tax' on the profits declared by it in its own accounts. Under this new provision, a company will pay tax on at least 30 per cent. of its book profits. In other words, a domestic widely held company will pay tax of at least 15 per cent. of its book profit. This measure will yield a revenue gain of approximately Rs. 75 crores". Section 115J of the Act broadly makes applicable to the assertible depreciation at the rates prescribed in Schedule VI. Thus, this provision is incorporated in the Act. Section 355 of the Companies Act cannot be made applicable in such cases. We are of the view that depreciation has to be calculated as stated in section 350 of the Companies Act." 5.1 Even otherwise, in view of decision of the Hon'ble Apex Court in Apollo Tyres Ltd. Vs. CIT, 255 ITR 273, the AO, while assessing a company for income-tax under section 115J of the Act, cannot question the correctness of the profit and loss account prepared by the assessee-company and certified by the ....
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.... ii) the accounting standards adopted for preparing such accounts including profit and loss account; iii) the method and rates adopted for calculating the depreciation, have to be the same as have been adopted for the purpose of preparing such accounts including profit and loss account and laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 1956. 11. Considering the above, Tribunal held that in view of the specific provisions contained in sub-section (2) of sec. 115JB of the Act, especially when the Ld. Commissioner of Income Tax (A) merely followed the aforesaid decision in accepting the claim of the assessee while the Revenue have not brought to the notice any contrary decision nor any other material, the tribunal did not take a different view in the matter and hence, the tribunal declined to interfere with the order of the Ld. Commissioner of Income Tax (A). 11.1 We further note that in the case laws referred by the Ld. Departmental Representative in the case of C.I.T. vs. Himatasingike Seide Ltd. [2006] 286 ITR 0255 (Karnataka High Court) following was held:- "Held, that section 10B cannot b....
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....able for computation of deduction u/s. 10B under the normal provisions of the Act. As regards computation of income u/s. 115JB is concerned, we find that for computing deduction u/s 10B the decision of the Tribunal in assessee's own case is relevant. In this case the tribunal had relied upon the decision of the Kerala High Court in the case of C.I.T. vs. Dynamic Orthopedics Pvt. Ltd. 257 ITR 446. In this case it was held that in the context of provisions of section 115J of the Act, it was held that the book profit estimate under section 115J has to be made on the basis of depreciation calculated in accordance with Schedule VI to the Companies Act, 1956 and not as per the provisions of the I.T. Act. 12.1 The tribunal has further noted that even otherwise, in view of the decision of the Hon'ble Apex Court in the case of Apollo Tyres Ltd. vs. C.I.T. 255 ITR 273, the Assessing Officer while assessing a company for income tax under section 115J of the Act, cannot question the correctness of the profit and loss account prepared by the assessee company and certified by the statutory auditors of the company as having been prepared in accordance with the requirements of Parts II and III ....