AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1316
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....ry States.-(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-section (3). (2) This section applies to any undertaking or enterprise,- (a) which has begun or begins to manufacture or produce any article or thing, not being any article or thing specified in the Thirteenth Schedule, or which manufactures or produces any article or thing, not being any article or thing specified in the Thirteenth Schedule and undertakes substantial expansion during the period beginning- (i) on the 23rd day of December, 2002 and ending before the 1st day of April, 2012, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Gover....
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....l assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains. (4) This section applies to any undertaking or enterprise which fulfils all the following conditions, namely:- (i) it is not formed by splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation.-The provisions of Explanations1and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (ii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section. (5) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section cont....
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....the investment in the plant and machinery by at least fifty per cent of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the previous year in which the substantial expansion is undertaken; (x) "Theme Park" means such parks, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government.'. '115JB. Special provision for payment of tax by certain companies.-(1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2001, is less than seven and one-half per cent of its book profit, the tax payable for the relevant previous year shall be deemed to be seven and one-half per cent of such book profit. (2) Every assessee, being a company, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III ....
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.... Provided that, where this section is applicable to an assessee in any previous year (including the relevant previous year), the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 2001 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this Explanation; or (ii) the amount of income to which any of the provisions of section 10 or section 10A or section 10B or section 11 or section 12 apply, if any such amount is credited to the profit and loss account; or (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. Explanation .-For the purposes of this clause, the loss shall not include depreciation; or (iv) the amount of profits eligible for deduction under section 80HHC, computed under clause (a) or clause (b) or clause (c ) of sub-section (3) or subsection (3A), as the case may be, of that section, and subject to the conditions specified in that section; or (v) the amount of profi....
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.... January, 2003 has been filed alongwith petition which reads as under:- "Ministry of Commerce & Industry (Department of Industrial Policy & Promotion) New Delhi, dated 7th January, 2003 Office Memorandum Subject : New Industrial Police and other concessions for the State of Uttaranchal and the State of Himachal Pradesh The Hon'ble Prime Minister, during the visit to Uttarnchal from 29th to 31st March, 2002, had interalia made an announcement that "Fax and Central Excise Concessions to attract investments in the industrial sector will be worked out for the Special Category States including Uttaranchal. The Industries eligible for such incentives will be environment friendly with potential for local employment generation and use of local resources. In pursuance of the above announcement discuss on strategy and action plant for development of industries and generation complement in the States of Uttaranchal and Himachal Pradesh were held with the various related Ministries/agencies on the issue, inter-alia, infrastructure development financial concessions and to provide easy market access. The new initiatives would provide the required incentives as well as an enabli....
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....ld be changed from 50:50 to 90:10 under this Scheme Ministry of Textiles would extend its package of incentives, as notified for North-Eastern States, to the States of Uttarnchal and Himachal Pradesh also (ii) Ministry of Food Processing Industries would include Uttaranchal in difficult areas category. The State of Himachal pradesh is already included in the difficult areas category. (iii) Pradhan mantri Rozgar yojana (PMRY) :Ministry of Agro & Rural Industries would provide for States of Himachal Pradesh and Uttaranchal relaxation under PMRY with respect to Age ( i.e. 18-40 years from 18-35 years) and subsidy @ 15% of the project cost subject to a ceilling of Rs. 15,000/- per entrepreneur) 3.4 Ineligible Industries under the Policy: The list of industries excluded from the purview of proposed concessions is at Annexure-III In addition, the Valley Notification S. O. No.102(E) dated 1st February, 1989(Annexure-IV) as amended from time to time, issued by Ministry of Environment & Forests would continue to operate in the Doon Valley area and the industries notified under it are excluded from the proposed concessions, in the State of Uttranchal 3.5 Nodal Agency : ....
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....eneral and the non obstante clause, in the general statute, did not affect the special statute. It was contended that since Section 80-IC is a special provision, Section 115JB does not affect the same. Section 115JB, being a part of Chapter XIII-B of the Act, is also a special provision contained in the later part of the statute and, unless the context otherwise requires, should be deemed t control Section 80-IC. Furthermore, as aforesaid, while Section 80-IC, as a special provision, allows deductions, Section 115JB, as a special provision, imposes a tax liability on an assessee, being a company, if its tax liability, assessed after grant of such deductions, it is less than what has been provided therein." 6. Against which SLP was preferred in the Hon'ble Supreme Court being SLP (Civil) 6319/2011 which was decided on 6^th January, 2012. The order of the Supreme Court reads as under:- "In our view, the writ petition ought not to have been filed before the High Court by the petitioner and the petitioner ought to have gone by the normal statutory remedy. Be that as it may, liberty is given to the petitioner to argue the points raised in this petition before CIT(A). We are inform....
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...., namely Rs. 60 lacs, and will not pay any tax on the profit of Rs. 40 lacs earned by the Uttarakhand unit. Since normal tax of Rs. 18 lacs would be more than 10% of the book profit i.e., Rs. 10 lacs, Company 'B' will not have to pay any tax under section 115JB even in respect of the income of the Uttarakhand unit." 8. Counsel for the petitioners has contended that in view of the various decisions of the Supreme Court, the provisions which has been introduced by the legislation by amendment of Section 115JB is discriminatory of the amount as the persons who are doing business in the two States were granted different deduction who are prepared to pay tax on the income which has been derived by the unit in Uttarakhand and Himachal Pradesh whereas, in other States there is no deduction as conferred under Section 80IC. 9. Counsel for the petitioners has relied upon following decisions of Supreme Court:- 1. Nagpur Improvement Trust and Ors. Vs. Vithal Rao and Ors. (1973) 1 SCC 500 :- 32. It will not be denied that a statute cannot tax some owners of land leaving untaxed others equally situated. If the owners of the land cannot be taxed differently how can some owners be indi....
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....e of Tamil Nadu MANU/SC/0380/1973 : (1974)ILLJ172SC , Menak Gandhi v. Union of India MANU/SC/0133/1978 : [1978]2SCR621 , Ajay Hasia v. Khalid Mujib Sehravardi." 3. State of U.P. and Ors. Vs. Deepak Fertilizers and Petrochemical Corporation Ltd (2007) 10 SCC 342 :- 13. From a perusal of the notifications in question, it is evident that other fertilizers of the NPK category i.e. N.P.K. 12:32:16; N.P.K. 15:15:15; N.P.K. 20:20:0; N.P.K. 14:35: 14 are included in the exemption list, whereas it is a matter of fact that the NPK 23:23:0 fertilizer is also a fertilizer of the same category, but it is omitted from the list. According to the notification dated 2nd November, 1994, the intention of the State was not to tax the sale of "potassium phosphatic fertilizers" but when we go into enquiry of nomenclature of these chemical compounds, we find that the NPK 23:23:0 is a "nitro-phosphate fertilizer" which has no potassium (K) ingredient. The Notifications dated 10th April, 1995 and 15th May, 1995 clearly include NPK 20:20:0, which is also a nitro-phosphate fertilizer with zero content of potassium (K). This classification made under the notification dated 10th April, 1995 does not hold....
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.... is to be made. Certainly, this classification cannot be a product of a blind approach by the administrative authorities on which the responsibility of delegated legislations is vested by the constitution. In a nutshell, the notifications issued by the Trade Tax Department of the State of U.P., dated 10th April, 1995 and 15th May, 1995 lack the sense of reasonability because it is not able to strike a rational balance of classification between the items of the same category. As a result of this, NPK 23:23:0 is not given exemption from taxation where as all other NPK fertilizers of the same category like that of NPK 20:20:0 are provided with the exemption from taxation. 16. The reasonableness of this classification must beexamined on the basis, that when the object of the taxing provision is not to tax the sale of certain chemical fertilizers included in the list, which clearly points out that all the fertilizers with the similar compositions must be included without excluding any other chemical fertilizer which has the same elements and compositions. Thus, there is no reasonable nexus of such classification among various chemical fertilizers of the same class by the state. This ....
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.... case. When under the impugned rule, the Government assumed to itself the power to compulsorily retire a permanent government servant after ten years of qualifying service, the court's act of striking that Rule as unconstitutional is the law which appeared on the scene, not only to break the presumption of constitutionality but to declare it void. In a sense the offending provision was never there and in the other it was henceforth not there. In either event, it would be within the ambit of the emphasised word in Mathura Prasad's case." 5. Kusum Ingots and Alloys Ltd. Vs. :Union of India (UOI) and Ors. (2004) 6SCC 254 :- 24. Learned counsel for the appellant in support of his argument would contend that situs of framing law or rule would give jurisdiction to Delhi High Court and in support of the said contention relied upon the decisions of this Court in Nasiruddin v. State Transport Appellate Tribunal MANU/SC/0026/1975 : [1976]1SCR505 and U.P. Rashtriya Chini Mill Adhikari Parishad, Lucknow v. State of U.P. and Ors. MANU/SC/0422/1995 : AIR 1995 SC 2148. So far as the decision of this Court in Nasiruddin v. State Transport Appellate Tribunal (supra) is concerned it is....
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....f cause of action although the original order was at a place outside the said area. When a part of the cause of action arises within one or the other High Court, it will be for the petitioner to choose his forum. 30. We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens. (See Bhagar Singh Bagga v. Dewan Jagbir Sawhany, AIR 1941 Cal; Mandal Jalan v. Madanlal,; Bharat Coking Coal Limited v. Jharia Talkies & Cold Storage Pvt. Ltd.; S.S. Jain & Co. and Anr. v. Union of India and Ors. (1994) CHN 445; New Horizon Ltd. v. Union of India, MANU/DE/0014/1994 : AIR 1994 Delhi 126 )." 10. He has also contended that the decision of Uttarakhand High Court has nothing to do with the present petition as in both the petitions, the prayers are different. He has also stated that the other case is also on the board today where in view of the ob....
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....on section? 15. The difference between the two expressions 'exemption' and 'deduction', though broadly may appear to be the same i.e. immunity from taxation, the practical effect of it in the light of the specific provisions contained in different parts of the Act would be wholly different. The above implications cannot be more obvious than from the case of Civil Appeal Nos. 8563/2013, 8564/2013 and civil appeal arising out of SLP(C) No. 18157/2015, which have been filed by loss making eligible units and/or by non-eligible Assessees seeking the benefit of adjustment of losses against profits made by eligible units. 17. From a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an Assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the Assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the Assessee. This is also more than clear from the contemporaneous Circular No. 794 dated 9.8.2000 which states in paragraph 15.6 that, The export turnover an....
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....n accounts. Under this new provision, a company will pay tax on at least 30 percent of its book profit. In other words, a domestic widely held company will pay tax of at least 15 percent. of its book profit. This measure will yield a revenue gain of approximately Rs. 75 crores." 12. Then for the purpose of supporting the arguments that the registered office of the company is situated in Uttarakhand, the petition ought to have been filed at Uttarakhand he relied on the case of Morgan Stanelay Mutual Fund vs. Kartick Das & other connected matter; 1994 (4) SCC 225 wherein it has been held as under:- "40. Today the corporate sector is expanding. The disgruntled litigants indulge in adventurism. Though, in this case we have come to the conclusion that the District Consumer Forum will have no power to grant injunction yet in general cases it becomes necessary to evolve certain venue restrictions. 41. As to the effect of incorporation it is stated in Halsbury's Law of England (4th Edition, Volume 7, Page 55, para 83) as under: When incorporated, the company is a legal entity or persona distinct from its members, and its property is not the property of the members. Th....