TaxTMI 
TaxTMI 
2019 (10) TMI 772
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....ds, the ld. AR inviting attention to the record, submitted that the assessee has also raised the following additional ground in the present appeal : "That the Ld. Assessing Officer has erred in charging the interest u/s 234B & 234C and the same is not chargeable as provisions of section 234B & 234C are not applicable where the income of the company is computed by invoking of provisions of section 115J as per the binding judgment of Hon'ble Supreme Court in the case of Kwality Biscuits Ltd. As reported in 284 ITR 0434." 2.1 Relying upon the decision of the Apex Court in the case of M/s NTPC Vs CIT 229 ITR 383 (S.C), it was his prayer that the said ground being legal in nature requires no verification on facts, hence it may be admitted. 3. The ld. CIT-DR on a perusal of the additional ground raised submitted that the ground is a legal ground and he has no objection to admission of the same. 4. Accordingly, in the light of the submissions of the parties and considering the legal position on the issue addressed by way of the additional ground by the assessee in the present appeal, the ground is admitted. The parties were required to address their position accordin....
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.... considered. It is to note that the provisions of sub section (6) in section 115JB have been inserted by the Special Economic Zones Act, 2005 w.e.f. 10.02.2006. Under that Act "Unit" means a Unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre, whether established before or established after commencement of this Act. and "Special Economic Zone" means each special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) or section 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone, Further, the Developer has been defined as "developer"' means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-section (10) of section 3 and includes an Authority and a co-developer; and " means a person who has been granted a letter of approval by the Commissioner under sub-section (9) of section 15. 5.1 It is seen that the AR's reliance upon the exception carved out u/s 115JB(6) misplaced as it is quite apparent that the except....
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....e have been cited. The Ld. Counsel for the assessee has given a dictionary meaning of the word Unit' and submitted that the word 'Unit' not restricted to the units in Special Economic Zone Act, 2005 but is applicable to units at any place. The contention of Ld. counsel for the assessee has no merit because these are the special provisions provided for exemption to the builders etc. who have raised the construction of units in Special Economic Zone only. Since the assessee has not carried on any business as a Developer in a unit established in Special Economic Zone or Special Economic Zone, therefore, provisions of Section 115JB(6) will not apply in the case of the assessee. The Id. CIT (Appeals) gave a specific finding of fact that the- assessee is not situated in a unit or Special Economic Zone, therefore, the case of the assessee does not fall under section 115JB(6) of the Income Tax Act. Finding of fact recorded by Ld. CIT (Appeals) has not been rebutted through any 'knee or material on record. 7. In the absence of any evidence or material on record to rebut the finding of fact recorded by the authorities below, I am not inclined to interfere with the order of I....
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....ls were fixed before us." 7.1.1 The Co-ordinate Bench, it is seen has considered the relevant facts and the issues in the following manner : 3. It was common ground that the issue involved in all the appeals was identical, relating to whether the assessee was liable to pay minimum alternate tax (MAT) under the provisions of Section 115JB of the Act. They were therefore heard together and are being disposed of by way of this common consolidated order. 4. For the sake of convenience, we shall be dealing with the facts in the case of ITA No. 422/CHD/2016 relating to assessment year 2008-09 and our decision rendered therein would apply mutatis-mutandis to the rest of the appeals. 5. The brief facts relating to the case are that the assessee is a Private Limited company dealing in the business of development of housing project units. It filed its return of income for the impugned assessment year i.e. A.Y 2008-09 on 04.03.2009 declaring income of Rs. 2,20,013/-. The Assessing Officer (AO) framed assessment u/s 153A read with Section l43(3) of the Act and assessed the total income at Rs. 12,74,720/- and the tax payable under MAT was determined at Rs. 96,28,33....
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....ITA 2329/A/2008 is extracted hereunder for the sake of completeness : 20. We are in agreement with the contention of the ld. D.R. The reasons are as follows. Sub-section (6) to section 115JB of the Act was inserted by the Special Economic Zone Act, 2005 (hereinafter referred to as "SEZ Act"), which was enacted to provide for the establishment, development and management of Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto. The Act is a complete code in itself dealing with all aspects relating to SEZ's, making necessary amendments in other Acts, as required. The applicability of the Income tax Act,1961 and modifications thereto for the purposes of the SEZ Act ,have been made by section 27 of the said Act , and the second schedule to the Act .Section 27 of the SEZ Act reads as under:- "27. The provisions of the Income-tax Act, 1961, as in force for the time being, shall apply to, or in relation to, the Developer or entrepreneur for carrying on the authorised operations in a Special Economic Zone or Unit subject to the modifications specified in the Second Schedule." 21. The second Schedule....
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....tion by incorporation. Dealing with the subject, Justice G.P. Singh states in Principles of Statutory Interpretation (7th Edn., 1999)- "Incorporation of an earlier Act into a later Act is a legislative device adopted for the sake of convenience in order to avoid verbatim reproduction of the ITA Nos.422,423,780,781 & 765 CHD/2018 Page 17 of 31 provisions of the earlier Act into the later. When an earlier Act or certain of its provisions are incorporated by reference into a later Act, the provisions so incorporated become part and parcel of the later Act as if they had been 'bodily transposed into it'. The effect of incorporation is admirably stated by Lord Esher, M.R. : 'If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act as if they had been actually written in it with the pen, or printed in it'. (p. 233) : "Even though only particular sections of an earlier Act are incorporated into later, in construing the incorporated sections it may be at times necessary and permissible to refer to other parts of the earlier statute which are not in....
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....c Zone Act read along with section 57, it was held that to avail the benefits under the Income Tax Act, the provisions of the Special Economic Zone Act and Rules have to be invoked. The relevant findings at pages 13 and 14 and thereafter at page 20 are, as under:- 'The above reproduced approval letter read with section 15(9) of the SEZ Act 2005 and Rule 19 of the SEZ Rules 2006 reveals that the facilities and privileges as admissible to the units situated in SEZ have been granted to the assessee for the manufacture of plain gold jewellery upto 500 kg on the basis of maximum utilization of plant and machinery. The assessee has also been granted facilities and privileges as admissible for trading activity in gold and polished diamonds as noted above. It is pertinent to note here that the Development Commissioner has to particularly specify as to what activities or authorized operation are allowed to be carried out in an SEZ unit for the claim of privileges and benefits under SEZ Act. Now the question comes whether the above provisions of the SEZ Act and SEZ Rules can be invoked to decide the benefits admissible to an assessee under the Income Tax Act. Section 57 of the SEZ A....
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....ry. Hence as per the provisions of section 10AA of the Income Tax Act 1961, the assessee is entitled to deduction on the manufacturing activity only as approved in the above reproduced approval letter of the Development Commissioner of the SEZ. The assessee's unit has not been approved for providing of any services. . . ITA Nos.422,423,780,781 & 765 CHD/2018 Page 20 of 31 . 20. We find that the claim of the assessee is required to be examined in the light of the provisions of SEZ Act/ SEZ Rules and also the provisions as envisaged in SEZ scheme 2007 to 2009 as referred to in the approval letter of the Development Commissioner dated 21.09.2005." 25. Moreover the Explanatory Note to the Finance Act, 2011, withdrawing the exemption granted from payment of MAT u/s 115JB(6) of the Act, further clarifies the legislative intent ,by clearly referring to Special Economic Zones, in the heading of the Note explaining the provision withdrawing the exemption, as pointed out by the Ld.DR before us. Thus, we have no hesitation in holding that the terms used in sub section (6) of 115JB, derive their meaning from the SEZ Act, 2005. Having said so, the definit....
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....t is a developer of housing projects, and dismiss all arguments made by the Ld. Counsel for the assessee in this regard. We, therefore, hold that the assessee is not eligible for exemption from payment of MAT as per the provisions of section 115JB(6) of ITA Nos.422,423,780,781 & 765 CHD/2018 Page 22 of 31 the Act, since, admittedly, it does not qualify as a business or services rendered by an entrepreneur or developer in a unit or SEZ as per definition of the said terms in the SEZ Act". 7.1.5 The alternate contention of the assessee that profits eligible for deduction under section 80IB(10) of the Act were to be reduced for arriving at the book profits of the assessee were also dismissed relying on the decision of the Hon'ble Uttarakhand High Court in the case of SIDCUL Industrial Association Vs State of Uttarakhand 241 CTR 156. The relevant extract of the decision is reproduced hereunder for the sake of completeness : 29. Taking up the alternate contention of the assessee that profits eligible for deduction under section 80IB(10 ) of the Act were to be reduced for arriving at the book profits of the assessee also, we find that the Ld. Counsel for the asses....
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....is provided against the "gross total income" of an assessee, while section 115JB of the Act levies taxes on the" book profits". Both the sections clearly operate in different spheres. Therefore sub-section (5) of section 115JB of the Act, cannot be interpreted so as to provide deduction under section 80IB(10) of the Act from the "book profits" of the assessee. The Hon'ble High Court of Uttarakhand ruled out the allowability of deduction u/s 80IC for the purposes of paying tax u/s 115JB of the Act, in the case of SIDCUL Industrial Association vs State of Uttarakhand & Others reported in 241 CTR 156 holding as under: "17. Sec. 80-IC deals with a matter totally alien to s. 115JB and, accordingly, there cannot be any question that both cannot be read harmoniously. Sec. 80-IC allows deduction. Sec. 115JB says that if allowing such deduction, income-tax payable is less than what has been mentioned in s. 115JB, the assessee, if it is a company, will be liable to pay income-tax to be ascertained in the manner and to the extent prescribed in s. 115JB. Since these two sections deal with two different situations, they play their role in two different situations and, accordin....
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....arging provision, and creating liability in respect of an ITA Nos.422,423,780,781 & 765 CHD/2018 Page 25 of 31 assessee which is a company and whose taxes as determined on the returns filed in the normal manner falls short of the stipulated amount and a charge is created for making the difference i.e. the object of the legislation is to ensure a minimum tax of 7½ percent on the book profit as ascertained under Section 115JB is levied and collected from the companies whose payment of tax always without the application of this provision falls short of this amount of tax. 27. Though Sri Shankar, learned counsel for the appellant has called in aid not only the budget speech but also the circular issued by the board and the principles of promissory estoppel and legitimate expectation etc., we are afraid none of these principles are attracted for the simple reason that a budget speech being only an introductory to the bill in the Parliament and that in itself is not an end. 28. Though many decisions are roped in for interpreting this, we find there is no scope for interpretation in the present situation, as the provision of the statute should be given effect to, ....
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....s. It is only because the assessee happens to be a company to which the provisions of Section 115JB is also attracted, levy as indicated therein becomes operative. Therefore, we do not find the applicability of the decisions relied upon by the learned counsel for the appellant-assessee on this aspect of the matter, in the present situation. 32. In so far as the reliance placed on the judgment of this court in the case of M/s United Breweries Ltd [supra] is concerned, while that was with reference to the provisions of Section 115JA and we are now examining the liability under Section 115JB of the Act. The scheme of charging under Section 115JB being totally different and not with reference to general rate, but with reference to a specified rate as indicated in Section 115JB itself i.e. 7½ percent of deemed income for the purpose of Section 115JB, we are afraid the judgment will not advance the case of the assessee in the present situation. 33. A budgetary speech while will have some significance for understanding a provision if there is any ambiguity, in the wake of clear language of the Section 115JB, in the first instance there is no ambiguity, in the seco....
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.... depending upon the nature or legal composition of the assessee. 36. In fact, the minimum alternate tax is sought to be levied earlier under Section 115JA and now under Section 115JB of the Act,, only in respect of such companies which, by availing various concessions given in Chapter VI-A of the Act, are able to show either a nil taxable income or much reduced taxable income. Concession given under Section 80-IB is also one such and therefore no exception can be taken. Only in respect of the availability of a concession under Section 80-IB and to make it immune from the applicability of the provisions of 115JB of the Act. Both provisions operate in their own respective spheres and have to be given effect. 37. Secondly and more importantly, no provision of a statute can be so interpreted as to render it unconstitutional. If the argument of Sri Shankar, learned counsel for the appellant, is to be accepted, then it will result in a discrimination against such assessee-companies who have to pay tax under Section 115JB of the Act, but have no concession available under Section 80-IB, whereas the tax liability of the person under Section 115JB of the Act, who can claim....