TaxTMI 
TaxTMI 
2022 (5) TMI 1262
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....ome for year under consideration on 31/10/2005 declaring total income of Rs. 3,26,76,628/-. The return was processed under section 143(1) of the Act, and the case was selected for scrutiny. Accordingly, notice under section 143(2) of the Act was issued to assessee, in response to which, representatives of assessee appeared before the Ld.AO. 3. The Ld.AO observed that, for the year under consideration, tax payable under regular provisions of the Act, was higher than the tax determined under 115JB of the Act. He also observed that, while computing book profits under section 115JB, assessee reduced Rs. 8,44,51,767.60/- as brought forward or unabsorbed depreciation whichever is less, as per the books of account. The Ld.AO from the submissions ....
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....be determined as per provisions of Companies Act, and thereafter, adjustments have to be made. This Tribunal further held that assessee cannot adjust the book profit except as provided under the Companies Act, and in the instant case, assessee is trying to compute the brought forward losses under the income tax provisions and not under the Companies Act, which is not permissible. The Tribunal thus dismissed the appeal filed by assessee. Aggrieved by the order of this Tribunal, assessee filed appeal before Hon'ble Karnataka High Court. Hon'ble Court on considering the submissions of assessee or observed and held as under: "7. We have considered the submissions made on both the sides and have perused the record. The supreme court in APOLLO....
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....tion(2). The supreme court in 'J.K.INDUSTRIES LTD. VS. UNION OF INDIA', (2008) 297 ITR 176 (SC) has held that books of account do not include balance sheet and profit and loss account. It has further been held that balance sheet and profit and loss account are financial statements. Section 10A of the Act permits a newly established undertaking in Free Trade Zone to claim a deduction from profits as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive Assessment years relevant to the previous year, in which undertaking begins to manufacture of produce such article or things or computer software as the case may be, shall be allowed from the total income of the assesse....
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....in adjusting the past profits of the STPI units from the brought forward loss or unabsorbed depreciation relating to non-STPI units and thus not allowing reduction of the brought forward loss or unabsorbed depreciation relating to non-STPI units while computing the book profits under Section 115JB? (iii) Whether on the facts and in the circumstances of the case, the honourable tribunal ought to have held that the STPI unit being outside the purview of MAT, the past profits of STPI unit should be kept out while computing the brought forward loss unabsorbed depreciation for the purpose of computing the book profits under Section 115JB?" 7. Before us in the remand proceedings by Hon'ble High Court, the Ld.AR submitted that, for purposes o....
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....not be considered for reduction, for computing of book profits as per section 115 JB of the Act. 10. On the contrary, the Ld.CIT.DR placing reliance on the orders passed by authorities below submitted that section 115 JB is a self-contained code by itself. He submitted that, the book profit is defined under explanation to section 115 JB, to mean, the net profit as shown in profit and loss account of the company prepared in accordance with the Companies Act. He submitted that, there are various decisions has held that, the book profits as computed under the relevant provisions of Companies Act cannot be interfered with. The Ld.CIT.DR thus submitted that, profit and loss of both 10A and non-10A units, together, have to be computed for making....
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....epreneur or a developer in a unit or SEZ, as the case may be. Therefore, said provision was enacted so as to continue tax benefit promised by the Government under the SEZ scheme. 14. It is also observed that by the SEZ Act, sub-section (6) to section 115JB was inserted providing that provisions of section 115JB shall not apply to the income accrued or arisen on or after 1/04/2005 from any business carried on, or services rendered, by an entrepreneur or a developer, in a Unit or Special Economic Zone, as the case may be. Hence, income of units located in SEZ will not be included for computing book profit for the purpose of MAT as per section 115JB(6) of the Act. 15. In view of the cojoint reading of the provisions, we are of the view that,....