TaxTMI 
TaxTMI 
2022 (5) TMI 1262
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...., 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 noted that assessee incurred loss in non-ST PI unit for preceding 3 financial years being 2001-02, 2002-03 and 2003-04 the details of which are as under: 4. The Ld.AO computed the book profits without reducing Rs. 8,44,51,767.60 and recomputed the net profit as per profit and loss account at Rs. 21,14,41,728/-, to be considered as book profit for purpose of section 11JB of the Act. Aggrieved by the order of the Ld.AO, assessee preferably before the Ld.CIT(A). 5. The Ld. CIT(A) by order dated 27/08/2010 held that, when there is a loss shown in the books of account, it has to be considered, and there is no reason to go beyond to discover its genesis. The Ld.CIT(A), further held that, if section 115JB of the Act is applied to the case of assessee as a whole, there is no reason as to why only a particular amount has to be worked out in t....
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....th regard to the entries made in the books of accounts of the company. The said sub-Section mandates the company to maintain its account in accordance with the provisions of Companies Act. Section 115JB was inserted in the Act by Finance Act, 2000 with effect from 01.04.2001. Explanation-(1) to Second proviso to Section 115JB(1) provides that for the purposes of this Section, book profit means the profit as shown in the statement of profit and loss account for the relevant previous years prepared under sub-Section(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 c....
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....epreciation has to be taken as per books of account and not as per the balance sheet. It was submitted that, what needs to be reduced, is the lower of brought forward loss and unabsorbed depreciation, as per books of account relating to non 10A unit, for determining the book profits for purposes of section 115JB of the Act. 8. The Ld.AR drew our attention to various adjustments mentioned an Explanation 1 clause (f) of section 115JB seeks to increase the net profit by the amount of expenditure relatable to any income to section 10A applies. And that, Clause (2) seek to reduce the net profit by the amount of income through which any of the provisions of section 10A applies if such amount is credited to the profit and loss account. The Ld.AR categorically argued that income and expenditure from 10A units are out of the purview of section 115 JB of the Act. He thus submitted that, the methodology of computation of book profits under 115JB of the Act aims at completely eliminating the profits or losses of 10 A unit. 9. He further submitted that clause (iii) of Explanation 1 provides to reduce the net profit by the amount of laws brought forward or unabsorbed depreciation whichever....
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....nomic Zone Act, 2005 (SEZ Act) w.e.f. 10/2/2006 provides that, provisions of MAT would not apply to income from any business carried on by an entrepreneur 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, there is merit in the contention of the Ld.AR that, irrespective of the fact that, amendment has been made in clause (f) of Explanation (1) to section 115JB(2) of the Act, to apply the provisions of MAT in respect of units which are entitled to deduction under section10A or 10B, the units which are....