TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 895
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....k profit u/s. 115JB of the Act. 4. Brief facts of the case are that the assessee company is engaged in the business of manufacturing of apparels fabric, yarn, home textile and garments and had filed its return of income dated 30.09.2008, declaring total income at Rs. 40,35,45,610/- under the normal provisions and Rs. 1,52,44,68,844/- under the provisions of section 115JB of the Act. The assessee's case was selected for scrutiny and assessment order u/s. 143(3) of the Act was passed on 29.12.2018, determining total income at Rs. 1,96,69,150/-, where the learned Assessing Officer ('ld. AO' for short) made certain addition/disallowance to the total income of the assessee, where the addition on subsidy received under the Technology Upgradation Fund (TUF) scheme was included while computing the book profit u/s. 115JB of the Act. 5. Aggrieved the assessee was in appeal before the first appellate authority, challenging the impugned addition. 6. The ld. CIT(A) deleted the addition by relying on the decision of the coordinate bench in assessee's own case for earlier years, where the interest subsidy was excluded while computing the book profit u/s. 115JB of the Act. 7. In an appeal befo....
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.... of Hyderabad Tribunal in Rain Commodities Ltd. v. DCIT [2010] 40 SOT 265 that exempt capital gain has to be considered for computing the book profits. On the other hand, the ld. CIT(A) deleted the impugned addition by relying on the decision of the Hon'ble Calcutta High Court in the case of Ankit Metal and Power Ltd. (supra) and Hon'ble Madras High Court in the case of Best Cooperation Ltd. (supra) and held that since it is held to be a capital receipt which cannot be taxed u/s. 2(24) of the Act, no adjustment can be made u/s. 115JB of the Act in respect of the interest subsidy received under TUF scheme while computing the book profit u/s. 115JB of the Act. 10. The learned Departmental Representative ('ld. DR' for short) for the revenue contended that the Hon'ble Jurisdictional High Court has held this issued against the assessee and not following the jurisdictional High Court decision would be contrary to the view taken by the Hon'ble Apex Court in the case of ACIT vs Saurashtra Kutch Stock Exchange Ltd., 305 ITR 227 (SC), where non-consideration of jurisdictional High Court decision would amount to mistake apparent on record. The ld. DR also relied on the Sp....
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.... above. The tribunal has referred to the decision of ITAT in the case of DCIT vs. M/s. Alok Industries Limited (in ITA Nos. 900 to 906/Mum/2019 vide order dated 16.07.2020 and quoted there from. Thereafter, the ITAT has concluded that ―consistent with the view taken by the coordinate benches on an identical issue we direct the assessing officer to exclude the amount of sales tax incentive from the net profit for the purpose of computed book profit under section 115 JB of the act as the same is capital in nature." Yet, a different view was taken in the immediately preceding assessment year, not on merits but by sending the matter back to the CIT(A) for fresh adjudication on the ground that "in the case of DCIT vs. M/s. Alok Industries Limited (supra), in a subsequent decision for A.Ys. 2006-07 to 2011-12 dated 16.07.2020, this tribunal has adjudicated the same issue and directed that "the learned CIT(A) is directed to consider this issue de novo after taking into account the aforesaid Hon'ble Jurisdictional High Court decisions [i.e. in the case of CIT vs Veekaylal Investment Co. (P.) Ltd., 249 ITR 597 (Bom.]" That approach, however, is contrary to the stand taken by Hon'b....
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....ower subsidy under the schemes in question would have to be excluded while computing book profit under Section 115 JB of the Income Tax Act, 1961". There is no decision contrary thereto by the Hon‟be jurisdictional High Court. While on the issue as to which judicial precedent be followed in such a situation, we find guidance from a rather decision of a coordinate bench, in the case of Siro Clinpharm Pvt Ltd Vs ITO [(2021) 131 taxmann.com 73 (Mum)], wherein, speaking through one of us (i.e. the Vice President), the coordinate bench has observed as follows: 7. .......... We may usefully take note of the observations of Hon'ble Supreme Court in the case of Asstt. CCE v. Dunlop India Ltd. [1985] 154 ITR 172, wherein the Their Lordships quoted, with approval, from the decision of House of Lords to the effect that "We desire to add and as was said in Cassell & Co. Ltd. v. Broome [1972] AC 1027 (HL), we hope it will never be necessary for us to say so again that "in the hierarchical system of courts" which exists in our country, "it is necessary for each lower tier", including the High Court, "to accept loyally the decision of the higher tiers". "It is inevitable in hierarchic....
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....udicial system that we have, better wisdom of the Court below has to yield to higher wisdom of the Court above and, therefore, one a authority higher than this Tribunal has expressed an opinion on that issue, we are no longer at liberty to rely upon earlier decisions of this Tribunal even if we were a party to them. Such a High Court being a non-jurisdictional High Court does not alter the position...". . There can, however, be exceptions to this situation on account of a variety of reasons, and these exceptions come into play only when the views are of non-jurisdictional High Court which, do not, legally speaking, bind the lower tiers of judiciary. In our considered view, so far as the precedence value of a non-jurisdictional High Court's judgment is concerned, the position has been very well summed up by a coordinate bench decision, in the case of Bank of India (supra), wherein, speaking through one of us (i.e. the Vice President), the coordinate bench has observed as follows: While dealing with judicial precedents from non-jurisdictional High Courts, we may usefully take of observations of Hon'ble jurisdictional High Court in the case of CIT v. Thana Electricity Co. Lt....
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....upra) have been pointed out to us. It is not even the case of the assessee, and rightly so, that the issue decided by Hon'ble Madras High Court is not the same as we are called upon to decide in this case, that there are conflicting decisions of Hon'ble non-jurisdictional High Court on the issue or that there are any other good and sufficient reasons for not following this judicial precedent. There is nothing more than Bank of India decision (supra) to justify our taking a decision at variance with the decision of a non-jurisdictional High Court, but then this decision by the coordinate bench is on its own unique facts and it recognizes the fundamental principle that it is more of an exception that the decisions of the non-jurisdictional High Court are not followed. At one place, this decision, inter alia, states that "To a forum like us, following a jurisdictional High Court decision is a compulsion of law and absolutely sacrosanct that way, but following a non-jurisdictional High Court is a call of judicial propriety.....-which can...be, in deserving cases, deviated from". Implicit in this observation is the fact that not following non-jurisdictional High Court decision i....
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....t aspect any deeper at this stage. There is, thus, no legally sustainable justification, on the facts of this case, to disregard the views expressed by Hon'ble Madras High Court in Redington's case (supra). Given the important judicial developments by way of a binding legal precedent, directly on the issue, even if from a non-jurisdictional High Court, we cannot simply treat this issue as covered by decisions of the coordinate bench, and thus disregard the esteemed views expressed by a higher judicial forum. 53. In any event, even with respect to the earlier assessment years, this issue was decided, in favour of the assessee, in the assessee's own case. The only reason for taking a deviation, in the immediately preceding assessment year, was the applicability of Veekaylal Investment decision (supra) but that reasoning has now been specifically disapproved by Hon'ble Madras High Court holding that the said decision does not apply in the case of section 115JB- as in this case. In view of these discussions, as also bearing in mind the entirety of the case, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter on this count as well....