TaxTMI 
TaxTMI 
2026 (4) TMI 394
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....That under the facts and circumstances of the case, there is no justification in law in computing book profit U/s. 115JB at Rs. 9,30,57,375/-. 4. (A) That the Ld. AO has erred in law as well as on facts in restricting MAT credit to be set off U/s. 115JAA at Rs. 2,11,85,180/- against at Rs. 3,93,30,475/-. (8) That without prejudice, the MAT credit to be allowed U/s. 115JAA is to be allowed before charging of surcharge and Health and Education Cess. 5. That under the facts and circumstances, no interest U/s. 234A, 234B & 234C should have been charged, In any case, the calculations are erroneous and excessive." 4. We next note that the CIT(A)'s impugned lower appellate discussion has rejected the assessee's corresponding substantive grounds seeking exemption from section 115JB "MAT" computation; reads as under: 10. Ground no. 8 and 9: These grounds of appeal have been raised against the action of AO in considering the book profit of INR 9,30,57,375/- as the taxable income and levying the applicable tax rate as per section 115JB. The appellant stated that in the return filed in response to notice U/s. 153A has claimed set off of MAT credit of Rs. ....
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....x companies" which in spite of having earned substantial book profits, do not pay any tax due to various tax concessions and incentives provided under the Income-tax Act. As a result, a new section 115J was inserted in the Income-tax Act. This provision is applicable to all the domestic companies. The relevant portion of the memorandum explaining the provision of this new section depicting the legislative intent was as under: "Minimum Alternative Tax (MAT) on companies was introduced by the Finance (No.2) Act, 1996 with effect from 1.4.1997 with a view to ensure that companies with business profits do not regularly avoid paying tax. This was necessary due to rise in the number of zero-tax companies in view of tax preferences granted in the form of exemptions, deductions and high rate of depreciation. The rate of minimum tax was kept at a modest figure by deeming 30% of book profits as total income. This modest amount is likely to go down further with the downward revision of corporate tax rate and abolition of surcharge..." Since the introduction of MAT, several changes have been introduced in the provisions of MAT and currently, it is levied on companies as per t....
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....ss for the relevant previous year in accordance with the provisions of the Act governing such company: 10.2 As per the MAT provisions under section 115JB of the Act, the tax liability of a company will be higher of tax liability computed as per the normal provisions of the Income-tax Act (normal tax liability) or tax computed @ 15% (plus surcharge and cess as applicable) on book profit (tax liability under MAT). As per Explanation 1 to section 115JB(2) "book profit" for the purposes of section 115JB means net profit as shown in the statement of profit and loss prepared in accordance with Schedule III to the Companies Act, 2013 as increased and decreased by certain items prescribed in this regard provided these items are debited or credited respectively. Every company to whom the provisions of section 115JB applies is required to obtain a report from a chartered accountant in Form No. 29B certifying that the book profit has been computed in accordance with the provisions of section 115JB. The report should be obtained before the specified date referred to in Section 44AB. Audit report in Form No. 29B shall be filed electronically. 10.3 In the instant case, the appe....
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....n'ble Supreme Court in the case of Distributors (Baroda) Ltd. Vs CIT [1985] 155 ITR 120/22 Taxman 49 (SC). The Hon'ble Apex Court held that "to perpetuate an error is no heroism. To rectify it is the compulsion of the judicial conscience." This ratio of the Hon'ble Supreme Court has been applied in several cases. Therefore, following the decision of a legally wrong order under the pretext of uniformity and legal consistency is undesirable. The Hon'ble Apex Court in the case of Union of India & Anr Vs Raghubir Singh (178 ITR 548) had reiterated the same principle. It held that, if the previous decision is plainly erroneous, there is a duty of the Court to review it and not perpetuate the mistake i,e. a vital point was not considered or when an relevant statutory provision had not been brought to the notice of the court. Similar view was taken by the Apex Court in the case of Sri Agasthayar Trust Vs. CIT (236 ITR 23). Therefore, this a well settled legal position that an erroneous order does not set any binding precedence. Therefore, the decisions cited above are not applicable to the fact of this case in view of the principle laid down by the Hon'ble Supreme Court in aforesaid cases....
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....jected at the taxpayer's behest. Coming to hon'ble Karnataka high court decision, we notice that it involved assessment year 2006-07 whereas section 115JB is admittedly applicable from 01.04.2012. We further reiterate at the cost of repetition that till time the legislature has not made dividend issuance/payment as a mandatory condition before section 115JB applicability, the same couldn't be excluded as mere assumption and presumption. The assessee's all other judicial precedents (supra) admittedly do not deal with the amended section 115JB of the Act. We thus invoke stricter interpretation in light of Commissioner Vs. Dilip Kumar (2018) 9 SSC 1 (SC) to conclude that the CIT(A)'s impugned lower appellate discussion upholding the assessee's section 115JB deserves to be affirmed. We order accordingly. The assessee failed in it's first and foremost grievance. 9. Next comes the assessee's latter ground that it is entitled for "MAT" credit. The Revenue quotes Jai Steel (India), Jodhpur vs. ACIT (2013) 36 taxmann.com 523 (Raj.) to buttress the point that we are in a search assessment wherein the assessee is barred from raising a claim altogether new relief; as the case may be. 10.....