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Income Tax Appellate Tribunal, “K” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI SANDEEP GOSAIN, JM
O R D E R Per Shamim Yahya, A. M.:
This appeal by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) dated 21.06.2016 and pertains to the assessment year 2011-12.
The grounds of appeal read as under: 1) "Whether on the facts and in circumstances of the case and in law, the book profit of the SEZ unit not be included while computing book profit under section 115JB for the assessment year 2011-12, despite the fact that clause(f) of Explanation 1 to section 115)6(2) has amended to apply to the provisions of MAT to units which are entitled to deduction under section 10A." 2) The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the A.O. be restored.
Brief facts of the case are as under:
M/s. Jewlmark India Pvt. Ltd. During the course of assessment proceedings, the Assessing Officer noted that the ass had declared book profit, though the taxable income was reducted to ‘nil’ on account of brought forward losses. He also noted that the ass had failed to declare any book profit under section 115JB of the Act. During the year under consideration, the ass had not claimed deduction under section 10A of the Act as it had completed ten years of deduction.
In response to the query raised by the Assessing Officer as to why its “Book Profit” should not be enhanced, the assessee replied that section 115JB is not applicable to the assessee being carrying on business in SEZ [Section 115JB(6)].
The Assessing Officer declined to accept the contention of the assessee on the reasoning that profit of 10A & 10B units have been brought within the purview of MAT by virtue of Explanation-1 (f) and (ii) of section 115JB of the Act, as per the Finance Act, 2007, with effect from 01-04-2008, whereby the words 10A and 10B were omitted from the aforesaid Explanation. The Assessing Officer opined that clause (6) of section 115JB of the Act was applicable only to units claiming benefit of section 10AA and not 10A of the Act. In other words, the contention of the Assessing Officer was that the profit of units claiming deduction was includible in computing the ‘book profit' under section 115JB of the Act.
The Assessing Officer further observed that the order of the First Appellate Authority in the case of the assessee for assessment year 2008-2009 had not been M/s. Jewlmark India Pvt. Ltd. accepted by the Department and further appeal to the ITAT had been preferred, which was pending.
Against the above order, the assessee appealed before the ld. Commissioner of Income Tax (Appeals).
The ld. Commissioner of Income Tax (Appeals) followed the decision of ITAT in assessee's own case and decided the issue in favour of assessee the ld. Commissioner of Income Tax (Appeals) and held as under:
2.7 The appellant has also filed a copy of order dated 15-04-2015 of the learned Appellate Tribunal, Mumbai, in the appellant's own case for the assessment year 2008-2009 in and 582/Mum/2014 comprising cross appeals. Vide para (4) of the said Order, the learned ITAT upheld the order of the CIT(Appeals) based on its decision in Genesys International Corporation Ltd. Reported in 151 TTJ (Mumbai) 606, wherein it was held that a unit located in a SEZ was covered by section 115JB irrespective of the fact that such unit was claiming deduction under section 10A of the Act. The learned ITAT held that, "the book profit of the SEZ unit could not be included while computing book profit under section 115JB for the assessment year 2008-2009, despite the fact that clause (f) of Explanation 1 to section 115]B(2) has been amended to apply to the provisions of MAT to units which are entitled to deduction under section 10A".,
Against the above order, the Revenue is in appeal before us.
We have heard both the counsel and perused the records. The learned counsel of the assessee submitted that the issue is covered in favour of the assessee by the decision of ITAT in assessee's own case.
Per Contra the learned departmental representative would not disputed the proposition that the issue is not covered in favour of the assessee by ITAT decision in assessee's own case.
M/s. Jewlmark India Pvt. Ltd. 10. Before proceeding further, we may gainfully refer to the extant provisions of clause (f) of Explanation 1 to section 115 JB and section 115 JB (6) which reads as under:
Section 115JB :
Explanation [1].—For the purposes of this section, "book profit" means the 99[profit] as shown in the 1[statement of profit and loss2] for the relevant previous year prepared under sub-section (2), as increased by— (a) the amount of income-tax paid or payable, and the provision therefor; or (b) the amounts carried to any reserves, by whatever name called 3[, other than a reserve specified under section 33AC]; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) the amount by way of provision for losses of subsidiary companies; or (e) the amount or amounts of dividends paid or proposed ; or (f) the amount or amounts of expenditure relatable to any income to which [section 10(other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply; or] (6) The provisions of this section shall not apply to the income accrued or arising on or after the 1st day of April, 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:
Upon careful consideration we find that the ITAT in assessee's own case by the order dated 15.04.2015 in for assessment year 2008-09 has adjudicated the same issue in favour of the assessee, by holding as under:
4. Apropos the issue raised by the Revenue in its appeal, it was the contention of Ld. AR that this issue is covered in favour of the assessee by the decision of Genesys International Corporation Ltd. 151 TTJ(Mumbai) 606, wherein it has been held that a unit located in SEZ is covered buy sub-s.(6) of s. 115JB irrespective of the fact that such unit is claiming deduction under s. 10A and, therefore, the book profit of the SEZ unit could not be included while computing book profit under s. 115JB for assessment year 2008-09, despite the fact that clause (f) of Expln. 1 to s. 115JB(2) has been amended to apply the provisions of MAT to units which are entitled to deduction under section 10A. 4.1 Following M/s. Jewlmark India Pvt. Ltd. the aforementioned decision similar view was also taken by G. Jewelcraft Ltd. 36 ITR (Trib) 521 (Mumbai) 4.2 It is seen that Ld. CIT(A) has followed aforementioned decision of Tribunal in the case of Genesis International (supra). Respectfully, following the decision of Co-ordinate Bench we decline to interfere in the relief granted by Ld. CIT(A) and the appeal filed by the Revenue is dismissed.
Upon consideration of the aforesaid we find that the issue is squarely covered in favour of the assessee.
We may add that although it is a ground by the revenue that as per insertion of explanation (1)(f), the issue needs to be decided against the assessee. But we note that provisions of section 115 JB (6) of the Act duly existed in the statute books in the concerned assessment year. The existence of this provision makes it abundantly clear that assessee being unit carrying on business in special economic zone is eligible for the benefit in the concerned assessment year. The operation of the said provision of section 115 JB (6) has been subsequently stopped by insertion of following proviso to section 115 JB. The said proviso reads as under “provided that the provisions of this sub section shall cease to have effect in respect of any previous year relevant to the assessment year commencing on or after the first day of April 2012”. From the above it is evident that in the present assessment year the said provision 115JB (6) duly existed in the statute books.
Hence, the assessee’s claim is fully justified as per the provisions of law as existing for the concerned financial year.
Accordingly, in the background of aforesaid discussion and precedent we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals).
Accordingly, we uphold the same.
M/s. Jewlmark India Pvt. Ltd. 15. In the result, this appeal by the Revenue stands dismissed.
Order pronounced in the open court on 05.09.2018