Income Tax Appellate Tribunal - Delhi
Kanodia Technoplast Ltd,Delhi vs Acit Central Circle-19, Delhi on 27 February, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E', NEW DELHI
Before Sh. Satbeer Singh Godara, Judicial Member
&
Sh. Manish Agarwal, Accountant Member
ITA No.3068/Del/2025 : Asstt. Year: 2019-20
ITA No. 969/Del/2025 : Asstt. Year: 2020-21
Kanodia Technoplast Ltd. Vs ACIT,
A-54, Wazirpur Industrial Area, Central Circle-19,
Delhi-110052 New Delhi-110055
(APPELLANT) (RESPONDENT)
PAN No. AAACK3668F
Assessee by : Sh. Saurabh Rohtagi, CA
Revenue by : Ms. Amish S. Gupt, CIT-DR
Date of Hearing: 29.01.2026 Date of Pronouncement: 27.02.2026
ORDER
Per Satbeer Singh Godara, Judicial Member:
These assessee's twin appeals for Asses sment Years 2019- 20 and 2020-21 arise against the CIT(A)-26, New Delhi's D IN & order Nos. ITBA/AP L/M/250/2025-26/1075774503(1) and ITBA/APL/M/250/2024-25/1071697016(1) dated 15.04.2025 and 30.12.2024, in proceedings u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 (in short "the Act") , respectively.
2. Heard both the p arties at length. Case files peruse d.
3. The asse ssee's "lead" appeal ITA No. 3068/Del/2025 for assessment year 2019-20 raises the follow ing substantive grounds:
"1 . Asstt . f ramed U/s. 153A i s uns ustai nable in l aw as well as on merits.2 ITA Nos. 3068 & 969/Del/2025
Kanodia Technoplast Ltd.
2. That no proper a nd reaso na ble oppor tuni ty of heari ng ha s been allowed.
3. That under the facts a nd circ umst a nc es of the cas e, there is no justifi cation in la w i n computi ng book profit U/s. 115JB at Rs. 9,30,57,375/-.
4. (A ) That t he Ld. AO has erred i n la w as well as on fac ts i n res tric ti ng MAT cre dit to be set off U/s . 115JAA at R s. 2,11,85,180/- a gainst at Rs. 3 ,93,30,475/-. (8 ) That wit hout prejudice, t he MAT cr edit to be allowed U /s . 115JAA is to be allowed before c har gi ng of surcharge and Hea lth a nd Educa tio n Cess.
5. That under the fac ts a nd circums ta nces , no i nteres t U/s. 234A, 234B & 234C s hould have been c har ged, In any cas e, the c alcula ti ons a re e rroneous a nd exc essive."
4. We next note that the CIT(A)'s impugned lower appellate discuss ion has rejected the assessee' s corresponding substantive grounds seeking exemptio n from section 115JB "MAT" computation; reads as und er:
10. Gr ound no. 8 a nd 9: Thes e grounds of appeal ha ve bee n rais ed agai nst the ac tion of A O in c onsideri ng t he book pr ofit of IN R 9,30,57,375/- as the ta xable i nc ome and lev ying the a ppl icable tax rate as per s ec tio n 115JB.
The appella nt stat ed that i n t he retur n filed i n res pons e to notice U/s . 153A has claimed set off of MAT credit of Rs. 3,93,30,475/- U/s. 115JAA. The i nc ome has b een as sess ed U/s . 115JB i n the assessment or der wi thout specifyi ng any reason and onl y for the reas on t ha t the same has been i n the i ntimation U/s. 143(1) is sued. Appar ently , it shows boo k profit of INR 9,30,57,375 as per t he books of accounts mai ntained by it fo r the rel evant ass essment yea r. Ther efore, the tax liability u/s 115JB of t he Ac t (MAT) w ould be 15 % of s uc h book profit Further, a s the tax liability under MAT provis ions are hi gher than that under the normal c omputa tion under the inc ome-tax Act, suc h book profit w ould be the ta xable bas e as per s ecti on 115JB of the Act and the appella nt is liable to pa y ta x at the ra te spe cified under s ecti on 115JB of t he Act. Howe ver, the a ppellant's cont ention is tha t the appella nt company d oes not pa y dividend a nd theref ore, MAT provisi ons would not be appli cabl e to it. It has relied upon the decisi ons of BES T TRADING AND AGENC IES LTD . V S. DC IT IN ITA NO. 191 OF 2011 DTD.
3 ITA Nos. 3068 & 969/Del/2025Kanodia Technoplast Ltd.
26.08.2020 BY HON'BLE KARNAT AKA HIGH CO URT, Kolkat a I TAT i n case of SASA MUSA SUGAR WORKS P VT.
LT D. VS. DCIT IN CO . NO . 15/KOL/2017 DTD.
04.07.2022.
10.1 Before goi ng to decide the issue, it is essential to understand, in brief, t he ev ol uti on of s uc h pro vision. Inc ome-t ax Act gene rally provides a number of tax relief such as exempt ions or deducti ons i ncl udi ng s uper deduc tion or accel erate d depreciati on, etc . a s a m atte r of ta x policy to promote c ert ai n activities, etc. Acc ordi ngl y, certa i n taxpay er, being a c ompa ny , may not be lia bl e for pay ment of tax und er the pr ovisi ons of i nc ome-tax Act bec a use of tax re lief eve n whe n it has s ubs ta ntial bo ok profit as per fi nanc ial statem ent pre pared under t he compani es Act . This had res ul ted i n subs ta ntial inc rease in the number o f z ero ta x pa yi ng compani es ove r a perio d o f time . In order to a ddr ess thi s is s ue, it was prop os ed t o introduc e tha t suc h zer o ta x c ompa ni es shoul d contri bute some a mount of ta x liability i f they hav e pos itiv e boo k profits. This ta x liability was known as Mi nimum Alternative Tax (MA T). MAT was i nt roduced for the fir st time by the Fi na nc e Act, 1987 with effec t from ass ess ment yea r 1988-89. Later on, it was withdrawn by t he Fi na nce Act, 1990. T he Mi nimum Alter nativ e Tax pr ovis ions wer e re-i ntr oduc ed vide Fi nanc e Act , 1996 and became e ffec tive from 01.04.1997. The obj ec tive of i nt roducti on of MA T is to bri ng i nto the ta x ne t "zer o ta x c ompa ni es" whic h i n s pite of hav i ng earned s ubsta ntial boo k pro fits, do not pay any ta x due to v ari ous ta x c onces sions and i nc entiv es prov ided unde r the Inc ome-tax Act. As a result, a new sec tion 115J was insert ed i n the Income-tax Ac t. This prov ision is applicable to all the domestic compa nies . The rel evant portion of t he mem ora ndum explaini ng the prov ision of this new s ection depicting the legis lat ive inte nt was as unde r:
"Mi nimum Al ter na tive Tax (MAT) on c ompa ni es was intr oduced by t he Fi nanc e (No.2 ) Ac t, 1996 with effect from 1.4 .1997 wit h a vie w t o e ns ur e t hat compani es wi th busi ness profi ts do not regularly av oid payi ng ta x. This was nec essary due to ris e i n the number of zero-ta x compani es in vie w of t ax preferences grant ed i n the form of exemptions , deduc tions and hi gh r ate of depr ecia ti on. The ra te of mi ni mum tax was kept a t a modes t figure by dee mi ng 30% of book profits as to tal inc ome. This modest amo unt is likely to go down further with t he downwa r d revision of corporate tax ra te and abolition of surchar ge..."4 ITA Nos. 3068 & 969/Del/2025
Kanodia Technoplast Ltd.
Since t he i nt roduction of MAT, several changes ha ve been intr oduced i n the pr ovisions of MA T a nd c urrently, i t is lev ied on companies a s per the provis ions of s ec tion 115JB. Ori ginally, the MAT provisions compare tax base as per the provisions of Inc ome-ta x Act a nd tha t det ermi ned under the MAT w hi ch wa s 30% of the bo ok profits . The hi gher of thes e two tax bas es was deemed to be t he tax bas e on whic h the c ompa ny was liable to pay ta x. Ho wev er, in subs equent period for ass ess ment year commenc ing on or after t he 1st day of April, 2012, t he earlier provision was r eplaced with a new section 11 5JB of t he Act wher ei n comparison was made between t he tax liability under the pr ovisions of i nco me-tax Act and tha t under the MAT pr ovisi ons. As per sec tion 115JB of the Act, ev ery com pany is required to compute the tax liability under no rmal computation and also under MAT and t he hi gher of the two would become the ta x liabi lity of the c ompa ny. F or the purpos es of brevi ty , t he s ecti on 115JB is repr oduc ed as under:
"S peci al provision for pa yme nt of ta x by c ertai n compa ni es.
115JB. (1 ) Notwi thstanding a nythi ng c onta ined in any ot her provisio n of this Act, where in t he c as e of an as sessee, being a compa ny, the income-tax, payabl e on the total i nc ome as comput ed under this Ac t in res pect of a ny previ ous year rel ev a nt to t he as sessment y ear c ommencing on or aft er the 1s t da y of April, 2012, is less tha n ei ghtee n a nd one-half per cent of its book profit, s uch boo k profit s hall be dee med t o b e t he total income of the ass ess ee and t he tax pa yabl e by the asses s ee on s uc h to tal inc om e s hall be the a mount of income-tax a t the ra te of eight een a nd one-half per cent:
Pro vided tha t for the pr evious year relevant to the as sessment y ear c ommencing on or aft er the 1s t da y of April, 2020, the provisions of t hi s s ub-s ec tion s hall hav e effect a s i f for the words "ei ghteen a nd one-ha lf per cent" occurri ng a t b oth t he places , t he words "fi fte en per c ent " had bee n s ubstitut ed.
(2 ) Every assesse e,-- (a) bei ng a c ompa ny, ot her tha n a compa ny
ref erred to i n cla use (b), shall, fo r the purpos es of this sec tion, pr epare its sta t ement of profit and l os s for the rele vant previous year in accordanc e wit h the prov isions of Sc hedule III to the C ompa ni es Act, 2013 (18 of 2013); or 5 ITA Nos. 3068 & 969/Del/2025 Kanodia Technoplast Ltd.
(b) bei ng a c ompa ny , to whic h the s econd provis o to s ub-s ecti on (1) of s ec ti on 129 of the C ompani es Act, 2013 (18 of 2013) is applicable, shall, for t he pur poses of this section, prepar e i ts state ment of profit and loss f or the r elev ant previ ous year in ac corda nc e with t he provisions of the Ac t gov erni ng suc h c ompany:
10.2 As per the MA T provisions under secti on 115JB of the Act, the ta x liability of a compa ny will be hi gher of ta x liability c omp uted as per the normal provisions of t he Inc ome-t ax Act( normal t ax liabil ity) or tax comp uted @ 15% (plus surc harge a nd cess as applica bl e) on bo ok profit (ta x liability under MAT) . As per Explanation 1 to sec tion 115JB(2) " book profit" fo r the pur pos es of s ec tion 115JB mea ns net profit a s shown in the s tatement of profit and l oss prepar ed in acc orda nce wit h Sc hedule I II to t he Companies Act, 2013 as i ncreased a nd dec rea sed by certai n it ems prescribed i n this r egard p rovided thes e items ar e debited or cr edited res pectiv ely . Eve ry company to whom the provisions of section 115JB applies is required to obtai n a report fr om a c hartered ac co untant i n For m No . 29B c ertifyi ng that the bo ok profit has been c omputed i n acc orda nc e wi th the prov isions of s ection 115JB. The report s houl d be obtai ned before t he s pecified date referred to i n S ec tion 44AB. Audit report i n Form No. 29B shall be f iled electr onically.
10.3 In t he i ns tant ca se , t he appellant c ompa ny has a ta xabl e loss under the provisi ons of t he Inc ome-ta x Act.
Accordi ngly , it has NI L tax l iability under Inc ome -tax Act. Ho wever, i t has a book profit of IN R 9,30,57,375 as per Expla nati on 1 t o s ecti on 115JB (2) r ead wi t h its st atement of profit and l oss f or the rel eva nt previ ous year prepa red in ac cor da nce wit h the provisions of Schedul e III to the Companies Act, 2 013. There is no disput e to this fa ct. Under t he s ec tion 115JB of the Act, the ta x liability (MAT liability) would be 15% (pl us surcharge a nd c es s as applicabl e) of such book profit. Apparently, t he MAT t ax liability would be hi gher as the tax liability under nor mal computa tion is N IL i n thi s case. The provision under sec tion 115JB of the Act re quires every eli gible ass ess ee as menti oned i n sub-s ec tion(2 ) of Sec tion 115JB to compute tax liability under the provisions of i nc ome-tax Act and also the tax liability under t he provisions of MAT u/s 115JB . As pe r sec tion 115JB (1 ) of the Act , t he inc ome-tax, pay able on t he total income as c omputed under this Ac t i n res pect of a ny previous year relevant to the ass ess ment ye ar i s less than 15% of its book pro fit, such boo k profit shall be deemed to be the total inc ome of the assess ee and t he tax pa yabl e by t he ass es s ee on 6 ITA Nos. 3068 & 969/Del/2025 Kanodia Technoplast Ltd.
such total i ncom e s hall be the amo unt of i nc ome-ta x at the ra te of 15%.
10.4 In view of the a for esa id discus sion, the condition of whether the c ompany is a dividend payi ng or not is immaterial for the purposes of applic ation of MAT prov isions under secti on 115JB of the Ac t. The only requirement for a pplication o f MAT prov ision is when t he ta x liabili ty computed under the normal provisions of the Inc ome-t ax Act i s lower t ha n that co mputed under sec tion 115JB of the Act, then the book profit as per t he financia l state ment as a djus ted as per s ub-s ec ti on (2) of the Sec tion 115JB of the Act is deemed to be the tax bas e of t he compa ny and it is liable to pay tax a t the rat e prescribe d t herei n.
10.5 Appellant 's relia nce on the decis ion of Hon'bl e Karnata ka Hi gh Court in the case of B es t Tra di ng a nd Agencies Ltd Vs . DC IT In ITA N o. 191 of 2011 dated. 26.08.2020, the decisio n of K ol kata ITA T i n c as e of Sasamus a S uga r Works Pvt. Lt d V s. DCIT In CO. No. 15/KOL/2017 DTD. 04.07.2022., etc are i nappli cable bei ng contrary to provisions o f law. In this c ont ext, I woul d l ike plac e further reliance on t he decis ion o f t he Ho n'bl e Supreme Court i n the c as e of Distributors (B ar oda ) L td. Vs CIT [1985] 155 ITR 120/22 Ta xma n 49 (SC). The Hon'ble Apex C our t hel d t hat "to perpet ua te a n err or is no heroism. To r ectify it is t he c ompulsion o f the judicial conscienc e." This ratio of the Hon'bl e Supre me Court has be en appl ied in s ev er al cases . Therefore, followi ng the deci sion of a l egally w rong order under the pretext of uni formity and l ega l consist enc y is undesirable . T he Ho n'ble Apex Court in the cas e of Uni on of I ndia & Anr V s Raghubir Si ngh (178 ITR 548) had reit erat ed t he sa me pri nciple. It hel d t hat, i f t he previous decisi on is plainl y err oneous, there is a duty of the Co urt to revi ew it and not perpetua t e the mistake i ,e. a vital poi nt was not considere d or when a n rel eva nt statutory prov ision had not been br ought to t he notic e of t he court. Similar vi ew was ta ke n by the Apex C ourt i n the case of Sri Agas tha ya r Trust Vs. CI T (236 ITR 23). Ther efore, this a well settl ed legal position t hat a n err oneous order does not s et any bi ndi ng precede nc e. Ther efore, the dec isions cit ed above are not a pplicabl e to the fact of thi s cas e i n view of t he pri nciple lai d down by the H on'bl e Supreme Co urt i n a foresaid case s.
10.6 In the light o f abov e disc ussi ons , t he action of A O in c ons idering the b ook pr ofit of INR 9,30,57,375 as ta xabl e i nc om e and levyi ng the appl icable tax rat e as per sec tion 115JB of the Act is uphel d and acc or dingly, this ground of a ppeal i s dismissed. "
7 ITA Nos. 3068 & 969/Del/2025Kanodia Technoplast Ltd.
4.1 This is what leaves the assessee aggrieved.
5. It is in this factual backdrop that the asse ssee inter alia submits that both the learned lo wer authoritie s have erred in law and on facts in denying it's exemp tion from MAT computat ion despite the fact that it is no t dividend paying company as per Best Trad ing & Agencies Ltd. Vs. DCIT in ITA No. 191 of 2011 dated 26.08.2020 (Karnataka HC), Sasamusa Sugar Works Pvt. Ltd. Vs. DCIT in CO No. 15/Kol/2017 dated 04.07.2022 and United Provinces Sugar Company Ltd. Vs. ITO ITA No. 1956/Kol/2018 dated 01.04.2021 have also been wrongly distinguished in the department's favour.
6. The Revenue on the other hand has placed strong reliance on the CIT(A)' foregoing discussion rejecting the assessee's claim of exemption from section 115JB MAT co mputatio n.
7. We have given our thoughtful consideration to the assessee's and the Revenue's foregoing respective vehement submissions. A perusal of the case file indicates tha t the assessee had filed it's return on 30.11.2022 u/s 139(5) of the Act stating income of Rs.11,25,5 2,8870/-. And that the learned departmental authorities in the meantime had received an information o f cash seizure involving the assessee and others on 14.05.2020 which made them to issue/execute section 132A warrant on 04 .12.2020 in the ir names. This followed the 8 ITA Nos. 3068 & 969/Del/2025 Kanodia Technoplast Ltd.
relevant panchnama dated 30.12.2020 as well. The departmental authorities thereafter initiated/issued section 153A notice to the assessee on 18.01.2022 which finally culminated the Assessing Officer's assessment order dated 29.03.20222 computing it's income under "MAT" provis ions which stands upheld in both the lower appellate proceedings .
8. We have given our thoughtful consideration to the foregoing relevant facts as well as both the party's respective rival stands. We find no reason to interfere with the learned CIT(A)'s impugned detailed discussio n. This is for the precise reason that there is no such stipulation of invoking the impugned " MAT" computation of the learned departmental authorities only in case of comp any who issues dividend as is the case sought to be projected at the taxpayer's behest. Coming to hon'ble Kar nataka high court decis ion, we notice that it involved assessment year 2006-07 whereas sec tion 115JB is admittedly applicable from 01.04.2012. We further reiterate at the cost of repetitio n that till time the leg is lature has not made dividend issuance/payment as a mandatory cond ition before section 115J B applicability, the same couldn't be excluded as mere assumption and presumption. The assessee's all o ther judicial precedents (supra) admittedly do not deal w ith the amended section 115JB of the Act. We thus invoke str icter interpretation in light o f Co mmissioner Vs. Dilip 9 ITA Nos. 3068 & 969/Del/2025 Kanodia Technoplast Ltd.
Kumar (2018) 9 SSC 1 (SC) to conclude that the CIT(A)'s impugned lower appellate discussion upho lding the assessee's sec tion 115JB deserves to be affirmed. We order accord ing ly. The assessee failed in it's first and foremost grievance.
9. Next comes the assessee's latter ground that it is entitled for "MAT" cred it. The Revenue quotes Jai Stee l (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 r aising a claim altogether new relief; as the case may be.
10. We find no merit in the Revenue's stand herein. This is for the precise reason that the impugned asse ssment year is admittedly an "abated" than " unabated" one wherein the entire assessment is open to be framed afresh in light of incriminating as well as regular books of account in the assessee's case. Hon'ble Bombay hig h court in JSW Steel Ltd. (20 20) 422 ITR 1 (Bom.) has further settled the issue that such a claim wo uld indeed be raised in an "abated" assessment u/s 153A of the Act. We will indeed be failing in our duty not to further make it clear that this tribunal's Spe cial Bench in (2024) 167 taxmann.co m 44 6 (Hyd. SB) DC IT Vs. SEW Infrastructure Ltd. has further settled the issue that such an o ptio n is not applicable in an instance of an "unabated" tha n an "abated" 10 ITA Nos. 3068 & 969/Del/2025
Kanodia Technoplast Ltd.
assessment. We thus accept the assessee's four th substantive ground here in seeking "MAT" credit in principle and direct the learned Assessing Officer to proceed afresh with the consequential computation as per law.
11. Same order to follow in assesse e's latter appeal ITA No. 969/Del/2025 since involving identical issues.
12. No other ground or argument has been pressed before us.
13. These assessee's tw in appeals ITA No s. 3 068 & 969/Del/2025 are partly allowed for statistical purpose. A copy of this common order be placed in the respective c ase files.
Order Pronounced in the Open Co urt on 27/02/2026.
Sd/- Sd/-
(Manish Agarwal) (Satbeer Singh Godara)
Accountant Member Judicial Member
Dated: 27/02/2026
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR