Income Tax Appellate Tribunal - Ahmedabad
Cairn Exploration (No. 7) Ltd.,, Surat vs The Adit., (Intl.Taxn.), Ahmedabad on 1 August, 2018
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ ',' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" A " BENCH, AHMEDABAD
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BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER
And SMT MADHUMITA ROY, JUDICIAL MEMBER
आयकर अपील सं./I.T.A.No. 1613/Ahd/2014
( नधा रण वष / Assessment Year : 2008-09)
Cairn Exploration (No.7) बनाम/ ADIT,
Ltd., C/o. SNK & Co., 31-A, Vs. International Taxation
Adarsh Society, Opp: Seven Ahmedabad.
Day Adv. High School,
Athwalines, Surat - 395 001
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AACCC 8811 E
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से / Appellant by : Shri Piyush Chawla, A.R.
यथ क ओर से/Respondent by : Shri Aparna M. Agrawal, CIT-D.R.
ु वाई क तार ख /
सन Date of Hearing 21/06/2018
घोषणा क तार ख /Date of Pronounce ment 01/08/2018
आदे श / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax(Appeals)- Gandhinagar, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)/GNR/197/2010-11 dated 10.02.2014 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 27.02.2012 relevant to Assessment Year (AY) 2008-09.
ITA No.1613/Ahd/2014Cairn Exploration (No.7) Ltd. vs. ADIT Asst.Year - 2008-09 -2-
2. The grounds of appeal raised by the assessee are as under:-
"1. That on the facts and circumstances of the case & in law, the order passed by the Learned Commissioner of Income Tax (Appeals) ("Ld. C1T( A)") under section 250 of the Income Tax Act. (the "Act") confirming the assessment order passed by the Ld. AO under section 143(3) read with section 144C of the Act is bad in law.
2. That on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in relation to bringing to tax the Net Profit declared in the Profit & Loss Account as Book Profit under the provisions of section 115JB of the Act without appreciating that the purpose of section 115JB was to tax the companies which had earned substantial book profits and paid dividends but pay no taxes under the normal provisions of the Act. 2.1 That the Ld. C1T(A) / AO failed to appreciate that the consideration appearing in the credit side of Profit & Loss Account merely represented the recoupment of the exploration cost incurred by the appellant on GS-OSN-2003/1 Block till 23rd March 2007 and thus could not result into am real profit to appellant taxable under section 115JB of the Act.
3. That on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming that the appellant was not eligible to claim brought forward losses of the earlier year from the current year income by virtue of sub-clause (iii) of Explanation 1 to section 115JB of the Act since the company has NIL 'unabsorbed depreciation."
That the above grounds of appeal are without prejudice to each other."
3. At the outset, ld. Counsel for the assessee fairly conceded that Hon'ble Gujarat High Court has already decided the issue raised in the appeal in its case against the assessee vide Special Civil Application No.11581 of 2008 vide order dated 21.10.2010. The relevant extract of the order is reproduced below:
"5.4 On careful consideration of entire facts, it is observed that appellant on very same issue and for the year under consideration has filed special Civil Application before Hon'ble Gujarat High Court in SCA No 11581 of 2008 wherein following prayers were made:ITA No.1613/Ahd/2014
Cairn Exploration (No.7) Ltd. vs. ADIT Asst.Year - 2008-09 -3- "[17] The petitioner, therefore, prays that this Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorarior any other appropriate writ, direction or order and be pleased to:
[a] declare the provisions of clause (iii) of Explanation 1 of section 115JB of the Act as ultravires the Constitution and liable to be struck down;
[b] restrain the Respondents from giving effect to the provisions of clause (iii) of Explanation 1 of section 115JB of the Act;
[c] issue writ of mandamus or an order directing the respondent No.2 & 3 to allow the reduction of the brought forward losses of P.s.11,67,85,411/- of the petitioner company from the net profit in order to compute the book profit under the MAT provisions (i.e. 115 JB of the Act) of the Income Tax Act, 1961 in the absence of any unabsorbed depreciation in respect of the assessment year 2008-2009;"
The Hon'ble Gujarat High court vide its order dated 21/10/2010 has discussed the facts of appellant's case at para 2 of the order. The Hon'ble High Court in said order has categorically considering all the pleas of appellant and dismissed the petition filed by appellant and held as under:
"[7.18,] In the case of the petitioner company, the petitioner itself had debited the expenditure incurred by it to the profit and loss account and thereafter, had assigned its participating interest in the UJV to M/s Cairn India Ltd. before it actually started making any profit in relation to the business and as such, was not in a position to set off its losses against the income earned by it. In the year under consideration, it is an admitted position, that the petitioner had a book profit of Rs.11,64,57,873/- as per, its books of account as maintained in accordance with provisions of the Companies Act, 1956 and as such, became liable to pay income tax in respect thereof under section 115JB of the Act. It is also not as if the petitioner was not permitted to set off its brought forward losses against its income. In fact it is only after computing the income under the provisions ITA No.1613/Ahd/2014 Cairn Exploration (No.7) Ltd. vs. ADIT Asst.Year - 2008-09 -4- of the Income Tax Act after allowing all allowable deductions, because the income tax payable works out to less than ten per cent of book profits that the petitioner has become liable to be assessed under provisions of section 115JB of the Act on its book profits. Thus, merely because, in the peculiar facts and circumstances of the case of the petitioner, the petitioner has not been able to set off its losses against its income while computing its income under section 115JB of the Act, the same would not render the statutory provisions unconstitutional or invalid. In the circumstances, the challenge to the provisions of section 115JB of the Act must necessarily fail.
[17.19] Though not specifically pleaded in the petition, at the time of hearing of the petition it had been urged that in case where the plain literal interpretation produces an absurd or manifestly unjust result which could never have been intended by the Legislature, the Court may fine tune the language used by the Legislature and produce a rational result. It was submitted that since the plain and literal interpretation produces an absurd and unjust result inasmuch as the petitioner who has no income is required to pay tax, the provision is required to be read down by the Court. [7.20] Insofar the prayer that the provisions may be read down is concerned, it is well settled that the Doctrine of Reading Down is an internal aid to construe the words or:
phrase in a statute to give it a reasonable meaning. The .object of reading down is to keep the operation of the statute within the purpose of the Act and constitutionally valid. Thus, in order to save a statute or a part thereof from being struck down it can be suitably read down. However, reading down is not permissible in such a manner as would fly in the face of the express terms of the statutory provisions. It is a very well settled legal position, that if the Court while construing a provision, finds that the same is ambiguous, the Court instead of striking it down, may read it down so as to save the constitutional validity. Moreover, the rule of reading down applies only where two views are possible as to the meaning of the statutory language. (See Delhi Transport Corporation v, D.T.C. azdoor Congress, 1991 Supp (1) SCC 600, C.B. Gautam v. Union of India, (1993) 1 SCC 78, and Rapti Commission Agency v. State of U.P., (2006) 6 SCC 522).ITA No.1613/Ahd/2014
Cairn Exploration (No.7) Ltd. vs. ADIT Asst.Year - 2008-09 -5- [7.21] In the present case, the Court does not find the impugned provision to be in any manner unconstitutional, hence, the question of reading it down to save its constitutional validity does not arise, Besides, the provisions of clause (iii) of the Explanation to section 115JB are clear and ambiguous and it is not possible to take two views as to the meaning of the statutory language. Hence, the request to read down the provision also does not merit acceptance. Consequently, the question of directing the respondents to allow reduction of the brought forward losses of Rs.11,67,85,411/- of the petitioner company from the net profit in order to compute book profits under section 115JB of the Act in absence of any unabsorbed depreciation in the assessment year under consideration, also cannot be accepted....."
4. On the other hand, Ld DR vehemently supported the order of authorities below.
5. We have heard the rival contentions and perused the material available on record. As the issue in hand is already covered against the assessee by the Hon'ble Gujarat High Court in its case as discussed above, we do not find any reason to interfere in the finding of ld. CIT(A). Hence, the ground of appeal filed by the assessee is dismissed.
6. In the result, the appeal filed by the assessee is dismissed.
This Order pronounced in Open Court on 01/08/2018
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(MADHUMITA ROY) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 01/08/2018
ITA No.1613/Ahd/2014
Cairn Exploration (No.7) Ltd. vs. ADIT
Asst.Year - 2008-09
-6-
Priti Yadav, Sr.PS
आदे श क त"ल#प अ$े#षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं'धत आयकर आयु)त / Concerned CIT
4. आयकर आय)
ु त(अपील) / The CIT(A)-Gandhinagar, Ahmedabad.
5. ,वभागीय /त/न'ध, आयकर अपील य अ'धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड4 फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या,पत /त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad