Income Tax Appellate Tribunal - Mumbai
Ajanta Pharma Ltd, Mumbai vs Department Of Income Tax on 30 December, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "A", MUMBAI
BEFORE SHRI J.SUDHAKAR REDDY (A.M.) AND SHRI V.D. RAO (J.M.)
ITA No.1582/Mum/2009
Assessment Year : 2000-2001
ITA No.1583/Mum/2009
Assessment Year : 2001-2002
ITA No.1584/Mum/2009
Assessment Year : 2002-2003
ITA No.1585/Mum/2009
Assessment Year : 2004-2005
D.C.I.T. Rg.9(1), M/s.Ajanta Pharma Ltd.
R.No.223,Aayakar Bhavan, Ajanta House, Govt. Industrial
M.K. Rd., Estate, Charkop, Kandivli (W),
Mumbai - 400 020. Vs. Mumbai - 400 067.
PAN : AAACA5579P
(Appellant) (Respondent)
Appellant by : Shri S.T. Bidari
Respondent by : Shri Madhur Agarwal
ORDER
PER BENCH All these are Revenue's appeals directed against separate orders of the learned CIT (A)- IX, Mumbai dated 30.12.2008 for the Assessment Years 2000-01 to 2003-2004. Ground of appeal is common and reads as follows:
"On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in reducing the Book Profit u/s.115JA of the I.T. Act by 100% of the amount being profit derived from the export of goods or merchandise computed u/s.80HHC(1) without appreciating the fact that the deduction as per clause
(viii) of the section 115JA is to be allowed from book profit to the extent of deduction u/s.80HHC allowable under the I.T. Act, 1961."
2. We have heard Shri S.T. Bidari, learned DR and Shri Madhur Agarwal, learned Counsel for the assessee.
2 ITA No.1582 to 1585/Mum/20093. The issue is brought out in the order of the CIT(A) at page 10, para 7 and 7.1 which is extracted below:
"7. 6th Ground relates to the Assessing Officer's action of not accepting claim of the asesee that on true and correct interpretation of section 115JA r.w.s. 80HHC, reduction envisaged in terms of clause (viii) of the Explanation to section 115JA was required to be calculated by adopting book profit as per corporate accounts in the place and instead of assessable business income.
7.1 It is the assessee's contention that deduction under clause (viii) of Explanation to section 115JA needs to be granted after considering reduction envisaged in terms of said clause (viii) w.r.t. book profit as per corporate accounts instead of assessable business income. The Assessing Officer relying on the Hon'ble ITAT decision in the case of M/S. Omnitex Industries (I) Ltd. in ITA No.2049/Mum/2003, Assessment Year 1998-99 has rejected the assessee's contention. The assessee further submits that for the purpose of reduction from 'book profit' as envisaged in clause (viii) of Explanation to section 115JA by considering the assessable business income as per normal provisions instead of profit as reflected in the corporate accounts of the assessee. The AR submitted that this issue is squarely covered in favour of the assessee by the decision of the Mumbai Tribunal in assessee's own case for Assessment Year 2001-01 in ITA No.7202/M/2004 dated 30.11.2004 which in turn has followed binding Special Bench decision of Mumbai Tribunal in the case of DCIT vs. Syncome Formulations (I) Ltd. (106 ITD 193). It is further stated that the Assessing Officer had relied upon a decision of Mumbai Tribunal in the case of Omnitex Industries (I) Ltd. in ITA No.2049/M/03 which was rendered prior to the Special Bench decision."
4. The first appellate authority has followed the decision of Special Bench of the Tribunal in the case of Syncome Formulations (I) Ltd. (106 ITD
193) (SB) (Mum) and granted relief.
5. As agreed between both the parties the issue now stands covered in favour of the assessee and against the Revenue by the judgment of the Hon'ble Supreme Court in assessee's own case in Civil Appeal No.7518 of 2010 judgment dated 09.09.2010.
6. The question before the Hon'ble Supreme Court is brought out at para 3, which is extracted for the reference.
"3. The question of law raised in this civil appeal is :
whether for determining the "book profits" in terms of Section 115JB, the net profits as shown in the P&L Account have to be 3 ITA No.1582 to 1585/Mum/2009 reduced by the amount of profits eligible for deduction under Section 80HHC or by the amount of deduction under Section 80HHC"
7. The Hon'ble Supreme Court held as follows:
(i) The question of law is "whether for determining the "book profits" in terms of s. 115JB, the net profits as shown in the P&L Account have to be reduced by the amount of profits eligible for deduction under Section 80HHC or by the amount of deduction under s. 80HHC?"
(ii) S. 115JB is a self-contained Code and taxes deemed income. S. 115JB begins with a non-obstante clause and requires vide clause (iv) for the "eligible" profits derived from exports to be excluded from the "book profits". S. 80HHC operates in a different sphere. S. 80HHC(1B) is concerned with the "extent of deduction";
(iii) If an assessee earns Rs.100 crores then while for AY 2001-
02, the extent of deduction is 80% thereof, for purposes of computation of book profits, 100% of the profits are "eligible profits" and cannot be reduced to 80% by relying on s. 80HHC(1B). The idea is to exclude "export profits" from computation of book profits under s. 115JB which imposes MAT on deemed income;
(iv) The argument of the department that because clause (iv) of Explanation to s. 115JB provides that the deduction is "subject to the conditions specified in s. 80HHC", both "eligibility" as well as "deductibility" of the profit has to be considered together has no merit. If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then s. 115JB will cease to be a self-contained code. One cannot rely upon the last sentence in clause (iv) of Explanation to s. 115JB to obliterate the difference between "eligibility" and "deductibility" of profits.
8. Respectfully following the same we dismiss all the four appeals of the Revenue.
9. In the result, appeals filed by the Revenue are dismissed.
Order pronounced on this 3rd day of December, 2010.
Sd/- Sd/-
(V.D. RAO) (J.SUDHAKAR REDDY)
(JUDICIAL MEMBER) (ACCOUNTANT MEMBER)
Mumbai, Dated 03.12.2010
4 ITA No.1582 to 1585/Mum/2009
Janhavi
Copy to:
1. The appellant
2. The respondent
3. Commissioner of Income Tax (Appeals)- , Mumbai
4. Commissioner of Income Tax, City- , Mumbai
5. Departmental Representative, Bench ' ', Mumbai //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI