Adani Mundra SEZ Infrastructure Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(1)(1), Ahmedabad

ITA 1816/AHD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0630 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 07-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L MEENA
• Keywords: Business income; Depreciation; Earning of tax free income
• Section: 6; 143(3); 11A; 14A; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , SMC BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO.1816 /AHD/2016 / ASSTT. YEAR : 2010 - 2011 ADANI MUNDRA SEZ INFRASTRUCTURE PVT. LTD. ADANI HOUSE, NR.MITHKHALI SIX ROADS, NAVRANGPURA, AHMEDABAD PAN: AAGCA9924Q VS . IT O , WARD - 1(1)(1) , AHMEDABAD (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI VARTIK CHOKSI , A . R REVENUE BY : SHRI B.L. MEENA , SR. DR / DATE OF HEARING : 18 / 09 / 201 8 / DATE OF PRONOUNCEMENT: 03 /12 /2 01 8 / 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 COMMIS SIONER OF INCOME TAX (APPEALS) 1 , [CIT (A) IN SHORT] VIDE APPEAL NO. CIT(A) - 1/153 / ITO, WD - 1(1)/2015 - 16 DATED 29 / 04 / 2016 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S.143(3) R.W.S 154 OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') DATED 01 /0 5 / 201 5 RELEVANT TO ASSESSMENT YEAR (AY) 2010 - 11 . 2. THE A SSESSEE HAS RAIS ED THE FOLL OWING GROUNDS OF APPEALS : 1. IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) HAS ERRED IN UPHOLDING BOOK PROFIT OF RS. 22,44,000/ - U/S 115JB OF THE ACT ON THE GROUND THAT THE APPELLANT HAS ITSELF SHOWN INCOME FROM NON - SEZ UNIT ON WHICH EXEMPTION SPECIFIED IN VIEW OF PROVISIONS OF SECTION 115JB(6) IS NOT ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 2 AVAILABLE, WITHOUT APPRECIATING THE FACTS THAT THE APPELLANT COMPANY I S CO - DEVELOPER FOR PROVIDING INFRASTRUCTURE FACILITY IN MULTI PRODUCT SEZ AT MUNDRA PORT HENCE THE PROVISIONS U/S 115JB OF THE ACT IS NOT APPLICABLE TO THE BUSINESS INCOME ACCRUED OR ARISING TO THE COMPANY IN THE YEAR UNDER CONSIDERATION. 2. IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE FACTS THAT ISSUE INVOLVED IN THE PRESENT CASE OF THE APPELLANT IS NOT DEBATABLE STATING THAT THE THERE IS NO DIFFERENT INTERPRETATION IS POS SIBLE AND DECISIONS RELIED BY APPELLANT ARE NOT RELATED TO ISSUE INVOLVED IN PRESENT APPEAL WITHOUT DISCERNING THE FACT THAT THE ASSESSMENT ORDER AND THE NOTICE U/S 154 OF THE ACT HAS BEEN ISSUED BY DIFFERENT ASSESSING OFFICERS AND LD. ASSESSING OFFICER WH ILE PASSING ASSESSMENT ORDER SPECIFICALLY CALLED APPELLANT'S EXPLANATION ON THIS ISSUE WHICH ITSELF PROVE THAT PRESENT ISSUE IS HIGHLY DEBATABLE FOR WHICH NO ORDER U/S 154 OF THE ACT CAN BE PASSED IN VIEW OF DECISION OF THE HON'BLE SUPREME COURT IN THE CAS E OF T.S. BALRAM, ITO VS. VOLKART BROS. (1971) 82 ITR 50 (SC). 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING DISALLOWANCE U/S 14A OF RS.6,55,555/ - WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, ALTER OR AMEND ANY OF THE GROUND/ S ON OR DURING THE APPELLATE PROCEEDINGS. 3. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT THE LD.CIT (A) ERRED IN N OT GIVING BENEFIT SPECIFIED U/S 115JB(6) O F THE ACT, AN D CONFIRMING THE ORDER O F THE LD.AO BY WORKING OUT TAX LIABILITY U/S 115JB OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE DEVELOPMENT OF SPECIAL ECONOMIC ZONES AS CO - DEVELOPER AT MUNDRA PORT . THE A SSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,31,100/ - WHICH WAS PROCESSED U/S143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY , AND ACCORDINGLY , THE ASSESSMENT WA S FRAMED U/S 143(3) OF THE ACT, AFTER MAKING DISALLOWANCE OF RS. 16,438/ - U/S 35D OF THE ACT, VIDE ORDER DATED 25/03/2013. 5. SUBSEQUENTLY , THE LD.AO OBSERVED THAT THE ASSESSEE HA D EARNED INCOME FROM SPECIAL ECONOMIC ZONES (IN SHORT SEZ ) AS WELL AS FROM THE ACTIVITIES ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 3 OF NON - SPECIAL ECONOMIC ZONES ( IN SHORT NON - SEZ ). ACCORDINGLY, THE AO WAS OF THE VIEW THAT THE BENEFIT GIVEN U/S 115JB (6) OF THE ACT, FOR THE DEVELOPMENT ACTIVIT Y OF SEZ WILL NOT BE AVAILABLE TO THE ASSESSEE IN RELATION TO THE INCOME FROM NON - SE Z. THE LD.AO ACCORDINGLY OPINED THAT THE INCOME FROM NON - SEZ AMOUNTING TO RS. 21,73,099/ - IS LIABLE TO TAX UNDER THE PROVISIONS OF MAT WHICH WAS OMITTED IN THE ASSESSMENT P ROCEEDINGS U/S 143(3) OF THE ACT. 6. IN VIEW OF THE ABOVE, THE LD.AO ISSUED A SHOW CAUSE NOTICE U/S 154 OF THE ACT VIDE LETTER DATED 22/10/2014 F OR APPLYING THE PROVISION S OF MAT IN RELATION TO THE NON - SEZ INCOME. 7. THE ASSESSEE VIDE ITS LETTER DATED 10/12/2014, SUBMITTED THAT THE MAT PROVISIONS ARE NOT APPLICABLE TO IT IN PURSUANCE TO THE PROVISIONS OF SUBSECTION 6 OF SECTION 115JB OF THE ACT . 8. THE AO REJECTED THE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE I TSELF HAS SHOWN INCOME FROM NON - SEZ ACTIVITIES WHICH IMPLIES THAT THE ASSESSEE CANNOT GET THE BENEFIT OF THE PROVISIONS OF SECTION 115JB(6 ) OF THE ACT IN RESPECT OF SUCH INCOME . ACCORDINGLY THE LD.AO WORKOUT THE BOOK PROFIT AS DETAILED AS UNDER: NET PROFIT NON - SEZ AS PER P & L ACCOUNT ADD: DISALLOWANCE U/S.14A OF THE ACT ASSESSED BOOK PROFIT RS.21,73,099/ - RS. 6,55,555/ - RS.28,28,654/ - 9. AGGRIEVED AS SESSEE PREFERRED AN APPEAL TO L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) STATED THAT IT HA D CLASSIFIED GROSS RECEIPT OF RS. 28,86,800/ - ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 4 AS INCOME FROM NON - SEZ. BUT IT REPRESENT S THE WORK CARRIED OUT BY IT FOR ITS GROUP COMPANY LOCATED IN SEZ. THE ASSESSEE IN SUPPORT OF HIS CLAI M HAS FILED THE COPY OF INVOICE R AISED BY IT TO ITS GROUP COMPANY NAMELY ADANI POWER LIMITED. ACCORDINGLY, THE ASSESSEE CLAIM ED THAT I T S ENTIRE INCOME IS FROM SEZ ACTIVITI ES AND ACCORDINGLY THE PROVISION OF MAT CANNOT BE APPLIED TO IT IN PURSUANCE TO THE PROVISIONS OF SUBSECTION 6 TO SECTION 115JB OF THE ACT. 10 . HOWEV ER, THE LD. CIT (A) DISREGARDED THE CONTENTIONS OF THE ASSESS EE AND CONFIRMED THE ORDER OF LD.AO BY OBSERVING AS FOLLOWS: 2.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSION FILED BY THE APPELLANT. THE UNDISPUTED FACTS OF PRESENT CASE ARE THAT THE APPELLANT HAS PREPARED PROFIT & LOSS ACCOUNT FOR SEZ AND NON - SEZ SEPARATELY AND INCOME PERTAINING TO NON - SEZ WAS SEPARATELY SHOWN IN COMPUTATION OF TOTAL INCOME FILED FOR YEAR UNDER CONSIDERATION. THE APPELLANT ITSELF HAS NOT CLAIMED DED UCTION UNDER SECTION 80IA ON NON - SEZ PROFIT. ONCE PROFIT IS FROM NON - SEZ, THE PROVISIONS OF SECTION 115JB SQUARELY APPLY TO SUCH PROFIT. THE APPELLANT HAS RELIED UPON SECTION 115JB(6) AND CONTENDED THAT PROVISIONS OF BOOK PROFIT AS ENVISAGED IN THAT SECTIO N SHALL NOT APPLY TO INCOME ACCRUED FROM ANY BUSINESS CARRIED ON BY A DEVELOPER IN SEZ. HOWEVER, THIS PROVISION RESTRICTS NON - APPLICABILITY OF SECTION 115JB TO THE EXTENT PROFIT IS FROM SEZ WHEREAS IN APPELLANT'S CASE, PROFIT FROM NON - SEZ IS SEPARATELY SHO WN AND EVEN APPELLANT ITSELF HAS EXCLUDED SUCH PROFIT FROM DEDUCTION UNDER SECTION 80IA HENCE APPELLANT'S STAND THAT IT IS NOT LIABLE FOR BOOK PROFIT ON NON - SEZ UNIT CANNOT BE ACCEPTED. THUS, ASSESSING OFFICER IS CORRECT IN COMPUTING INCOME OF NON - SEZ BY A PPLYING PROVISIONS OF SECTION 115JB. 11 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. THE LD.AR, BEFORE US , FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 176 AND SUBMITTED THAT THOUGH T HE INCOME WAS CLASSIFIED AS NON - SEZ ACTIVITIES AMOUNTING TO RS. 21,73,099/ - BUT IT REPRESENTS THE SEVERAL WORK S CARRIED OUT WITHIN THE BOUNDARY OF SEZ . T HEREFORE, TH E SAME CANNOT BE TREATED AS NON - SEZ INCOME. THE LD.AR, IN SUPPORT O F HIS CLAIM , DREW OUR ATTENTION TO THE COPY OF INV OICE ISSUED TO ITS GROUP COMPANY NAMELY ADANI POWER LIMITED WHICH IS PLACED ON PAGE S 58 TO 59 OF A PAPER BOOK. ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 5 THE LD.AR, ALSO SUBMITTED THAT IN THE SUBSEQUENT ASSESSMENT YEAR 2011 - 2012, AN ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT, BUT THERE WAS NO D ENIAL OF THE BENEFIT SPECIFIED UNDER SUBSECTION 6 T O SECTION 115JB OF THE ACT. THE LD. A R, DREW OUR ATTENTION IN SUPPORT OF HIS CLAIM ON THE COPY OF INCOME TAX RETURN AND ASSE SSMENT ORDER U/S 143(3) OF THE ACT, PERTAINING TO THE ASSESSMENT YEAR 2011 - 2012, WHICH ARE PLACED ON PAGES 125 TO 155 OF THE PAPER BOOK. 12 . ON THE OTHER HAND THE LD. DR VE HEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 13 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD S . IN THE INSTANT CASE , THE ISSUE RELATES TO WHETHER THE ASSESSEE IS ENTITLED TO THE BENEFIT PROVIDED UNDER SUB - SECTION 6 OF SECTION 11 5JB OF THE ACT I N THE GIVEN FACTS AND CIRCUMSTANCES . A T THIS POINT , WE FIND IMPORTANT TO REFER TO THE PROVISION OF SUB - SECTION 6 OF SECTION 115J B O F THE ACT, WHICH READS AS UNDER: (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 UNI T OR SPECIAL ECONOMIC ZONE, AS THE CASE MAY BE. 14 . ON PERUSAL OF THE ABOVE PROVISION, WE NOTE THAT THE PROVISIONS OF MAT WILL NOT APPLY TO THE ASSESSEE IN RELATION TO THE INCOME ACCRUED/ARISES FROM THE DEVELOPMENT OF SEZ. AS PER THE SUBMISSION OF THE ASSESSEE , IT IS TRANSPIRE D THAT IT HAD CARRIED OUT CIVIL WORK WITHIN THE BOUNDARY OF SEZ . THUS SUCH INCOME IS OUTSIDE THE PURVIEW OF THE MAT LIABILITY . ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 6 HOWEVER, THE LD. CIT(A) HAS GIVEN HIS FINDINGS THAT THE ASSESSEE HAS NOT CLAIMED DEDUCTION U /S 80IA OF THE ACT IN RES PECT OF NON - SEZ PROFITS . T HEREFORE , THE LD.CIT(A), WAS OF THE VIEW THAT THE INCOME FROM NON - SEZ UNIT IS NOT OUTSIDE THE PURVIEW OF MAT PROVISIONS. IN THIS REGARD, WE FIND THAT THE FINDINGS OF LD. CIT(A), IS INCORRECT. IT IS BECAUSE THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S 80IA OF THE ACT, I N RESPECT OF NON - SEZ INCOME. OUR VIEW IS FORTIFIED FROM THE COMPUTATION OF INCOME FILED BY THE ASSESSEE WHICH IS PLACED ON P AGE 11A TO 15 OF THE PAPER BOOK. THE RELEVANT EXTRACT OF THE COMPUTATION OF INCOME IS REPRODUCED BELOW: COMPUTATION OF INCOME PROFIT & GAINS OF BUSINESS OR PROEFESSION RS. RS. RS. NET PROFIT AS PER PROFIT & LOSS A/C (BEFORE TAXATION) 383 5198 ADD: DISALLOWABLES /ADDITIONS DEPRECIATION TREATED SEPARATELY DONATION LOSS ON SALE OF ASSET VAT PENALTY INTEREST ON LATE PAYMENT OF TDS UNPAID LEAVE ENCASHMENT UNPAID BONUS PRIOR PERIOD EXPS. 7727571 25001 3796296 100 265 615995 560748 32960 12758336 LESS: DEDUCTION/EXPENSES CLAIMED PRELIMINARY EXPS .W /OFF (4 TH YEAR) DEPRECIATION AS PER STATEMENT 164338 12166172 ( - )121822610 NET PROFIT/LOSS FROM THIS BUSINESS 383661524 NET PROFITS AS PER PROFIT & LOSS A/C 2173099 ADD: DISALLOWABLES /ADDITIONS DEPRECIATION TREATED SEPARATELY 622060 655555 1277615 LESS: INCOME CONSIDERED SEPARATELY INTEREST INCOME DIVIDEND INCOME 133600 584654 ( - )718254 NET PROFIT/LOSS FROM THIS BUSINESS 2732460 386393984 INCOME FROM OTHER SOURCES INCOME FROM DIVIDEND DIVIDEND INCOME U/S.115 - O/115 - R ( TAXFREE ) DIVIDEND ON MF 584654 LESS: DEDUCTION EXEMPTED DIVIDEND INCOME U/S.10(34/35) ( - )584654 ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 7 INCOME FROM INTERES OTHER INTEREST INCOME AS PER ACCOUNT 133600 NIL 133600 B/F LOSSES OR ALLOWANCES ASSESSMENT YEAR 2009 - 10 DATE OF RETURN FILING 22/09/09 UNABSORBED DEPR. ALLOWANCE 14754324 SUMMARY OF TOTAL INCOME PROFIT & GAINS OF BUSINESS OR PROFESSION OWN BUSINESS OR PROFESSION INCOME FROM OTHER SOURCES INCOME FROM DIVIDEND INCOME FROM INTEREST NIL 133600 386393984 133600 B/F DEPRECIATION/INVESTMENT ALLOWANCES ( - ) 14754325 371773259 GROSS TOTAL INCOME LESS: DEDUCTION UNDER CHAPTER VI - A INDUSTRIAL UNDERTAKING STATED ON 22/06/06 AMOUNT OF PROFIT ALLOWABLE DEDUCTION @ 100.00% 371639659 371639659 DEDUCTION U/S.80G 50% DEDUCTIBLE DONATIONS ADANI FOUNDATION GROSS QUALIFYING AMOUNT 5001 5001 2501 TOTAL DEDUCTION UNDER CHAPTER VI - A ( - )371642160 NET TOTAL INCOME 131099 ROUNDED OFF 131100 15 . ON PERUSAL OF THE ABOVE STATEMENT OF INCOME REVEALS THAT THE ASSESSEE HAS CLAIM DEDUCTION OF THE ENTIRE PROFIT EARN ED BY IT FROM SEZ AS WELL AS NON - SEZ ACTIVITIES. BESIDES ABOVE, WE ALSO NOTE THAT THERE IS A C.A CERTIFICATE IN FORM NO. 10CCB JUSTIFYING THE DEDUCT ION CLAIMED BY THE ASSESSEE U/S 80IA OF THE ACT FOR SEZ AS WELL AS NON - SEZ ACTIVITIES . A COPY OF THE CERTIFICATE IS PLACED ON PAGES 39 TO 46 OF THE PAPER BOOK. 16 . WE ALSO NOT E THAT THE DEDUCTION CLAIMED BY THE ASSE S SEE U/S 8 0IA OF THE ACT, FOR SEZ AND NON - SEZ PROFIT HAS NOT BEEN DISTURB BY THE LD.AO, EITHER ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 8 U/S 143(3) OR 154 OF THE ACT . T HEREFORE, WE DISAGREE WITH THE FINDINGS OF LD.CIT(A) . W E ALSO NOTE THAT THERE WAS NO INFIRMITY POINT ED OUT EITHER BY LD.AO OR LD.CIT(A), IN THE ARGUMENTS OF THE ASSESSEE THAT IT HAS CARRIED CIVIL WORK WITHIN THE BOUNDARY OF SEZ WHICH WAS CLASSIFIED AS NON - SEZ INCOME. IN THIS REGARD , WE NOTE THAT ALL THE DETAILS OF THE PARTIES WERE AVAILABLE BEFORE THE LOWER AUTHORITIES , BUT NON E OF THEM HAS EXERCISE D THEIR POWER TO VERIFY THE FACT WHETHER NON - SEZ INCOME REPRESENT S THE INCOME FROM THE ACTIVITIES CARRIED OUT IN SEZ U/S 131/133 ( 6 ) OF THE ACT. THE ASSESSEE IS ACTING AS A DEVELOPER , AND ANY OF THE AUTHORITIES BELOW HA VE NOT DOUBTED THIS FACT . WE ALSO NOTE AS , IN THE SIMILAR FACTS AND C IRCUMSTANCES, THE PROVISIONS OF SECTION 115JB OF THE ACT WERE NOT APPLIED IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT, PERTAINING TO THE ASSESSMENT YEAR 2011 - 2012 IN THE OWN CASE OF THE ASSESSEE . THE COPY OF THE ASSESSMENT ORDER IS PLACED ON PAGE 152 OF A PAPER BOOK. 17 . IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE PROVISIONS U/S 115JB OF THE ACT CANNOT BE INVOKED , MERELY ON THE GRO UND THAT THE ASSESSEE HAS CLASSIFIED IT S INCOME UNDER THE HEAD NON - SEZ INCOME. THERE WERE VARIOUS TANGIBLE MATE RIALS AVAILABLE BEFORE THE LOWER AUTHORITIES JUSTIFYING THAT THE ASSESSEE HAS EARNED INCOME ONLY FROM SEZ ACTIVITIES . T HEREFORE , WE DO NOT FIND ANY MERIT IN THE ORDER OF AUTHORITIES BELOW. 18 . NOW COMING TO THE DISALL OWANCE OF THE EXPENSES OFFERED B Y THE ASSESSEE UNDER THE PROVISION OF SECTION 14A OF THE ACT, AMOUNTING TO RS.6,55,555/ - . IN THIS REGARD WE NOTE THAT THE ASSESSEE SUO MOTTO HAS MADE THE DISALLOWANCE U/S 14A OF THE ACT, FOR RS.6,55,555/ - WHILE OFFERING THE INCOME UNDER NORMAL COMPUTATION AS EVIDENT FROM THE COMPUTATION OF INCOME OF ASSESSEE PLACED ON PAG E 12 OF THE PAPER BOOK. ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 9 19 . THE LD.AO, WHILE DETERMINING THE INCOME UNDER THE PROVISIONS OF MAT, HAD ADDED THE DISALLOWANCE MADE BY THE ASSESSEE UNDER NORMAL COMPUTATION OF INCOME WHILE WORKI NG OUT TAX LIABILITIES UNDER THE PROVISION OF MAT. 20 . IT IS A SETTLED LAW, THAT THE DISALLOWANCE MADE BY THE ASSESSEE U/S 14A OF THE ACT, R.W.R 8D CANNOT BE APPLIED UNDER THE PROVISION OF MAT. IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMEN T OF VIREET INVESTMENT LIMITED REPORTED IN 82 TAXMANN.COM 415 WHEREIN IT WAS HELD AS UNDER: 6.2 NOW THE QUESTION BEFORE US IS, WHETHER THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO EXEMPT INCOME AS CONTEMPLATED IN CLAUSE (F) TO EXPLANATION 1 TO SECTIO N 115JB(2) COULD BE ARRIVED AT BY' RESORTING TO PROVISIONS OF SECTION 14A OR NOT. THE SUBMISSION OF LD. PRINCIPAL CIT (DR) IS THAT IT CANNOT BE DISPUTED THAT THE OBJECT OF SECTION 14A WAS ONLY TO DETERMINE THE EXPENDITURE IN RELATION TO EXEMPT INCOME AS NOTED EARLIER. HIS CONTENTION, THEREFORE, IS THAT THE OBJECT OF SEC. 14A AND CLAUSE (F) TO EXPLANATION 1 TO SECTION 115JB(2) IS SAME AND, THEREFORE, IT CANNOT BE DISPUTED THAT SECTION 14A CAN BE RESORTED TO FOR FINDING OUT THE EXPENDITURE RELATABLE TO ANY INCOME WHICH IS EXEMPT. IN THIS REGARD LD. PRINCIPAL CIT(DR) HAS REFERRED TO SOME OF THE WELL SETTLED PRINCIPLES OF STATUTORY INTERPRETATION WHICH ARE DISCUSSED HEREUNDER. 6.3 WHEN THE QUESTION ARISES AS TO THE APPLICABILITY OF SIMILAR PR OVISIONS IN DIFFERENT PARTS OF THE STATUTE, THEN IT IS NOT ONLY LEGITIMATE BUT PROPER TO READ BOTH THE PROVISIONS IN THEIR CONTEXT. IF CONTEXT IS SAME , DIFFERENT MEANING CANNOT BE ASSIGNED. IT IS TO BE FOUND OUT THAT WHAT MISCHIEF WAS INTENDED TO BE REMEDI ED BY INSERTING A PARTICULAR SECTION. THE INTENTION OF THE LEGISLATURE ONCE IS MANIFESTED IN A PARTICULAR SECTION IN THE STATUTE THEN SAID INTENTION CANNOT BE GIVEN A DIFFERENT MEANING, IF A SIMILAR PROVISION HAS BEEN INCORPORATED IN A DIFFERENT SECTION IN THE STATUTE. THE INTENTION OF THE LEGISLATURE MUST BE FOUND OUT BY READING THE STATUTE AS A WHOLE. 6.4 LITERAL MEANING CANNOT ALWAYS BE FOLLOWED LOGICALLY, BECAUSE SOMETIMES IT TENDS TO DEFEAT THE OBVIOUS INTENTION OF THE LEGISLATURE AND RESULTS IN PRODUC ING A WHOLLY UNREASONABLE RESULT. TO ACHIEVE THE OBVIOUS INTENTION AND TO PRODUCE A REASONABLE RESULT. 6.10 THUS, THE SUBMISSION OF LD. CIT( DR) IS THAT WHEN BASIC OBJECT AND PURPOSE OF SECTION 14A AND CLAUSE (F) TO EXPLANATION 1 TO SECTION 115JB(2) IS SAME, THEN IT CANNOT BE SAID THAT MERELY BECAUSE SECTION 14A HAS NOT BEEN MENTIONED IN CLAUSE (F), THEREFORE, IT HAS NO APPLICATION. THE MODE OF COMPUTATION WITH SAME PURPOSE CANNOT BE DIFFERENTLY MADE MERELY BECAUSE SECTION 115JB CREATES A DEEMING ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 10 SECTION. THE OBJECT OF DEEMING PROVISIONS IS TO SUBSTITUTE THE TOTAL INCOME COMPUTED UNDER NORMAL PROVISIONS BY THAT COMPUTED UNDER MAT PROVISIONS . SUB MISSION OF LD. CIT(DR) IS THAT THIS CANNOT BE EXTENDED TO COMPUTATION FOR SAME ITEMS UNDER NORMAL AS WELL AS MAT PROVISIONS. UNDER THE PROVISIONS OF SECTION 14A, BOTH DIRECT AND INDIRECT EXPENSES IN RELATION TO EARNING OF EXEMPT INCOME ARE TO BE REDUCED . T HEREFORE, DIFFERENT MEANING CANNOT BE ASCRIBED IN CLAUSE (F) AND, THEREFORE, THE SUBMISSION OF ID. COUNSEL FOR THE ASSESSEE THAT ONLY DIRECTLY RELATABLE EXPENDITURE IS TO BE REDUCED, CANNOT BE ACCEPTED. IN VIEW OF ABOVE DISCUSSION, THE COMPUTATION UNDER CL AUSE ( F ) OF EXPLANATION 1 TO SECTION 115JB(2), IS TO BE MADE WITHOUT RESORTING TO THE COMPUTATION AS CONTEMPLATED UNDER SECTION 14A, READ WITH RULE 8D OF THE INCOME - TAX RULES, 1962 . 21 . HOWEVER, IN OUR CONSIDERED VIEW THE DISALLOWANCE NEEDS TO BE MADE AS PER CLAUSE (F) TO SECTION 115JB OF THE ACT INDEPENDENTLY. THE JUDGMENT OF HON BLE GUJARAT HIGH COURT RELIED ON BY THE LD AR IN THE CASE OF ALEMBIC LTD . (SUPRA) , DOES NOT DENY TO MAKE THE DISALLOWANCE AS PER CLAUSE (F) U/S 115JB OF THE ACT. THUS I T IS CLEAR THAT THE DISALLOWANCE NEEDS TO BE MADE IN TERMS OF THE PROVISIONS OF CLAUSE (F) TO SECTION 115JB OF THE ACT WHILE DETERMINING THE BOOK PROFIT. IN HOLDING SO , WE DRAW OUR SUPPORT FROM THE JUDGMENT OF HON BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. JAYSHREE TEA INDUSTRIES LTD. IN GO NO.1501 OF 2014 (ITAT NO.47 OF 2014) DATED 19.11.14 WHEREIN IT WAS HELD THAT THE DISALLOWANCE ABOUT EXEMPTED INCOME NEEDS TO BE MADE AS PER THE CLAUSE (F) TO EXPLANATION - 1 OF SEC. 115JB OF THE ACT INDEPENDENTLY. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED BELOW: - W E FIND COMPUTATION OF THE AMOUNT OF EXPENDITURE RELATABLE TO EXEMPTED INCOME OF THE ASSESSEE MUST BE MADE SINCE THE ASSESSEE HAS NOT CLAIMED SUCH EXPENDITURE TO BE NIL. SUCH COMPUTATION MUST BE MADE BY APPLYING CLAUSE (F) OF EXPLANATION 1 UNDER SECTION 115JB OF THE ACT. WE REMAND THE MATTER FOR SUCH COMPUTATION TO BE MADE BY THE LEARNED TRIBUNAL. WE ACCEPT THE SUBM ISSIO N O F MR. KHA ITAN, LEARNED SENIOR ADVOCATE THAT THE PROVISION OF SECTION 115JB IN THE MATTER OF COMPUTATION IS A COMPLETE CODE IN ITSELF AND RESORT NEED NOT AND CANNOT BE MADE TO SECTION 14A OF THE ACT. ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 11 GIVEN ABOVE , WE HOLD THAT THE DISALLOWANCES MADE UNDER THE PROVISIONS OF SEC. 14A R.W.R. 8D OF THE IT RULES, CANNOT BE APPLIED TO THE PROVISION OF SEC. 115JB OF THE ACT AS PER THE DIRECTION OF TH E HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. JAYSHREE TEA INDUSTR IE S LTD. ( SUPRA). 22 . NOW THE QUESTION ARISES TO DETERMINE THE DISALLOWANCE AS PER THE CLAUSE (F) TO EXPLANATION - 1 OF SEC. 115JB OF THE ACT INDEPENDENTLY. HOWEVER , WE NOTE THAT THE LIABILITY UNDER NORMAL COMPUTATION OF INCOME IS GREATER THAN THE LIABILITY OF TAX UNDER PROVISIONS OF MAT . T HEREFORE , THE ASSESSEE IS LIABLE TO PAY THE TAX UNDER THE NORMAL COMPUTATION OF INCOME ONLY. THEREFORE, WE ARE OF THE VIEW THE WORKING OUT THE TAX L IABILITY UNDER THE PRO VISIONS OF MAT BECOMES REDUNDANT UNDER THE GIVEN FACTS AND CIRCUMSTANCES. 23 . IN VIEW OF THE ABOVE, WE HO LD T HAT THE PROVISIONS OF MAT C OULD NOT BE APPLIED IN THE CASE ON HAND. HENCE, WE REVERSE THE ORDER OF THE AUTHORITIES BELOW AND DIRECT THE LD.AO, TO DELETE THE ADDITION MADE BY HIM. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. AS WE HAVE DECIDE D THE ISSUE IN FAVOR OF THE ASSESSEE ON MERIT, WE A RE NOT INCLINED TO ADJUDICATE THE TECHNICAL GROUND RAISED BY THE ASSESSEE AT THE TIME OF THE HEARING . THEREFORE, WE DISMISS THE TECHNICAL GROUND RAISED BY THE ASSESSEE. 2 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE COURT ON 03 /12/ 2018 AT AHMEDABAD. - SD - - SD - (MAHAVIR PRASAD ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY A HMEDABAD; DATED 03 / 12 /2018 MANISH ITA NO.1816/AHD/2016 ASSTT. YEAR 2010 - 11 12 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE .