M/s Innovative Colonisers (P) Ltd., Delhi V. DCIT, Ludhiana

ITA 421/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8406 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 04-01-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 22-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.421/CHD/2016 (ASSESSMENT YEAR :2012-13 ) M/S INNOVATIVE COLONISERS (P) LTD., VS. THE D.C.I.T., 4 BATTERY LANE, RAJPURA ROAD, CENTRAL CIRCLE-1, DELHI. LUDHIANA. PAN: AABCI3667F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI RAVI SARANGAL, DR DATE OF HEARING : 04.01.2017 DATE OF PRONOUNCEMENT : 10.01.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, LUDHIANA DATED 23.2.2016 RELATING TO ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO CLAIM OF THE ASSESSEE THAT IT WAS NOT REQUIRED TO PAY TAXES ON ITS BOOK PROFITS AS PER THE PROVISIONS OF SECTION 115JB OF THE ACT, ON ACCOUNT OF THE EXCLUSION PROVIDED 2 UNDER SECTION 115JB(6) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. BRIEF FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE COMPANY IS A DEVELOPER OF HOUSING PROJECTS . IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSM ENT YEAR THE ASSESSEE DECLARED INCOME OF RS.92,53,668/- AFTER CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE AC T OF RS.1,94,84,876/-. AS PER THE AUDIT REPORT, THE BOO K PROFIT OF THE COMPANY AMOUNTED TO RS.2,84,99,344/- BUT THE ASSESSEE DID NOT PAY ANY TAX ON THE SAME UNDER THE PROVISIONS OF MAT I.E. UNDER SECTION 115JB, STATING THAT IN VIEW OF SECTION 115JB(6) OF THE ACT IT WAS EXCLU DED FROM THE APPLICABILITY OF THE SAME. THE ASSESSING OFFIC ER REJECTED THE CONTENTION OF THE ASSESSEE AND APPLIED THE PROVISIONS OF SECTION 115JB OF THE ACT CALCULATING TAX UNDER MAT AND LEVIED THE SAME. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS) WHERE THE ASSESSEE CONTENDED THAT ITS CLAIM OF EXEMPTION FROM PROVISIONS OF MAT WAS IN ACCORDAN CE, SINCE THE INCOME EARNED BY IT WAS FROM BUSINESS CAR RIED ON AS A DEVELOPER TO WHOM THE PROVISIONS OF MAT ARE NOT APPLICABLE AS PER SECTION 115JB(6) OF THE ACT. THE LD. CIT (APPEALS) DISALLOWED ASSESSEES APPEAL ON THIS GROU ND 3 STATING THAT THE ASSESSEE COULD NOT RELY UPON THE EXCEPTION CARVED OUT IN SECTION 115JB(6) SINCE T HE SAID SUB-SECTION HAD BEEN INSERTED BY THE SPECIAL ECONOM IC ZONES(SEZ) ACT, 2005, WHICH DEFINED THE TERMS UNIT S, SPECIAL ECONOMICS ZONE, DEVELOPER AND ENTREPRE NEUR AND THE ASSESSEE WAS NEITHER AN ENTREPRENEUR OR DEV ELOPER AS DEFINED UNDER SEZ ACT, NOR WAS IT SITUATED IN A UNIT OR SEZ AS DEFINED UNDER SEZ ACT. HE, THEREFORE, HELD THAT THE ASSESSEES DID NOT FALL UNDER SECTION 115JB(6) OF THE ACT AND THUS UPHELD THE ACTION OF THE ASSESSING OFF ICER CHARGING MINIMUM ALTERNATE TAX (MAT) U/S 115JB OF THE ACT, IN THE PRESENT CASE. THE RELEVANT FINDINGS OF THE CIT (APPEALS) AT PARAS 4 AND 4.1 ARE AS FOLLOWS : 4. THE FACTS OF THE CASE, THE CHARGING OF MAT U/S 115 JB BY THE A.O. AND THE SUBMISSIONS/ARGUMENTS OF THE AR DURI NG THE APPELLATE PROCEEDINGS HAVE BEEN CONSIDERED. IT I S TO NOTE THAT THE PROVISIONS OF SUB SECTION (6) IN SECTION 1 15JB HAVE BEEN INSERTED BY THE SPECIAL ECONOMIC ZONES ACT, 2005 W.E.F, 10.02.2006. UNDER THAT ACT 'UNIT' MEANS A UNIT SET UP BY AN ENTREPRENEUR IN A SPECIAL ECONOMIC ZONE AND INCL UDES AN EXISTING UNIT, AN OFFSHORE BANKING UNIT AND A UNIT I N AN INTERNATIONAL FINANCIAL SERVICES CENTRE, WHETHER ESTABLISHED BEFORE OR ESTABLISHED AFTER COMMENCEMEN T OF THIS ACT. AND 'SPECIAL ECONOMIC ZONE' MEANS EACH SPECIAL ECONOMIC ZONE NOTIFIED UNDER THE PROVISO TO SUB-SECT ION (4) OF SECTION 3 AND SUB-SECTION (1) OR SECTION 4 (INCLUDING FREE TRADE AND WAREHOUSING ZONE) AND INCLUDES AN EXISTING SPECIAL ECONOMIC ZONE, FURTHER, THE DEVELOPER HAS BEEN DEFINED AS 'DEVELOPER' MEANS A PERSON WHO, OR A STATE 4 GOVERNMENT WHICH, HAS BEEN GRANTED BY THE CENTRAL GOVERNMENT A LETTER OF APPROVAL UNDER SUB-SECTION ( 10) OF SECTION 3 AND INCLUDES AN AUTHORITY AND A CO- DEVELOPER; AND 'ENTREPRENEUR' MEANS A PERSON WHO HAS BEEN GRANTED A LETTER OF APPROVAL BY THE DEVELOPMEN T COMMISSIONER UNDER SUB-SECTION (9) OF SECTION 15. 4.1 IT IS SEEN THAT THE ARS RELIANCE UPON THE EXCEPTI ON CARVED OUT U/S 115JB(6) IS MISPLACED AS IT IS QUITE AP PARENT THAT THE EXCEPTION ARE IN RESPECT OF CONCERN (ENTREP RENEUR OR DEVELOPER AS DEFINED UNDER THE SEZ ACT) SITUATED IN A UNIT OR SPECIAL ECONOMIC ZONE, (ALSO DEFINED UNDER THE SEZ AC T) AS THE CASE MAY BE. THE ASSESSEE IS NOT SITUATED IN A UN IT OR SPECIAL ECONOMIC ZONE (WHICH ARE DEFINED UNDER SEZ ACT , 2005) AND THE ASSESSEE IS NOT A DEVELOPER UNDER SE CTION 115JB(6)THEREFORE, THE CASE OF THE ASSESSEE DO ES NOT FALL UNDER U/S 115JB(6). THE INTERPRETATION GIVEN ON BEHALF OF THE ASSESSEE DEFIES THE LOGIC OF ENACTING THE AM ENDED PROVISIONS OF SECTION 115JB. THE EXCEPTION CANNOT BE AS LARGE AS THE MAIN PROVISION SO SUCH SO TO NULLIFY THE LEGISLATIVE INTENT OF IMPOSING TAX ON SPECIFIED COMPA NIES U/S 115J8. IN THE CIRCUMSTANCES, THERE IS NO MERIT IN AR'S ON THE ISSUE. HENCE THE ACTION OF THE A.O. IN CHARGING THE MAT IN THIS CASE IS SUSTAINED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE CONCEDED THAT THE FINDINGS OF THE LD. CIT (APPEALS) , THAT THE ASSESSEE DID NOT QUALIFY AS AN ENTREPRENEUR OR DEVELOPER AS DEFINED UNDER SEZ ACT, NOR WAS SITUATE D IN A UNIT OR SPECIAL ECONOMIC ZONE AS DEFINED UNDER THE ACT, WAS CORRECT. 6. IN VIEW OF THE ABOVE ADMISSION MADE BY THE LD. COUNSEL FOR THE ASSESSEE, WE FIND NO REASON TO INTE RFERE IN 5 THE ORDER OF THE CIT(A), HOLDING THAT THE ASSESSEE IS NOT COVERED UNDER THE EXCLUSIONARY PROVISIONS OF SECTIO N 115JB(6) OF THE ACT, AND IS THUS LIABLE TO PAY TAX ON ITS BOOK PROFITS AS PER THE PROVISIONS OF SECTION 115JB OF THE ACT. WE THEREFORE UPHOLD THE ORDER OF THE LD. CIT (APPEALS) ON THIS GROUND, AND DISMISS THE GROUND RA ISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH JANUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH