M/s. Safeflex International Limited, Jaipur V. Income Tax officer, Ward-6(3), Jaipur

ITA 769/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4016 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 31-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDAR MEHTA
• Keywords: Rectification of order
• Section: 143(3); 10AA; 115JB; 263; 10; 154; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC H A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 769/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-13 M/S SAFEFLEX INTERNATIONAL LTD., JAIPUR CUKE VS. ITO, WARD-6(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAJCS7201D VIHYKFKHZ@ APPELL ANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDAR MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 30/07/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 22/08/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 26.03.2018 FOR ASSESSMENT YEAR 2012-13 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN, CONFIRMING THE ACTION OF LD. A O OF INVOKING THE PROVISIONS OF SECTION 154, THEREBY RECTIFYING THE A SSESSMENT ORDER PASSED U/S 143(3) OF INCOME TAX ACT, 1961. THE ACTION OF L D. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE RECTIFICATION ORDER BEIN G ILLEGAL, BEYOND SCOPE AND WITHOUT ANY BASIS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN, CONFIRMING THE ACTION OF LD. A O, IN ASSESSING THE ALLEGED BOOK PROFITS OF RS. 6,83,86,428/- AND APPLY ING THE MAT ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 2 PROVISIONS U/S 115JB. THE ACTION OF LD. CIT(A) IS I LLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE RECTIFICATION ORDER APPLYING THE MA T PROVISIONS U/S 115JB. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 9,39,290/- AND ALSO CLAIMED EXEMPTION U/S 10AA IN RESPECT OF ITS UNIT SITUATED AT PITHAMP UR, DISTRICT. DHAR (M.P) WHICH IS ENGAGED MANUFACTURING AND EXPORT OF POLYETHYLENE & POLYPROPYLENE BAGS WHICH ARE GENERALLY USED FOR TRANSPORTATION OF GOOD S. THE ASSESSMENT U/S 143(3) WAS COMPLETED BY THE ASSESSING OFFICER BY PA SSING ORDER U/S 143(3) DATED 28.02.2015 WHEREIN DEDUCTION U/S 10AA AMOUNTI NG TO RS. 5,67,17,090/- HAS BEEN ALLOWED TO THE ASSESSEE AND THE TOTAL INCO ME FINALLY ASSESSED COMES TO RS. 15,64,483/-. SUBSEQUENTLY, NOTICE U/S 154 WA S ISSUED TO THE ASSESSEE ON 17.05.2016 STATING THAT ON PERUSAL OF THE ASSESSMEN T RECORDS, IT REVEALS THAT THE ASSESSEE WAS LIABLE TO PAY TAX OF RS. 1,36,82,5 85/- U/S 115JB ON BOOK PROFIT OF RS. 6,83,86,428/- WHICH WAS INADVERTENTLY NOT CHARGED AT THE TIME OF ASSESSMENT U/S 143(3) DATED 28.02.2015. ACCORDINGLY , ORDER U/S 143(3) WAS RECTIFIED U/S 154 DATED 01.06.2016 AND BOOK PROFIT U/S 115JB DETERMINED AT RS. 6,83,86,428/- WAS BROUGHT TO TAX, THE SAME BEING HI GHER THAN THE INCOME ASSESSED UNDER THE NORMAL PROVISIONS OF THE ACT. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A). AS PER LD. CIT(A), WITH EFFECT FROM THE ASS ESSMENT YEAR 2012-13, THE PROVISIONS OF SECTION 115JB WAS MADE APPLICABLE TO THE SEZ UNIT VIDE SUB SECTION (6) AND PROVISO THERETO. IT WAS HELD THAT F OR THE RELEVANT ASSESSMENT YEAR, MAT WAS CHARGEABLE ON THE APPELLANT COMPANY A ND NOT TAX UNDER NORMAL PROVISIONS OF THE ACT AND ACCORDINGLY, THE ACTION O F THE AO IN RECTIFYING THE ASSESSMENT ORDER U/S 154 WAS UPHELD FOLLOWING THE O RDER OF THE HONBLE ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 3 KARNATAKA HIGH COURT IN CASE OF CIT VS SANKALA POLY MERS [2012] 20 TAXMANN.COM 378 AND THE DECISION OF THE COORDINATE BENCH IN CASE OF S.I.J CHAINS (P) LTD VS ACIT, JALANDHAR 100 ITD 379 (ASR) . AGAINST THE SAID FINDING OF THE LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BE FORE US. 4. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE ASSESSEE COMPANY STARTED ITS OPERATION IN THE AY 2008-09 AND FROM THE FIRST YEAR CLAIMED EXEMPTION U/S 10AA OF THE IT ACT. THE YEAR UNDER CONSIDERATION IS, THEREFORE, 5 TH YEAR OF CLAIMING EXEMPTION U/S 10AA OF THE IT ACT. THE PROVISIONS OF SECTION 10AA EXEMPTS 100% OF THE PROFITS AND GAI NS DERIVED FROM EXPORTS, IN FIRST FIVE YEARS OF THE CLAIM. THEREFORE, THE IN COME OF THE ASSESSEE COMPANY, IN THE YEAR UNDER CONSIDERATION IS 100% EXEMPT AS P ER THE PROVISIONS OF SECTION 10AA OF THE IT ACT, 1961. 5. IT WAS FURTHER SUBMITTED THAT THE ACTION OF THE LOWER AUTHORITIES OF BRINGING THE ENTIRE INCOME UNDER THE PURVIEW OF PRO VISIONS OF SECTION 115JB, IGNORING THE PROVISIONS OF SECTION 115JB(5), IS ILL EGAL. IT IS PERTINENT TO MENTION THAT PRIOR TO INSERTION OF SECTION 115JB, SECTION 1 15J WAS IN OPERATION WHICH PROVIDED FOR SPECIAL RATE OF TAXATION ON THE BOOK P ROFITS. SECTION 115J DID NOT PROVIDE IN ANY OF ITS SUB-SECTIONS THAT ALL THE OTH ER PROVISIONS OF THE ACT SHALL APPLY TO EVERY ASSESSEE COMPANY. HOWEVER, IN SECTIO N 115JA (WHICH WAS IN OPERATION AFTER SECTION 115J), BY WAY OF SUB-SECTIO N (4), LEGISLATURE PROVIDED THAT THE OTHER PROVISIONS OF THE ACT SHALL APPLY AN D EVEN UNDER THE PREVAILING SECTION I.E. SECTION 115JB, BY WAY OF SUB-SECTION ( 5) IT HAS BEEN PROVIDED AS UNDER: SECTION 115JB(5): SAVE AS OTHERWISE PROVIDED IN TH IS SECTION, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO EVERY ASSESSE E, BEING A COMPANY, MENTIONED IN THIS SECTION. ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 4 6. FURTHER, THE LD AR PLACED RELIANCE ON THE FOLLOW ING JUDICIAL PRONOUNCEMENTS: CIT VS. METAL & CHROMIUM PLATER (P.) LTD. [2016] 76 TAXMANN.COM 229 (MADRAS) SUTLEJ COTTON MILLS LTD. VS. ACIT [1993] 45 ITD 22 (SB) ACIT VS. SHREE CEMENT LTD. ITA NO. 614, 615 & 635/J P/2010 JSW STEEL LTD. VS. ACIT [2017] 82 TAXMANN.COM 210 NEHA HOME BUILDERS (P.) LTD. VS. CIT (2018) 92 TAXM ANNCOM 102 (MUMBAI-TRIB.) DATED 22 ND JANUARY 2018 BINANI INDUSTRIES LTD., KOLKATA VS. DEPARTMENT OF I NCOME TAX ITA NO. 144/KOL/2013 7. IT WAS SUBMITTED THAT THE ABOVE JUDICIAL DECISIO NS PROVE BEYOND DOUBT THAT EVEN IF THE ELIGIBLE EXEMPTION U/S 10AA IS NOT FINDING MENTIONED IN EXPLANATION 1 FOR DEDUCTION FROM THE PROFITS SHOWN AS PER THE PROFIT AND LOSS ACCOUNT. THE SAME IS ELIGIBLE AND THEREFORE NOT LIA BLE FOR MAT. 8. IT WAS FURTHER SUBMITTED THAT THE DECISIONS RELI ED UPON THE LD. CIT(A) ARE DISTINGUISHABLE ON FACTS AND THEREFORE SHOULD NOT B E APPLIED IN THE INSTANT CASE. IT WAS FURTHER SUBMITTED THAT THE ISSUE UNDER CONSI DERATION IS WHETHER AN UNDERTAKING WHICH IS CLAIMING ITS 100% OF THE PROFI TS AND GAINS DERIVED FROM EXPORTS AS EXEMPT U/S 10AA WILL BE LIABLE TO PAY TH E TAX ON THE ENTIRE BOOK PROFIT AS PER THE PROVISIONS OF SECTION 115JB OR NO T. IT WAS SUBMITTED THAT THE ACTION OF THE AO WHICH WAS CONFIRMED BY THE LD. CIT (A) IN TAXING THAT PORTION OF THE ASSESSEES INCOME WHICH WAS EXEMPT U/S 10AA UND ER THE PROVISIONS OF SECTION 115JB IS BAD IN LAW AND THEREFORE, DESERVES TO BE QUASHED. 9. IT WAS FURTHER SUBMITTED THAT WHETHER INCOME WHI CH WAS OTHERWISE EXEMPT CAN BE CHARGED TO TAX U/S 115JB IS DEBATABLE ISSUE AND IS BEYOND THE ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 5 SCOPE OF RECTIFICATION U/S 154 OF THE ACT. IN SUPPO RT, THE RELIANCE WAS PLACED ON THE HONBLE SUPREME COURT DECISION IN CASE OF ITO V S. VOLKART BROTHERS [1971] 82 ITR 50 (SC). IT WAS SUBMITTED THAT VARIOUS JUDIC IAL DECISIONS REFERRED ABOVE MAKE IT CLEAR THAT ALTHOUGH THE DECISIONS HAVE BEEN RENDERED IN FAVOUR OF THE ASSESSEE COMPANIES YET THE CONTROVERSY HAD TO BE RE SOLVED BY LONG DRAWN REASONING BY THE VARIOUS JUDICIAL FORUMS. THIS VERY ASPECT MAKES THE ISSUE BEYOND THE SCOPE OF RECTIFICATION U/S 154 OF THE AC T. 10. THE LD. DR IS HEARD WHO HAS RELIED ON THE FINDI NG OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE PROVISIONS OF SECTION 115JB ARE VERY CLEAR AND SUB SECTION (6) ALONG WITH THE PROVISO THERETO MAKES IT S CLEAR THAT THE MAT PROVISIONS ARE APPLICABLE TO THE ASSESSEE COMPANY F ROM A.Y 2012-13 ONWARDS AND THERE IS NO BASIS FOR THE ASSESSEE TO CLAIM EXE MPTION AS PER THE PROVISIONS OF SUB-SECTION (5) OF SECTION 115JB OF THE ACT. HE ACCORDINGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 11. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSMENT YEAR INVOLVED IS 2012-13 AND THE ISSUE U NDER CONSIDERATION IS WHETHER MAT PROVISIONS CONTAINED IN SECTION 115JB A RE APPLICABLE TO THE ASSESSEE COMPANY WHICH IS ELIGIBLE FOR SECTION 10AA BENEFIT. THE RELEVANT PROVISIONS OF SECTION 115JB 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 F ROM ANY BUSINESS CARRIED ON, OR SERVICES RENDERED, BY AN ENTREPRENEUR OR A D EVELOPER, IN A UNIT OR SPECIAL ECONOMIC ZONE, AS THE CASE MAY BE: ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 6 PROVIDED THAT THE PROVISIONS OF THIS SUB-SECTION SH ALL CEASE TO HAVE EFFECT IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASS ESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2012. 12. THE PROVISO TO SUB-SECTION (6) TO SECTION 115J B WAS INTRODUCED BY THE FINANCE ACT, 2011 AND THE CBDT VIDE CIRCULAR NO. 2/ 2012, DATED 22-5-2012 HAS EXPLAINED THE SAID AMENDMENT WHICH READS AS UNDER: 19. PROVISIONS RELATING TO MINIMUM ALTERNATE TAX ( MAT) AND DIVIDEND DISTRIBUTION TAX (DDT) IN CASE OF SPECIAL ECONOMIC ZONES 19.1.1 UNDER THE EXISTING PROVISIONS OF SECTION 10A A, A DEDUCTION OF HUNDRED PER CENT IS ALLOWED IN RESPECT OF PROFITS A ND GAINS DERIVED BY A UNIT LOCATED IN A SPECIAL ECONOMIC ZONE (SEZ) FROM THE EXPORT OF ARTICLES OR THINGS OR FROM SERVICES FOR THE FIRST FIVE CONSE CUTIVE ASSESSMENT YEARS; OF FIFTY PER CENT FOR FURTHER FIVE ASSESSMENT YEARS ; AND THEREAFTER, OF FIFTY PER CENT OF THE PLOUGHED BACK EXPORT PROFIT FOR THE NEXT FIVE YEARS. 19.1.2 FURTHER, UNDER SECTION 80-IAB. A DEDUCTION O F HUNDRED PER CENT IS ALLOWED IN RESPECT OF PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM THE BUSINESS OF DEVELOPMENT OF AN SEZ NOTIFIED ON O R AFTER 1ST APRIL, 2005 FROM THE TOTAL INCOME FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH T HE SEZ HAS BEEN NOTIFIED BY THE CENTRAL GOVERNMENT. 19.1.3 UNDER THE EXISTING PROVISIONS OF SUB-SECTION (6) OF SECTION 115JB, AN EXEMPTION IS ALLOWED FROM PAYMENT OF MINIMUM ALT ERNATE TAX (MAT) ON BOOK PROFIT IN RESPECT OF THE INCOME ACCRUED OR ARISING ON OR AFTER 1ST APRIL, 2005 FROM ANY BUSINESS CARRIED ON, OR SERVIC ES RENDERED, BY AN ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 7 ENTREPRENEUR OR A DEVELOPER, IN A UNIT OR SPECIAL E CONOMIC ZONE (SEZ), AS THE CASE MAY BE. 19.1.4 FURTHER, UNDER THE EXISTING PROVISIONS OF SU B-SECTION (6) OF SECTION 115-O, AN EXEMPTION IS ALLOWED FROM PAYMENT OF TAX ON DISTRIBUTED PROFITS [DIVIDEND DISTRIBUTION TAX (DDT)] IN RESPEC T OF THE TOTAL INCOME OF AN UNDERTAKING OR ENTERPRISE ENGAGED IN DEVELOPING OR DEVELOPING AND OPERATING OR DEVELOPING, OPERATING AND MAINTAINING A SPECIAL ECONOMIC ZONE FOR ANY ASSESSMENT YEAR ON ANY AMOUNT DECLARED , DISTRIBUTED OR PAID BY SUCH DEVELOPER OR ENTERPRISE, BY WAY OF DIV IDENDS (WHETHER INTERIM OR OTHERWISE) ON OR AFTER 1ST APRIL, 2005 O UT OF ITS CURRENT INCOME. SUCH DISTRIBUTED INCOME, IN THE HANDS OF THE RECIPI ENT, IS ALSO EXEMPT FROM TAX UNDER SUB-SECTION (34) OF SECTION 10 OF TH E ACT. 19.1.5 THE ABOVE PROVISIONS WERE INSERTED IN THE IN COME-TAX ACT BY THE SPECIAL ECONOMIC ZONES ACT, 2005 (SEZ ACT) WITH EFF ECT FROM 10TH FEBRUARY, 2006. 19.2.1 THERE WAS NO SUNSET DATE PROVIDED FOR EXEMPT ION FROM MAT IN THE CASE OF AN ENTREPRENEUR OR A DEVELOPER, IN A UN IT OR SEZ OR FROM DDT IN CASE OF AN UNDERTAKING OR ENTERPRISE ENGAGED IN DEVELOPING OR DEVELOPING AND OPERATING OR DEVELOPING, OPERATING A ND MAINTAINING AN SEZ. 19.2.2 THE AVAILABILITY OF EXEMPTION FROM MINIMUM A LTERNATE TAX IN THE CASE OF SEZ DEVELOPERS AND UNITS IN SEZS HAS NOW BE EN SUNSET IN THE INCOME TAX ACT AS WELL AS THE SEZ ACT AND THE PROVI SIONS OF SECTION 115JB(6) WILL CEASE TO HAVE EFFECT FROM 1-4-2012. ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 8 19.2.3 APPLICABILITY - THESE AMENDMENTS TAKE AFFECT FROM 1ST APRIL, 2012 AND WILL ACCORDINGLY APPLY IN RELATION TO THE ASSES SMENT YEAR 2012-13 AND SUBSEQUENT YEARS. 13. IT IS THUS SEEN THAT THE SPECIAL ECONOMIC ZONE S ACT, 2005 HAD INITIALLY INSERTED SUB-SECTION (6) IN SECTION 115JB OF THE AC T TO PROVIDE THAT THE PROVISIONS OF SECTION 115JB SHALL NOT APPLY TO INCO ME ACCRUED OR ARISING ON OR AFTER 1-4-2005 FROM ANY BUSINESS CARRIED ON, OR SER VICES RENDERED, BY AN ENTREPRENEUR IN A UNIT OF SEZ OR A DEVELOPER OF SEZ . THUS, A COMPANY CARRYING ON THE SPECIFIED BUSINESS IN A UNIT IN SEZ OR AS A DEVELOPER OF SEZ WAS NOT LIABLE TO PAY MAT ON THE PROFITS DERIVED FROM THE S AID BUSINESS. HOWEVER, THE FINANCE ACT, 2011 BROUGHT-IN A SUNSET CLAUSE AND IN SERTS A PROVISO TO SUB- SECTION (6) TO PROVIDE THAT, WITH EFFECT FROM 1-4-2 012, THE PROVISIONS OF SUB- SECTION SHALL CEASE TO HAVE EFFECT. ACCORDINGLY, A SEZ DEVELOPER OR ANY ENTREPRENEUR CARRYING ON BUSINESS IN AN SEZ UNIT (B EING A COMPANY) WOULD BE LIABLE TO PAY MAT ON THE PROFITS ARISING FROM THE D EVELOPMENT OF SEZ OR THE BUSINESS CARRIED ON IN AN SEZ UNIT WITH ASSESSMENT YEAR 2012-13 AND ONWARDS. 14. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE CARRIES ON ITS BUSINESS IN AN SEZ UNIT AND ITS INCOME WILL THEREFO RE BE SUBJECT TO THE PROVISIONS OF SECTION 115JB OF THE ACT. ON BARE RE ADING OF PROVISIONS OF SUB- SECTION (6) TO SECTION 115JB, IT IS CRYSTAL CLEAR T HAT PROVISIONS OF SECTION 115JB WILL APPLY TO THE ASSESSEE COMPANY FOR THE ASSESSME NT YEAR BEGINNING ASSESSMENT YEAR 2012-13 ONWARDS. THEREFORE, WHILE PASSING THE ASSESSMENT ORDER U/S 143(3), WHERE THE ASSESSING OFFICER HAS F ORGOT TO INVOKE THE PROVISIONS OF SECTION 115JB OF THE ACT, THE MATTER CLEARLY FALLS WITHIN PURVIEW OF SECTION 154 OF THE ACT AND THE SAME CAN BE RECTIFIE D AS MISTAKE APPARENT FROM RECORD. ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 9 15. NOW, COMING TO ANOTHER CONTENTION OF THE LD AR THAT IN VIEW OF SUB- SECTION (5) TO SECTION 115JB OF THE ACT, THE ENTIRE INCOME OF THE ASSESSEE CANNOT BE BROUGHT TO TAX UNDER SECTION 115JB GIVEN THAT THE INCOME OF THE ASSESSEE COMPANY IS EXEMPT AS PER THE PROVISIONS OF SECTION 10AA OF THE ACT. IN THIS REGARD, WE REFER TO SUB-SECTION (5) TO SECT ION 115JB OF THE ACT WHICH READS AS UNDER: (5) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, AL L OTHER PROVISIONS OF THIS ACT SHALL APPLY TO EVERY ASSESSEE, BEING A COMPANY, MEN TIONED IN THIS SECTION. 16. THE ABOVE PROVISIONS THUS PROVIDE THAT ALL OTH ER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSEE COMPANY SUBJECT TO ANY THING OTHERWISE PROVIDED IN OR BARRED BY SECTION 115JB OF THE ACT. THE SAID PR OVISIONS HAVE BEEN EXPLAINED IN CBDT CIRCULAR NO. 13 OF 2001 WHERE IT WAS STATED AS UNDER: 2. INSTANCES HAVE COME TO THE NOTICE OF THE BOARD THAT A LARGE NUMBER OF COMPANIES LIABLE TO TAX UNDER THE NEW MAT PROVIS IONS OF SECTION 115JB ARE NOT MAKING ADVANCE TAX PAYMENTS. IT MAY B E EMPHASISED THAT THE NEW PROVISION OF SECTION 115JB IS A SELF-CONTAI NED CODE. SUB-SECTION (1) LAYS DOWN THE MANNER IN WHICH INCOME-TAX PAYABL E IS TO BE COMPUTED. SUB-SECTION (2) PROVIDES FOR COMPUTATION OF 'BOOK PROFIT'. SUB-SECTION (5) SPECIFIES THAT SAVE AS OTHERWISE PR OVIDED IN THIS SECTION, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO EVE RY ASSESSEE, BEING A COMPANY MENTIONED IN THAT SECTION. IN OTHER WORDS, EXCEPT FOR SUBSTITUTION OF TAX PAYABLE UNDER THE PROVISION AND THE MANNER OF COMPUTATION OF BOOK PROFITS, ALL THE PROVISIONS OF THE TAX INCLUDING THE PROVISION RELATING TO CHARGE, DEFINITIONS, RECOVERI ES, PAYMENT, ASSESSMENT, ETC., WOULD APPLY IN RESPECT OF THE PRO VISIONS OF THIS SECTION. ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 10 17. IN SUB-SECTION (6) TO SECTION 115JB, AS WE HAVE NOTED ABOVE, IT HAS BEEN SPECIFICALLY PROVIDED THAT INCOME ACCRUING OR ARISI NG FROM THE BUSINESS CARRIED ON BY THE ASSESSEE COMPANY IN ITS SEZ UNIT SHALL BE SUBJECT TO MAT PROVISIONS FOR ASSESSMENT YEAR BEGINNING 2012-13 ONWARDS. TH EREFORE, PROVISIONS OF SUB-SECTION (5) IS SUBJECT TO PROVISIONS OF SUB-SEC TION (6) OF SECTION 115JB AND READING BOTH THE PROVISIONS HARMONIOUSLY, IT IS CLE AR THAT THE INCOME OF THE ASSESSEE COMPANY SHALL BE SUBJECT TO THE PROVISIONS OF MAT UNDER SECTION 115JB OF THE ACT. 18. THE SUB-SECTION (5) TO SECTION 115JB HAS ALSO B EEN SUBJECT MATTER OF INTERPRETATION BY THE COURTS AND IT WOULD BE RELEVA NT TO REFER TO THESE DECISIONS WHICH HAVE BEEN BROUGHT TO OUR NOTICE DURING THE CO URSE OF ARGUMENTS BY THE LD AR. IN CASE OF CIT VS METAL & CHROMIUM PLATER (P) LTD (SUPRA), THE ISSUE FOR CONSIDERATION BEFORE THE HONBLE MADRAS H IGH COURT WAS WHETHER CLAIM UNDER SECTION 54EC FOR COMPUTING CAPITAL GAIN S CAN BE ALLOWED WHILE COMPUTING BOOK PROFITS AS PER SECTION 115JB OF THE ACT. IN THAT CONTEXT, THE HONBLE MADRAS HIGH COURT HAS HELD THAT SECTION 115 JB IS A SELF-CONTAINED CODE OF ASSESSMENT AND THE LEVY OF TAX IS ON THE BOOK PR OFITS AFTER EFFECTING VARIOUS ADJUSTMENTS AS SET OUT IN TERMS OF EXPLANATION THER ETO. IT WAS FURTHER HELD THAT PROVISIONS OF SUB-SECTION (5) OF SECTION 115JB OPEN THE ASSESSMENT TO THE APPLICATION OF ALL OTHER PROVISIONS CONTAINED IN TH E INCOME TAX ACT EXCEPT SPECIFICALLY BARRED BY THAT SECTION ITSELF. IT WAS ACCORDINGLY HELD THAT SECTION 115JB ADMITS GRANT OF RELIEF UNDER SECTION 54EC OF THE ACT. IN THE INSTANT CASE, THE ASSESSEE COMPANY IS ELIGIBLE FOR RELIEF UNDER S ECTION 10AA OF THE ACT HOWEVER THE SUB-SECTION (6) SPECIFICALLY PROVIDES T HAT MAT PROVISIONS CONTINUE TO APPLY TO THE ASSESSEE COMPANY BEGINNING ASSESSME NT YEAR 2012-13 ONWARDS. IN OTHER WORDS, THE APPLICATION OF OTHER PROVISIONS OF THE ACT AS SO PROVIDED IN SUB-SECTION (5) HAS BEEN BARRED BY VIRT UE OF SUB-SECTION (6) TO SECTION 115JB OF THE ACT. THEREFORE, THIS DECISION OF THE HONBLE MADRAS HIGH ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 11 COURT DOESNT SUPPORT THE CASE OF THE ASSESSEE COMP ANY RATHER OUR READING OF THE PROVISIONS OF SUB-SECTION (5) TO SECTION 115JB HAS BEEN FORTIFIED BY THIS DECISION. 19. IN CASE OF NEHA HOME BUILDERS (P) LTD VS CIT (SUPRA), THE ISSUE FOR CONSIDERATION BEFORE THE CO-ORDINATE BENCH WAS WHET HER THE LD CIT HAS JURISDICTION TO ISSUE DIRECTIONS U/S 263 OF THE ACT TO THE ASSESSING OFFICER NOT TO ALLOW DEDUCTION U/S 80IB(10) WHILE COMPUTING BOOK P ROFITS U/S 115JB OF THE ACT. IN THAT CONTEXT, REFERRING TO PROVISIONS OF S UB-SECTION (5) TO SECTION 115JB, IT WAS HELD THAT WHERE INCOME IS NOT TAXABLE IN VIE W OF SECTION 80IB(10), THE SAME HAS TO BE EXCLUDED WHILE COMPUTING BOOK PROFIT S. IN THE INSTANT CASE, IT IS NO DOUBT TRUE THAT INCOME OF THE ASSESSEE COMPAN Y IS ELIGIBLE FOR BENEFIT U/S 10AA OF THE ACT, HOWEVER, ON COMBINED READING OF PR OVISIONS OF SUB-SECTION (5) AND (6) OF SECTION 115JB, NO ADJUSTMENT CAN BE MADE TO BOOK PROFITS AS THE MAT PROVISIONS HAVE BEEN SPECIFICALLY MADE APPLICAB LE TO ASSESSEE COMPANY IN RESPECT OF ITS INCOME FROM BUSINESS CARRIED ON IN I TS SEZ UNIT FOR ASSESSMENT YEAR 2012-13 AND ONWARDS. THEREFORE, THIS DECISION OF THE CO-ORDINATE BENCH DOESNT SUPPORT THE CASE OF THE ASSESSEE COMPANY. 20. WE HAVE ALSO GONE THROUGH OTHER DECISIONS RELIE D UPON BY THE LD AR. HOWEVER, WE FIND THAT THESE DECISIONS ARE DISTINGUI SHABLE MAINLY FOR THE REASON THAT IN NONE OF THESE DECISIONS, THE PROVISIONS AS CONTAINED IN SUB-SECTION (6) TO SECTION 115JB HAVE BEEN EXAMINED AND/OR DISCUSSE D WHICH CLEARLY PROVIDES THAT THE MAT PROVISIONS WILL BE APPLICABLE TO INCOM E FROM BUSINESS CARRIED ON BY THE ASSESSEE COMPANY IN ITS SEZ UNIT. THEREFORE , IN VIEW OF THE SPECIFIC PROVISIONS SO CONTAINED IN SUB-SECTION (6) OF SECTI ON 115JB, THESE DECISIONS DOESNT SUPPORT THE CASE OF THE ASSESSEE COMPANY. ITA NO. 769/JP/2018 M/S SAFEFLEX INTERNATIONAL LIMITED, JAIPUR VS. ITO, WARD 6(3), JAIPUR 12 21. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIR ETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE AFFIRM THE ORDER OF T HE LD CIT(A) AND THE MATTER IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE COMPANY. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/08/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22/08/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S SAFEFLEX INTERNATIONAL LTD., JAI PUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 6(3), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 769/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR