ORDER
1. All these eighteen appeals arise out of the common order of the ITAT, and have been admitted by different orders of this Court, by framing following substantial questions of law:
1. Whether an intimation of tax computation issued under Section 143(1) by the Assessing Officer on the claim to deduction under Section 80IA/80IB made by the assessee in his return, could be rectified under Section 154 for raising a demand by invoking Section 115JA/115JB of the Income Tax Act, 1961 as existed during the relevant assessment year?
2. If so, whether in absence of any computation of book profit as defined under Explanation to Section 115JA/115JB on record, the Assessing Officer could assume the amount of Book Profit for invoking 115JA/115JB by ignoring the claim of the assessee to deduction under Section 80IA/80IB?
3. Whether computation of 'Book Profit' for the purpose of Section 115JA/115JB and determining the claim of assessee to benefit under Section 80 IA/80IB could at all be undertaken by the Assessing Officer under Section 143(1)?
4. If so, whether the amount allowable as deduction under Section 80IA/80IB, can at all form part of 'Book Profit' in view of Clause (v) of Explanation to Section 115JA/115JB?
2. The necessary facts are, that the returns were filed by the assessee for different assessment years, which were processed under Section 143(1), thereafter, the Audit Party raised an objection to the effect, that according to the provisions of Section 115JA/115JB, calculation of income was required to be made, but since, that has not been done, a notice under Section 154/155 of the Income Tax Act was given to show cause as to why the liability may not be increased, and after receiving the representation, the learned Assessing Officer, in all the cases, passed orders, purportedly exercising powers under Section 154, calculating the income at the rate of30% of the book profit, and the assessee was required to pay tax, at the rate of 35%, along with the interest and surcharge.
3. Against these orders, appeals were filed, and the same were dismissed by the learned Commissioner (Appeals). Then, all the matters were carried to the Tribunal, and the learned Tribunal held, that the provisions of Section 143 and 154 have been amended by the Finance Act of 1999, whereby, the provisions were modified, and prima facie adjustments, additional tax, and issue of limitation etc. were done away with. Then, after the amendment, mere filing of the return by itself would complete the process of assessment, limiting its scope only to raise demand and issue refund on the basis of the return filed, except for issuing intimations where any sum is payable by the assessee or refund is due to him, the acknowledgments shall be deemed to be intimation, and simultaneously, amendments were also made in Section 154 to provide for rectification of intimation or deemed intimation referred to in the proposed Sub-section (1) of Section 143.
4. Then, the learned Tribunal noticed this submission of the assessee, that Section 115JA provides, that for the purpose of determining the 'book profit', from the total profits, amount by which the net profit has to be reduced, also consists of the amount of profits derived by an industrial undertaking located in an industrially backward State or District, referred to in Sections 80-IA and 80IB, such industrial undertaking is eligible to claim a deduction of100% of the profits and gains under Sub-section 80-IA(5) with effect from1.4.2000, and under Section 80IB(4) or Section 80IB(5). Then, it was noticed that the contention of the assessee is, that the assessee company is an industrial undertaking, situated/located in the backward industrial State of District, therefore, whatever the income earned by the industrial undertaking is, it is 100% exempted from tax, as per the provisions of Section 80-IA(2)(iv)(c) of the Income Tax Act, and therefore, for the purpose of determination of 'book profit' as per Section 115JA, the100% exempted income, derived from such industrial undertaking, is required to be deducted, which aspect has not been considered by the Assessing Officer, otherwise, there would been no need to pass the order under Section 154 of the Income Tax Act.
5. Then, noticing this contention in Para 12, it was observed, that the undisputed facts of these cases are, that all these assessees are industrial undertakings, which are situated in the backward areas, and for the assessment years1998-99 to2000-01, the Assessing Officer taxed book profit as per the provisions of Section 115JA by invoking the provisions of Section 154, and charged interest under Sections 234A, 234B and 234C. While, for the assessment years 2001-02 to 2002-03, the Assessing Officer taxed the assessee on book profit as per the provisions of Section 115B by invoking the provisions of Section 154, and also charged interest. Then, after noticing the contention of the assessee on the evil of Section 115JA, it was held, that the Tribunal was convinced with the arguments and submissions of the authorized representatives of the assessee, because a perusal of the impugned order passed under Section 154 makes it ostensibly clear, that the orders in question are cyclostyled in pattern, which simply put the figure of books profit, giving the impression, that the Assessing Officer was not aware of the very fact, as to whether in the impugned assessment years the provisions of Sections 115JA/115JB are applicable or not, and orders have been passed by simply being carried away by audit objections.
6. Then, it has been held, that for the assessment years 2001-02 to 2002-03, the orders were passed under Section 154, and the provisions of Sections 115JA/115JB were inserted by the Finance Act, 2000, with effect from 1.4.2000, and by virtue of the operation of the said provision, where the income with respect to any previous year to the assessment year commencing on or after the first day of April 2001 is less than 7.5% of its book profit, the tax payable for relevant year shall be deemed to be 7.5%, but then the Proviso requires, that there should be report in the prescribed form from an accountant as defined in the Explanation appended to Sub-section (2) of Section 288, certifying that the book profit has been computed in accordance with the provisions of this Section, along with the return of income filed under Sub-section (1) of Section 139 or along with the return of income furnished in response to the notice under Clause (i) of Section 142.
7. In our view, it clearly appears from the assessment orders, that the orders proceeds in issuing initial intimation under Section 143(1). The provisions of Sections 115JA/115JB were not taken into consideration. True, it is, that the provisions of Section 115JB have been inserted with effect from 1.4.2001, however, the provisions of Section 115JA were inserted since 1.4.97 and, therefore, that provisions did apply to all the assessment years very much, but then, that is not the end of the problem.
8. A bare reading of Section 115JA does show, that Sub-section (1) starts with non obstante clause, and provides, that notwithstanding contained anything in any other provision of this Act, where in the case of an assessee, being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1997, but before the 1st day of April, 2001, is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year, shall be deemed to be an amount equal to thirty per cent of such 'book profit'. Thus, by this sub-section, only fiction is created to treat 30% of the 'book profit' to be the income chargeable to tax, for the relevant previous years, and to be taxed accordingly, but then, the term 'book profit' is of great significance. In the Explanation appended after Sub-section (2), 'book profit' is defined by providing, that for the purpose of this Section 'book profit' means the net profit as shown in the profit and loss account for the relevant previous year prepared under Sub-section (2), and then catalogues certain amounts, by which the said profit has to be increased, and then catalogues another list of certain amounts, which is required to be reduced from that profit, and it in this second list, which contains Item No. 5 as under:
the amount of profits derived by an industrial undertaking located in an industrially backward State or district as referred to in [Sub-section (4) and Sub-section (5) of Section 80IB], for the assessment years such industrial undertaking is eligible to claim a deduction of hundred per cent of the [profits and gains under Sub-section (4) or Sub-section (5) of Section 80IB].
9. Thus, on the face of it, notwithstanding the total income of the assessee is less than 30% of the alleged 'book profit', the 'book profit' is to be arrived at after deducting the amounts including the amount provided in Clause 5 as noted above.
10. It is not in dispute, that while making the order under Section 154, the learned Assessing Officer has not taken into consideration this clause. Obviously under Section 80IB and 80-IA, the assessee is entitled to 100% exemption, being an undertaking situated in the backward State of District. Thus, on the other hand, the order made by the learned Assessing Officer purportedly under Section 154, rather suffers from error, apparent on the face of the record, having been passed without considering the provisions of above Clause (5), and obviously, therefore, the learned Tribunal was right, though for additional reasons as well, for setting aside the order.
11. The net result of the aforesaid discussion is that question No. 2 is answered in negative, while question No. 4 is answered in affirmative as above, and consequent upon these answers questions No. 1 and 3 become academic. However, the ultimate result is that these appeals have no force, and are dismissed.