The Commissioner Of Income Tax Tamil Nadu-Ii, Madras v. Spel Semiconductor Limited

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN THE HONOURABLE MR.JUSTICE M.M.SUNDRESH The Commissioner of Income TaxTamil Nadu-II, Madras. .... Appellant v. SPEL Semiconductor LimitedNo.5, CMDA Industrial EstateMaraimalai Nagar, Chennai – 603 209.....Respondent The Commissioner of Income-taxTamil Nadu-I, Madras. ... AppellantVs. Irbaz Leather P.Ltd.,2(487), Kilpauk Garden, KilpaukChennai – 600 010. ... Respondent The Commissioner of Income-taxTamil Nadu-III, Madras. ... Appellant M/s.Rane Brake Linings Limited"Maithri", No.32, Cathedral RoadChennai- 600 086. Appeal in T.C.(A) No.480 of 2008 is filed under section260-A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal, Madras 'C' Bench, dated27.7.2007 made in C.O.No.233/Mds/2005 in I.T.A.No.1594/Mds/2005against the order of the Commissioner of Income Tax (Appeals)https://hcservices.ecourts.gov.in/hcservices/V, Chennai 34 in ITA 157/2004-05 dated 2.3.2005 against the order of the Asst Commissioner of Income Tax, Company circle VI(4), Chennai 34, dated 24.3.2003 in GIR No/PAN-SP-20/ . Appeal in T.C.(A) No.749 of 2008 is filed under section260-A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal, Madras 'A' Bench, dated21.8.2007 made in I.T.A.No.108/Mds/2005 against the order ofthe Commissioner of Income Tax (Appeals) III, Chennai 34 dated4.11.2004 in ITA No.92/2004-05/A III against the order of theAsst Commissioner of Income Tax, Company circle II (3), Chennai34, dated 23.3.2003 in GI No/PA.No.1x3-009/AAAC12313G. Appeal in T.C.(A) No.806 of 2008 is filed under section260-A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal, Madras 'B' Bench, dated27.7.2007 made in I.T.A.No.1480/Mds/2005 against the order ofthe Commissioner of Income Tax (Appeals) V, Chennai 34 dated25.2.2005 in ITA 53/2004-05 against the Deputy Commissioner ofIncome Tax, Company circle V (3), Chennai 34, dated 31.3.2004in PAN/GIR/No. /53056-R. For appellant:Mrs.Pushya Sitaramanin all T.C(A)s.Senior Standing CounselFor respondent : Mr.K.Venkatanarayanan for in T.C.(A)Nos.480 Mr.Subbaraya Aiyarand 806 of 2008 (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN J.) As the question of law involved in these tax cases iscommon, we have taken the first tax case appeal in T.C.(A)No.480 of 2008 as a typical case to state the facts.2. The assessee company is engaged in manufacture and saleof integrated circuits. The assessee claimed deduction ofRs.2,28,66,239/- in respect of profits eligible for deductionunder Section 80HHC of the Income-tax Act, 1961. Since theassessee's claim under Section 80HHC is nil, no deduction underSection 80HHC survives. Under Section 115JA as claimed underSection 80HHC will not change 115JA from what was under normalcomputation. Against that order, the assessee preferred anappeal before the Commissioner of Income-tax (Appeals), whoallowed the alternative claim of the assessee. Against thathttps://hcservices.ecourts.gov.in/hcservices/order, the assessee preferred Cross Appeal before the Income- tax Appellate Tribunal and the Income-tax Appellate Tribunalheld that the deduction under Section 80HHC of MAT assessmentis to be worked out on the basis of the adjusted book profitand not on the basis of the profit computed under the regularprovisions of law applicable to the computation of profits andgains of business or profession. The correctness of the sameis now canvassed by formulating the question of law to theeffect that whether on the facts and in the circumstances ofthe case, the Appellate Tribunal was right in law in holdingthat the deduction under Section 80HHC of the Act is a case ofMAT assessment is to be worked out on the basis of the profitcomputed under the regular provision of law applicable to thecomputation of profits and gains of the business orprofession." 3. We heard the argument of the learned counsel on eitherside and perused the material on record. 4. Learned counsel on either side submits that the issueinvolved in the present case is squarely covered by theDivision Bench judgment of this Court in the case ofCOMMISSIONER OF INCOME-TAX VS. RAJANIKANT SCHNELDER ANDASSOCIATES P.LTD., reported in (2008) 302 ITR 22, to which oneof us (K.Raviraja Pandian,J.) was a party, wherein this Courthas held that the assessing officer was not entitled to alterthe profit and loss account prepared by the assessee under theprovisions contained in the Companies Act while arriving at thebook profit under Section 115JA and the book profit so arrivedat should be the basis for taxation and, therefore, thecomputation under section 80HHC should be limited to the caseof profits of eligible category only. For coming to such aconclusion, this Court also relied on two decisions of theSupreme Court viz., SURANA STEELS P.LTD. VS. DEPUTYCOMMISSIONER OF INCOME-TAX, (1999) 237 ITR 777 and APOLLO TYRESLIMITED VS. COMMISSIONER OF INCOME TAX, (2002) 255 ITR 273. 5. In view of the reasoning stated in the above decisions,the tax case appeals deserve to be dismissed and the same aredismissed by answering the question of law in favour of theassessee and against the revenue. Usk Sd/Asst.Registrar /true copy/ Sub Asst.Registrar To 1.The Assistant Registrar,Income Tax Appellate Tribunal,Bench 'B', Rajaji Bhavan,3[rd] Floor, Besant Nagar, Madras. 2.The Income Tax Appellate Tribunal,Madras 'C' Bench, Chennai. 3.The Income Tax Appellate Tribunal,Madras 'A' Bench, Chennai. 4.The Commissioner of Income Tax (Appeals) V,121, Mahatma Gandhi Road, Madras 34. 5.The Commissioner of Income Tax (Appeals) III,121, Mahatma Gandhi Road, Madras 34. 6.The Asst Commissioner of Income Tax,Company Circle VI (4), Chennai 34 7.The Assistant Commissioner of Income Tax,Company Circle II (3) Chennai 34. 8.The Assistant Commissioner of Income Tax,Company Circle V (3) Chennai 34. 9.The Commissioner of Income Tax,Tamil Nadu III, Madras. 10.The Commissioner of Income Tax,Tamil Nadu I, Madras. + 6 ccs to M/s. Pushya Sitaraman SSC, CCSR No.13712, 13330,13705, 13329, 13326, 13711 + 2 ccs to Mr. R. Venkatnarayanan, Advocate CCSR Nos.13780,13783 SSN(CO)SR/21.4.2009 TC(A) Nos.480, 749 and 806 of 2008 https://hcservices.ecourts.gov.in/hcservices/