THE issues before the Bench are - Whether a company is immuned from the MAT liability, once it is eligible for tax benefits u/s 80-IB; Whether the principle of promissory estoppel can be invoked, once tax concession granted under a specific Section of the Income Tax Act, is taken away by any other Section under the Act and Whether Section 80-IB can have any effect or control over the provisions of Section 115JB, although the latter is a specific charging section introduced later in the Act. And the verdict goes against the assessee.
Facts of the case
The assessee is a company registered under the provisions of Companies Act, 1956 and had set up a newly established industrial unit in Silvassa, a notified backward area. The assessee had been claiming deduction u/s 80-IB. Section 11JB, Minimum Alternate Tax provision was
introduced in the Income Tax Act retrospectively w.e.f April 1, 2001. While for one of the AY the section was made applicable for the assessee, for the subsequent two AYs, the assessee filed returns being fully aware of the provisions of this Section. The assessee had opposed the levy on various grounds and mainly contending that its entire income attributable to this activity was allowed as exempted income and therefore, the taxable income of the assessee was not as determined by applying the provisions of Section 115JB of the Act.
The assessee filed appeals before the CIT(A) and thereafter before the Tribunal. Still aggrieved, and without getting any success, finally filed this appeal before the High Court.
The Counsel for the assessee Sri A Shankar, contended that the presence of a non-obstante clause, both in Section 80-IB, as incorporated with reference to Section 80-IA, and Section 115-JB of the Act, the non-obstante clause as incorporated in Section 80-IB should, prevail, as it is in consonance with the intention of the legislature in granting exemption in respect of the income earned by the assessee from out of the establishment of industrial unit in a backward state. Then he relied upon Section 115JA, the predecessor to Section 115JB and referred to the budget speech of the Finance Minister while introducing the amendment and Board Circular issued thereafter. He submitted that provisions of Section 115JA was introduced with a specific purpose to curb the practice of only 'certain companies', which are declaring dividends but not paying tax, and the same analogy was applicable to even Section 115JB. So he submitted that since, the assessee company did not fall in this category of these companies and, therefore, Section 115JB was not attracted.
Then the Counsel relied on the principal of promissory estoppel and submitted that when once the state grants a statutory exemption, it has been well settled that such statutory exemptions granted should be honoured and cannot be taken away by subsequent alterations or denial of the exemptions.The Counsel also brought up the principle of legitimate expectation and submitted that when once the assessee company had set up its unit in a backward area, where the income, is exempted for a specified period, till the expiry of the said period, the assessee company had legitimate expectation to enjoy the benefit of exemption and even a legitimate expectation being in the nature of an assurance in law if it flows out of the statutory provisions, that cannot be denied to, the assessee company.
The counsel also submitted that since the provision itself was brought on the statute book with effect from 11-5-2002, though giving retrospective effect from 1-4-2001, the assessee being not aware of its liability for computing advance tax would not attract any levy of interest u/s 234B.
On the other hand, the DR submitted that non-obstante clause is for the limited purpose of ascertaining the amount qualified for deduction u/s 80-IB of the Act and therefore it cannot be juxtaposed with Section 115JB of the Act. Then he argued that the provisions of the Section 115JB and the explanation indicate that while computing the profits in respect of all types of companies, the manner in which it is to be ascertained for the purpose of Section 115JB having been indicated, it is attracted to both dividend paying and non-dividend paying companies. With regard to the principle of promissory estoppel, the DR submitted that the assessee having paid the tax as per the amended Section 115JB by filing return later, showed that the assessee became aware of the same and there was no promissory estoppel operating. Finally, with regard to the budget speech of the finance minister, the DR pointed out that the very speech of the minister refers to the drying up of sources to the revenue in view of the concessions given to many assessees and that while they may get good profits, no tax being paid and therefore the provisions of Section 115JB was introduced into the statute.
Having heard the parties, the High Court held that,
++ section 80-IB operates in a particular sphere and Section 115JB is operative in a totally different sphere. It is not the case of the appellant-assessee that Section 80-IB is not operated or given effect to. Grievance of the assessee is that because of the operation of Section 115JB, the benefit of Section 80-IB is taken away. Section 115JB occurring in a taxing statute is in the nature of a charging section and that too a special charging section, exemption or concession or any other benefit sought should come from within the provisions of Section 115JB itself, which occurs in Chapter XII-B of the Act. Section 80-IB is a provision which occurs in Chapter VI-A of the Act and a chapter which contains certain incentives and concessions given to an assessee on fulfilling the requirement specified in each section mentioned therein;
++ section 80-IB in the first instance is not an exemption provision and it is only a provision providing certain concessions or benefit to an assessee and it does factor while computing the total taxable income of the assessee, as charged under Section 4 of the Act. While this is not in any way denied to an assessee, Section 115JB is a special charging section for regulating tax liability of companies in general and made applicable in particular and is confined to the assessee companies whose tax liability, when computed in the normal manner falls short of the liability as computed under this provision. Therefore, we are of the view that there is absolutely no question of Section 80-IB having any bearing or effect or control over the provisions of Section 115JB of the Act. It is to be noticed that Section 80-IB concession is in respect of those assessees who qualify for that and Section 115JB levy is confined to companies and such companies which are roped in within the scope of this section. It is because of this position, we are of the view that there is no occasion for the interpretation or examination of the principles of promissory estoppel or doctrine of legitimate expectation. The benefit under Section 80-IB is not denied, it works as it is. It is only because the assessee happens to be a company to which the provisions of Section 115JB is also attracted, levy as indicated therein becomes operative. Therefore, we do not find the applicability of the decisions relied upon by the learned counsel for the appellant-assessee on this aspect of the matter, in the present situation;
++ in so far as the reliance placed on the judgment of this court in the case of M/s United Breweries Ltd is concerned, while that was with reference to the provisions of Section 115JA and we are now examining the liability under Section 115JB of the Act. The scheme of charging under Section 115JB being totally different and not with reference to general rate, but with reference to a specified rate as indicated in Section 115JB itself i.e. 7 1/2% of deemed income for the purpose of Section 115JB, we are afraid the judgment will not advance the case of the assessee in the present situation;
++ a budgetary speech while will have some significance for understanding a provision if there is any ambiguity, in the wake of clear language of the Section 115JB, in the first instance there is no ambiguity, in the second instance, the ambiguity sought to be introduced on certain premise which is not apparent and is only on a limited reading of the budget speech, at any rate a budget speech in itself cannot regulate or control the statutory provision, more so a charging section in a revenue yielding statute, we are of the clear opinion that the provisions of Section 115JB should be given full effect to without being influenced or guided or regulated by the budget speech of the finance minister. The board circular being in the context of the earlier provisions, but, nevertheless more by way of extraction of the budget speech, that by itself cannot have any special significance, as the board circular does not in any way seeks to clarify the levy and rate of levy as provided in Section 115JB of the Act. Levy and rate of tax alone is what matters for the purpose of Section 115JB of the Act;
++ arguments are advanced by counsel for appellant-assessee based on principle of interpretation that Section 115JB should be so interpreted or understood as to ensure that the benefit given to the appellant-assessee under Section 80-IB of the Act is not taken away and the interpretation suggested by counsel fails for more than one reason even on applying the principle of interpretation. Though there is no need for interpreting the provision and examination can only be in the context of understanding the scope of Section 115JB of the Act, nevertheless, if it is sought to be interpreted as contended by Sri Shankar in the backdrop of Section 80-IB of the Act, the principle of harmonious construction of a statute will have to be kept in mind. It is a well settled principle that no provision of an enactment should be so interpreted or understood as to render otiose or ineffective any other provision of the same enactment. Therefore, Section 80-IB cannot be interpreted so as to render the provision of Section 115JB of the Act nugatory or otiose or ineffective or does not achieve the purpose for which it is enacted;
++ section 115JB, in fact, in no way either denies the benefit given under Section 80-IB or reduces the same. While the appellant-assessee can claim the benefit under Section 80-IB of the Act and it is not denied per se to the appellant-assessee, in the given case, the provisions of Section 115JB may be attracted or may not be attracted depending upon the nature or legal composition of the assessee;
++ in fact, the minimum alternate tax is sought to be levied earlier under Section 115JA and now under Section 115JB of the Act, only in respect of such companies which, by availing various concessions given in Chapter VI-A of the Act, are able to show either a nil taxable income or much reduced taxable income. Concession given under Section 80-IB is also one such and therefore no exception can be taken. Only in respect of the availability of a concession under Section 80-IB and to make it immune from the applicability of the provisions of Section 115JB of the Act. Both provisions operate in their own respective spheres and have to be given effect;
++ secondly and more importantly, no provision of a statute can be so interpreted as to render it unconstitutional. If the argument of Sri Shankar, counsel for the appellant, is to be accepted, then it will result in a discrimination against such assessee-companies who have to pay tax under Section 115JB of the Act, but have no concession available under Section 80-IB, whereas the tax liability of the person under Section 115JB of the Act, who can claim concession under Section 80-IB of the Act gets reduced for the purpose of Section 115JB of the Act. It is, therefore, to avoid Section 115JB being rendered discriminatory and unconstitutional being violative of Article 14 of the Constitution of India, the contention of Sri Shankar for reading down or reading up the provisions of Section 115JB of the Act, particularly by adding to different situations mentioned in the explanation, to be expanded by including reference to Section 80-IB of the Act cannot be accepted. A statutory provision cannot be so read down to render it unconstitutional, but reading down a statutory provision is to make it constitutional and not otherwise. Therefore, the arguments fail;
++ however, in so far as the levy of interest under Sections 234B and 234C, liability for the assessment year 2002-03 is concerned, in the light of the decision of this court in the case of M/s Jupiter Bioscience Ltd and the view which is supportive of taken by the Calcutta High Court in the case of EMAMI LTD and more importantly the impracticability existing on the advance tax in respect of this year alone is concerned, the question relating to levy of interest under Sections 234B and C is concerned, it is answered in favour of the appellant assessee for the assessment year 2002-03. The other questions relating to levy of tax under Section 115JB, they are answered against the assessee and in favour of the revenue and to this extent, the order of the tribunal is affirmed.
No comments:
Post a Comment