Commissioner of Income Tax vs Spel Semiconductor Ltd.

K. Raviraja Pandian, J.—As the question of law involved in these tax cases is common, we have taken the first tax case appeal in T. C. (A) No. 480 of 2008 as a typical case to state the facts.

The assessee-company is engaged in manufacture and sale of integrated circuits. The assessee claimed deduction of Rs. 2,28,66,239 in respect of profits eligible for deduction u/s 80HHC of the Income Tax Act, 1961. Since the assessee''s claim u/s 80HHC is nil, no deduction u/s 80HHC survives. u/s 115JA as claimed u/s 80HHC will not change 115JA from what was under normal computation. Against that order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who allowed the alternative claim of the assessee. Against that order, the assessee preferred a cross-appeal before the Income Tax Appellate Tribunal and the Income Tax Appellate Tribunal held that the deduction u/s 80HHC of MAT assessment is to be worked out on the basis of the adjusted book profit and not on the basis of the profit computed under the regular provisions of law applicable to the computation of profits and gains of business or profession. The correctness of the same is now canvassed by formulating the question of law to the effect that "whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the deduction u/s 80HHC of the Act in a case of MAT assessment is to be worked out on the basis of the profit computed under the regular provision of law applicable to the computation of profits and gains of the business or profession."

We heard the argument of the learned Counsel on either side and perused the material on record.

Learned Counsel on either side submits that the issue involved in the present case is squarely covered by the Division Bench judgment of this Court in the case of Commissioner of Income Tax Vs. Rajanikant Schnelder and Associates P. Ltd., , to which one of us (K. Raviraja Pandian J.) was a party, wherein this Court has held that the Assessing Officer was not entitled to alter the profit and loss account prepared by the assessee under the provisions contained in the Companies Act while arriving at the book profit u/s 115JA and the book profit so arrived at should be the basis for taxation and, therefore, the computation u/s 80HHC should be limited to the case of profits of eligible category only. For coming to such a conclusion, this Court also relied on two decisions of the Supreme Court, viz., M/s. Surana Steels Pvt. Ltd. Vs. The Deputy Commissioner of Income Tax and Ors, and Apollo Tyres Ltd. Vs. Commissioner of Income Tax, Kochi, .

In view of the reasoning stated in the above decisions, the tax case appeals deserve to be dismissed and the same are dismissed by answering the question of law in favour of the assessee and against the Revenue.