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DATE: August 22, 2019 (Date of pronouncement)
DATE: September 14, 2019 (Date of publication)
AY: 2012-13
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CITATION:
S. 10AA/ 115JB: Even income arising from the business of a SEZ Unit, which is exempt u/s 10AA, is subject to MAT from AY 2012-13 onwards owing to the insertion of the proviso to s. 115JB(6). The earlier judgements holding that the exemption provisions would prevail over s. 115JB are not good law after the insertion of the proviso to s. 115JB(6) (CBDT Circular No. 2/2012 dated 22.5.2012 referred)

It is thus seen that the Special Economic Zones Act, 2005 had initially inserted sub-section (6) in section 115JB of the Act to provide that the provisions of section 115JB shall not apply to income accrued or arising on or after 1-4-2005 from any business carried on, or services 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 said business. However, the Finance Act, 2011 brought-in a sunset clause and inserts a proviso to sub- section (6) to provide that, with effect from 1-4-2012, the provisions of sub- section shall cease to have effect. Accordingly, a SEZ developer or any entrepreneur carrying on business in an SEZ unit (being a company) would be liable to pay MAT on the profits arising from the development of SEZ or the business carried on in an SEZ unit with assessment year 2012-13 and onwards

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DATE: April 16, 2019 (Date of pronouncement)
DATE: April 30, 2019 (Date of publication)
AY: 2005-06
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CITATION:
S. 115JB (pre amendment by Finance Act, 2012) is not applicable to a banking company (also insurance & electricity cos) . The mechanism provided for computing book profit in terms of S. 115JB(2) is wholly unworkable for a banking company. When the machinery provision fails, the charging section also fails. The anomaly was removed by the Finance Act, 2012. However, the amendments are neither declaratory nor clarificatory but make substantive and significant legislative changes which are applicable prospectively (Kerala State Electricity Board 329 ITR 91 (Ker) followed)

These amendments in section 115JB are neither declaratory nor classificatory but make substantive and significant legislative changes which are admittedly applied prospectively. The memorandum explaining the provision of the Finance Bill, 2012 while explaining the amendments under Section 115JB of the Act notes that in case of certain companies such as insurance, banking and electricity companies, they are allowed to prepare the profit and loss account in accordance with the sections specified in their regulatory Acts. To align the Income Tax Act with the Companies Act, 1956 it was decided to amend Section 115JB to provide that the companies which are not required under Section 211 of the Companies Act, to prepare profit and loss account in accordance with Schedule VI of the Companies Act, profit and loss account prepared in accordance with the provisions of their regulatory Act shall be taken as basis for computing book profit under Section 115 JB of the Act.

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