Law:

Section:

Section 115JB, read with section 80HHC, of the Income-tax Act, 1961 - Minimum alternate tax - Whether in computation of book profit under section 115JB(2)(iv), assessees are entitled to deduction under section 80HHC but only by following method provided under sub-sections (3) and (3A) of section 80HHC - Held, yes - Whether in such computation restrictions contained in section 80AB or section 80B(5) cannot be applied inasmuch as carry forward of business loss or depreciation should not be first set off leaving gross total income as nil, which disentitles assessee to deduction under other provisions of Chapter VIA-C which include section 80HHC also - Held, yes FACTS After setting off huge amount of carried forward business loss and unabsorbed depreciation, the gross profit of the assessee became a negative figure. Therefore, the assessee was not entitled to deduction under section 80HHC by virtue of operation of section 80AB and section 80B(5). However, the Assessing Officer made assessment on book profit under section 115JB. In the computation of book profit, the Assessing Officer declined deduction under section 80HHC, though the assessee claimed it under section 115JB(2)(iv). When the matter was heard before the Division Bench of the High Court, the assessee relied on the decision of the Division Bench of the instant Court in CIT v. G.T.N. Textiles Ltd.[2001] 248 ITR 372 / 115 Taxman 55 , which was in its favour. However, the revenue contended that the Division Bench's said required reconsideration in view of subsequent decisions of the Supreme Court. In view of the contentions raised by the revenue, the matter was referred to the Full Bench. Before the Full Bench, both sides relied upon the latest decision of the Supreme Court on section 115JB in Ajanta Pharma Ltd. v. CIT [2010] 327 ITR 305 / 194 Taxman 358 , wherein the issue decided was the assessee's eligibility for deduction under section 80HHC in the computation of book profit under section 115JB. While the case of the assessee was that the issue was squarely covered by that of the Supreme Court in its favour, the revenue contended that the Supreme Court had only said that ceiling of deduction provided…

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