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Case Law Details

Case Name : Genesys International Corpn. Ltd Vs. ACIT (ITAT Mumbai)
Appeal Number : ITA No.6903/Mum/2011
Date of Judgement/Order : 31/10/2012
Related Assessment Year : 2008-09
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An existing SEZ unit will  be governed by Special Economic 2ones Act, 2005. Therefore, we are of the considered view that the benefits which are to be provided to the newly established unit in SEZ as per section 10AA of the Act will also be available to the existing units in SEZ. Moreover, section 4(1) of SEZ Act provides that an existing SEZ unit shall be deemed to have been notified and established in accordance with provisions of SEZ Act and the provisions of Special Economic 2ones Act shall apply to such existing SEZ units. It is also observed that by the SEZ Act, sub-section (6) to section 115JB was also inserted providing that provisions of section 115JB shall not apply to the income accrued or arisen on or after 1.4.2005 from any business carried on, or services rendered, by an entrepreneur or a Developer, in a Unit or Special Economic 2one, as the case may be. Hence, income of units located SEZ will not be included while computing book profit for the purpose of MAT as per section 115JB(6) of the Act. In view of above, we are of the considered view that there is merit in the contention of ld A.R. that irrespective of the fact that amendment has been made in clause (f) of Explanation (1) to section 115JB(2) of the Act to apply the provisions of MAT in respect of units which are entitled to deduction u/s. 10A or 10B but the units which are in SEZ will continue to get benefits from the applicability of provisions of MAT in view of sub-section(6) of the Act. The contention of ld D.R. that assessee will not be entitled to get the benefit u/s.115JB(6) of the Act as assessee has claimed deduction u/s. 10A of the Act is to be rejected for the reason that section 115JB (6) does not refer section 10A or section 10AA but it only refer that provisions of section 115JB will not apply to the income accrued or arisen on or after 1.4.2005 from any business carried on in an unit located in SEZ. Hence, we are of the considered view that the unit in SEZ will be covered by sub-section(6) to section 115JB of the Act irrespective of the fact that those units were claiming deduction u/s.10A of the Act. We also observe that benefit given to SEZ unit from the applicability of provisions of section 115JB has been withdrawn by the Finance Act, 2011 by inserting a proviso to section 115JB(6) of the Act, which reads as under:

“Section 15JB(6)

Provided that the provisions of this sub-section shall cease to have effect in respect of an previous year relevant to the assessment year commencing on or after the 1st day of April, 2012.”

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Authorities were not justified to include the book profit in respect of SEZ unit at Mumbai of the assessee while computing book profit u/s. 1 15JB of the Act for assessment year 2008-09. Therefore, we reverse the orders of authorities below by holding that income relating to SEZ unit at Mumbai is to be excluded while computing book profit u/s.115JB of the Act for assessment year 2008-09. Hence, Ground No.4 of appeal taken by the assessee for assessment year 2008-09 is allowed.

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0 Comments

  1. asit jena says:

    As per the provisions of subsection 6 of section 115JB, the benefits given to an unit of SEZ has been withdrawn by Finance Act 2011 by inserting a proviso to the section 115JB(6).
    then on or after 01-04-2012 the units of SEZ are not eligible to get the benefit of exclusion of profit from SEZ operation from calculation of book profit though entitled to get benefit from section 10AA. that means on or after 01-04-2012 SEZ profits are subject to MAT application.
    Indirectly the SEZ unit is not getting tax exemption benefit as each and every year the unit will have to pay tax as per MAT provisions. then what is the benefit of putting a unit in SEZ if not entitled to get tax exemptions. is this the intention of legislature ? pls suggest.

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