DEEPAK R. SHAH, A.M. ORDER This appeal by assessee is directed against order of learned CIT(A)-VIII, New Delhi, dt. 25th April, 2006. In ground Nos. 1 and 2, assessee challenges validity of assumption of jurisdiction for framing reassessment under s. 147 of IT Act (the Act). In ground Nos. 3 to 3.5, assessee challenges manner of computing book profit under s. 115JB whereby action of AO in computing profit of unit eligible for exemption under s. 10A is challenged. appellant, company incorporated under Companies Act, 1956, is engaged in business of manufacture and sale of optical/magnetic storage media products, viz., CDs and floppies. appellant is eligible for deduction under s. 10A/10B of Income-tax Act ( Act ) for its 100 per cent EOU units. For relevant previous year return of appellant was filed on declaring loss of Rs. 8,73,72,570 under normal provisions of Act and at book profit of Rs. 5,10,41,286 under s. 115JB of Act. return of income was assessed under s. 143(3) of Act at returned loss under normal provisions of Act and at book profit of Rs. 5,41,97,900 under s. 115JB of Act. Thereafter, notice under s. 148 of Act dt. 18th July, 2005 was issued seeking to reopen assessment. Pursuant to request made by appellant, AO vide letter dt. 23rd Aug., 2005, communicated reasons recorded for reopening assessment as under : "(1) assessee filed its return of income on 30th Oct., 2002 declaring loss of Rs. 8,73,72,570. assessment in this case was completed under s. 143(3) on 20th Feb., 2004 at total loss of Rs. 8,60,18,990 and assessed at book profit of Rs. 5,41,97,900 under s. 115JB. (2) Sec. 115JB of IT Act, 1961, provides that where in case of assessee being company, income-tax payable on total income as computed under this Act in respect of any previous year relevant to assessment year commencing on or after 1st day of April, 2001, is less than seven and one-half percent of its book profit, such book profit shall be deemed to be total income of assessee and tax payable by assessee on such total income shall be amount of income-tax @ seven and one-half per cent. For this purpose, book profit means net profit as per P&L a/c subject to certain additions/deletions. According to proviso (ii) of Explanation given under sub-s. (2) of s. 115JB, amount of income to which any of provisions of s. 10 or s. 10A or s. 10B or s. 11 or s. 12 apply, if any such amount is credited to P&L a/c (same) is to be reduced from net profit. 3. It is noted from assessment records that assessee has computed exemption of Rs. 9,825.14 lacs under s. 10A and nil exemption under s. 10B. Therefore, while computing book profit under s. 115JB, deduction under ss. 10A and 10B should have been restricted to Rs. 9,825.14 lacs as against Rs. 13,343.61 lacs actually allowed to assessee. 4. It is noted from assessee s computation of book profit under s. 115JB that assessee had itself taken amount of deduction pertaining to s. 10B which had to be added back to net profit as per P&L a/c at Rs. 13,343.61 lacs instead of Rs. 9,825.14 lacs which was claimed exemption being income pertaining to s.10A unit. 5. Wrong presentation of facts regarding income pertaining to s. 10A u n i t while computing book profit under s. 115JB has resulted in underassessment of book profit of assessee by Rs. 3518.47 lacs. 6. It is noted from assessment records that assessee in its P&L a/c at Sch. 15 has shown other income of Rs. 15,82,92,709. details of this income are as under : Amount in Details of Income Rs. Interest on deposits with banks 14,36,77,259 Interest on others 3,48, 17 6 Excess provisions and unclaimed credit balance 9,89,596 9,89,596 written back Difference in exchange rates 64,18,465 Profits on sale on forward contracts 17 ,22,535 Misc. Income 21,70,5 17 Dividend on Investments 26,66,161 Total 15,82,92,709 7. above income has not been derived from industrial undertaking. At most, they can be attributable to blueness of assessee barring interest income which is clearly income from other sources. 8. It has been judicially held by Supreme Court in cases of CIT vs. Sterling Foods (1999) 153 CTR (SC) 439 : (1999) 237 ITR 579 (SC), Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC), CIT vs. Pandian Chemicals Ltd. (1998) 147 CTR (??) 5 : (1998) 233 ITR 497 (Mad) and by Madras High Court in case of CIT vs. Sundaram Industries Ltd. (2002) 253 ITR 396 (Mad) and in case of CIT vs. Menon Impex (P) Ltd. (2003) 180 CTR (Mad) 40 : (2003) 259 ITR 403 (Mad) and by Kerala High Court in case of CIT vs. Cochin Refineries Ltd. (1982) 27 CTR (Ker) 147 : (1982) 135 ITR 278 (Ker) that use of term derived from in relevant provisions of Act indicates restricted meaning to cover only profits and gains directly accruing from conduct of business undertaking. 9. From reading of s. 10A coupled with above case law, it is evident that other income of Rs. 15,82,92,709 has not been derived from industrial undertaking and hence is not eligible to be considered for exemption under s. 10A. 10. But, it is seen from assessee s computation of deduction under s. 10A that, assessee has only deducted Rs. 14,09,71,819 of interest out of other income of Rs. 15,82,92,709 from business profits for computation of deductions under s. 10A. 11. Thus, in this process, asseseee has claimed excess deduction under s. 10A amounting to Rs. 51,96,267 (30 per cent of difference of Rs. 15,82,92,709 and Rs. 14,09,71,819). 12. Hence, because of wrong facts stated by assessee as to nature of income or miscellaneous income in computing deduction under s. 10A, there was under assessment Rs. 51,96,267 in form of excess deduction under s. 10A. 13. Therefore, I have reason to be believe that on account on part of t h e assessee to disclose truly and fully all material facts necessary for its assessment, for that year, income chargeable to tax amounting to Rs. 3,518.47 lacs under s. 115JB and Rs. 51.96 lacs under s. 10A has escaped assessment within meaning of s. 147 of IT Act, 1961, because of wrong commutation of deduction under s. 10A and wrong computation of book profit under s. 115JB." In preliminary objections to reopening of assessment vide letter dt. 10th Sept., 2005, it was submitted that reopening of assessment was based on reappraisal of same facts which were available at time of assessment completed under s. 143(3) of Act, and reassessment proceedings initiated merely on basis of change of opinion were bad in law. It was submitted on basis of aforesaid that reassessment proceedings initiated were beyond jurisdiction and called for being dropped. AO however, disposed of appellant s preliminary objections to reassessment vide order dt. 21st Sept., 2005 and proceeded to frame reassessment under s. 147 of Act. AO while completing reassessment under s. 147 of Act computed book profit under s. 115JB of Act at Rs. 40,34,22,680 as against Rs. 5,41,97,900, computed in assessment completed under s. 143(3) of Act by restricting deduction under s. 10B of Act at Rs. 9,825.14 lacs as against Rs. 13,343.61 lacs actually allowed in original assessment. 2. In assessment framed under s. 147 AO rejected contention of assessee that reassessment is merely on change of opinion. In assessment order AO held that in computing book profit under s. 115JB amount to be reduced is income which is eligible for exemption under ss. 10A and 10B as computed under provision of IT Act, and not on basis of book profit. same was upheld by learned CIT(A) and, hence, this appeal. 3. Learned counsel submitted that reassessment is not valid in eye of law. reassessment is initiated merely on change of opinion and reappraisal of information and documents available at time of original assessment. No fresh facts came to knowledge of AO after original assessment was framed under s. 143(3). assessee filed complete details as to how book profit is calculated. computation of book profit was duly supported by report of auditor as required to be obtained under s. 115JB of Act. As per computation, net profit as per P&L a/c was Rs. 138.56 crores. In such book profit amount of profit eligible for exemption under s. 10A was Rs. 133.43 crores. As per regular computation of income, assessee declared loss of Rs. 8.73 crores. This fact was considered while framing original assessment. On perusal of reasons recorded it can be seen that no fresh facts have come to knowledge of AO. Whether deduction permissible under s. 10B should be on basis of income forming part of book profit or as available under regular provision was very much available while framing original assessment. In original assessment AO has consciously adopted figure of deduction at sum of Rs. 133.43 crores while computing book profit. In reassessment, AO has relied upon decision of Hon ble Gujarat High Court in case of Praful Chunilal Patel vs. Asstt. CIT and that in Gruh Finance Ltd. vs. Jt. CIT (2000) 161 CTR (Guj) 100 : (2002) 123 Taxman 196 (Guj). Both these decisions have not been approved by jurisdictional Delhi High Court in case of CIT vs. Kelvinator of India Ltd. (2002) 17 4 CTR (Del)(FB) 6 17 : (2002) 256 ITR 1 (Del)(FB). decision rendered by Full Bench of Delhi High Court in case of Kelvinator of India Ltd. (supra) is reaffirmed in following cases : (i) CIT vs. Eicher (ITA No. 309/2006, dt. 22nd May, 2007); (ii) K.L.M. Royal Dutch Airlines vs. Asstt. Director of IT (2007) 208 CTR (Del) 33; He accordingly pleaded that there is no valid assumption of jurisdiction for framing reassessment under s. 147. 4 . As regards merits of addition, Shri Vohra submitted that s. 115JB is special provision for computation of book profit as chargeable to tax. While computing book profit under s. 115JB profit is to be computed as per Parts II and III of Sch. VI to Companies Act, 1956. In such accounts method and rates adopted for calculating depreciation shall be same as have been adopted for purpose of preparing such accounts as laid before company at its annual general meeting. In books of account assessee has provided depreciation as per Straight Line Method (SLM). While computing income under IT Act depreciation is allowable as per Written Down Value Method (WDV). However, when book profit is to be computed only that depreciation which was charged to P&L a/c is to be adopted. Even s. 147 of Act authorizes and permits AO to assess or reassess income chargeable to tax if he has reason to believe that said income for any assessment year has escaped assessment. It is settled law that reason to believe can never be outcome of change of opinion. Thus, where reasons recorded by AO disclose no more than mere change of opinion, reassessment proceedings are invalid and void ab initio and are liable to be quashed. In following decisions, it has been unanimously held that initiation of reassessment proceedings, even under provisions of s. 147 of Act, as amended w.e.f. 1st April, 1989, which were applicable to assessment order under consideration, is not sustainable on mere change of opinion : (i) Kaira District Co-operative Milk Producers Union Ltd. vs. Asstt. CIT (1996) 134 CTR (Guj) 228 : (1996) 220 ITR 194 (Guj); (ii) Jindal Photo Films Ltd. vs. Dy. CIT (1999) 154 CTR (Del) 355 : (1998) 234 ITR 17(Del); (iii) Berger Paints India Ltd. vs. Jt. CIT (2000) 164 CTR 587 : (2000) 245 ITR 645 (Cal); (iv) CIT vs. Kelvinator of India Ltd. (supra); (v) Foramer vs. CIT (2001) 166 CTR (All) 129 : (2001) 247 ITR 436 (All) {affirmed by SC in CIT vs. Foramer France (2003) 185 CTR (SC) 512 : (2003) 264 ITR 566 (SC)}; (vi) CIT vs. Smt. Binda Devi (2005) 197 CTR (P&H) 447; (vii) German Remedies Ltd. vs. Dy. CIT (2006) 201 CTR 193 (Bom); (viii) KLM Royal Dutch Airlines (supra); (ix) Delhi High Court in Eicher Ltd. (supra). appellant in return of income while computing book profit under s. 115JB of Act in terms of sub-cl. (ii) of Explanation to that section reduced net profit as shown in P&L a/c by sum of Rs. 13,343.61 lacs, being income net of expenses in relation to units to which provisions of s. 10A/10B of Act applied. computation of book profit under s. 115JB of Act, as aforesaid, was also supported by certificate issued by chartered accountant enclosed with return of income. appellant made full and complete disclosure of all material facts relevant for assessment along with original return of income. assessment was completed under s. 143(3) of Act, after considering facts on record and after due application of mind by AO. AO applied his mind to return of income and accompanying documents while assessing appellant at book profits at Rs. 5,41,97,900, after adjustments to returned book profits, in order passed under s. 143(3) of Act. reopening of concluded assessment was on reappraisal of same material forming part of record. aforesaid fact is evident from reasons for reopening assessment which clearly records that, "It is noted from that assessee s computation of book profit under s. 115JB that assessee had itself taken amount of deduction pertaining to s. 10B which had to be added back to net profit as per P&L a/c at Rs. 13,343.61 lacs instead of Rs. 9,825.14 lacs which was claimed exemption being income pertaining to s. 10A unit". AO in impugned reassessment has only varied conscious stand originally taken while concluding original assessment under s. 143(3) of Act after due application of mind, without any fresh material/information coming to his possession. In such circumstances, reopening is based on mere change of opinion and cannot be sustained as held in judgments referred to earlier including decisions from jurisdictional High Court. At this juncture it is apt to quote from judgment of Full Bench of Delhi High Court in case of Kelvinator of India Ltd. (supra) : "The scope and effect of s. 147 as substituted w.e.f. 1st April, 1989, by Direct Tax Laws (Amendment) Act, 1987, and subsequently amended by Direct Tax Laws (Amendment) Act, 1989 w.e.f. 1st April, 1989, as also of ss. 148 to 152 have been elaborated in Circular No. 549, dt. 31st Oct., 1989 [(1990)82 CTR (St) 1]. perusal of cl. 7.2 of said circular makes it clear that amendments had been carried out only with view to allay fears that omission of expression reason to believe from s. 147 would give arbitrary powers to AO to reopen past assessments on mere change of opinion. It is, therefore, evident that even according to CBDT, mere change of opinion cannot form basis for reopening completed assessment. statute conferring arbitrary power may be held to be ultra vires Art. 14 of Constitution of India. If two interpretations are possible, interpretation which upholds constitutionality should be favoured. In event it is held that by reason of s. 147 ITO may exercise his jurisdiction for initiating proceeding for reassessment only upon mere change of opinion, same may be held to be unconstitutional. order of assessment can be passed either in terms of sub-s. (1) of s. 143 or sub-s. (3) of s. 143. When regular order of assessment is passed in terms of sub-s. (3) of s. 143, presumption can be raised that such order has been passed on application of mind. It is well known that presumption can also be raised to effect that in terms of cl. (e) of s. 114 of Indian Evidence Act, 1872, judicial and official acts have been regularly performed. If it be held that order which has been passed purportedly without application of mind would itself confer jurisdiction upon AO to reopen proceeding without anything further, same would amount to giving premium to authority exercising quasi-judicial function to take benefit of its own wrong. Hence, it is clear that s. 147 of Act does not postulate conferment of power upon AO to initiate reassessment proceedings upon mere change of opinion." Hon ble Delhi High Court did not concur with view adopted by Hon ble Gujarat High Court in case of Praful Chunilal Patel (supra) Hon ble Delhi High Court in case of KLM Royal Dutch Airlines (supra) did not approve its own judgment in case of Consolidated Photo and Finvest Ltd. vs. Asstt. CIT (2006) 200 CTR (Del) 433 : (2006) 281 ITR 394 (Del) and held same as not laying down correct law. We accordingly find merit in submission of learned counsel for assessee that impugned reassessment was without any fresh material/information in possession of AO and only on mere change of opinion. Thus, there is no valid assumption of jurisdiction under s. 147 and, hence, reassessment framed under s. 147 has to be cancelled. We hold so. 7 . As regards merits of computation of book profit under s. 115JB, it would be relevant to consider relevant provision of s. 115JB. For purpose of computing book profit under s. 115JB, profit is to be first arrived at as computed under Parts II and III of Sch. VI, Companies Act, 1956. In so computing accounting policies accounting standards adopted for preparing such accounts and method and rates adopted for calculating depreciation shall be same as have been adopted for purpose of preparing such accounts and rate before company at its annual general meeting. profit is so computed which is not in dispute. Explanation to s. 115JB(2) provides as under : For purposes of this section, "book profit" means net profit as shown in P&L a/c for relevant previous year prepared under sub-s. (2) as increased by (a) ............ (b) ............ (c) ............ (d) ............ (d) ............ (e)............ (f) amount or amounts of expenditure relatable to any income to which s. 10 or s. 10A or s. 10B or s. 11 or s. 12 apply. If any amount referred to in cls. (a) to (f) is debited to P&L a/c, and as reduced by (i) ............ (ii) amount of income to which any of provisions of s. 10 or s. 10A or s. 10B or s. 11 or s. 12 apply, if any such amount is credited to P&L a/c; or (iii) ............ (iv) ............ (v) ............ (vi) ............ (vii) ............ (viii) ............ Under scheme of provisions of s. 115JB of Act, Minimum Alternate Tax (MAT) is levied with reference to book profit disclosed in P&L a/c prepared in accordance with provisions of Parts II and III of Sch. VI to Companies Act, as opposed to profits or gains of business or profession as computed as per provisions of Act. book profit gets substituted for total income as computed under Act. book profit has therefore, to be wholly quarantined from said total income. For determination of book profits thus any mode and manner of computation of total income under Act has not to be applied unless specifically provided, as held by apex Court in Apollo Tyres Ltd. vs. CIT (2002) 17 4 CTR (SC) 521 : (2002) 255 ITR 273 (SC) and as clarified in memorandum explaining Provisions of Finance Bill, 2000 [242 ITR (St.) 1 17 , 138]. In other words, for purpose of levy of MAT, reference is to be made only to annual accounts as prepared for purpose of Companies Act, as would be clearly borne out from scheme of s. 115JB of Act inasmuch as : (i) MAT is levied with reference to book profit, which is deemed to be total income of assessee [sub-s. (1) of s. 115JB]. (ii) For purpose of s. 115JB P&L a/c is to be prepared as per Parts II and III of Sch. VI to Companies Act [sub-s. (2) of s. 115JB)]. (iii) While preparing annual accounts, (i) accounting policies, (ii) accounting standards and even (iii) methods and rules adopted for calculating depreciation ought to be same as adopted for purpose of preparing such accounts as laid before company at its annual general meeting. [Proviso to s. 115JB(2)] Explanation to s. 115JB of Act provides manner of computation of book profit. starting point is book profit as disclosed in P&L a/c prepared in accordance with Parts II and III of Sch. VI to Companies Act, 1956. Such profit is subject to adjustments specified in Explanation to said section. In terms of Expln. (ii) to s. 115JB amount of income to which provisions, inter alia, of s. 10A/10B apply if such amount is credited to P&L a/c is to be reduced from profit as per P&L a/c. Similarly Expln. (f) to s. 115JB of Act provides that profit as shown in P&L a/c be increased by amount of expenditure relatable to any income to which, inter alia, s. 10A or 10B applies. amount of income to which inter alia, s. 10A/10B of Act applies, if such amount is credited to P&L a/c would only refer to such amount as appearing in books of account. Similarly, amount of expenditure, including depreciation relatable to any income to which s. 10A/10B applies would certainly refer to expenses and depreciation debited to P&L a/c and not computed in manner provided under ss. 28 to 44 of Act. appellant, accordingly, while computing book profit under s. 115JB, on which tax was paid, deeming same to be total income chargeable to tax in hands of appellant, adjusted profit as shown in P&L a/c to following extent : (i) Expenditure and book depreciation in relation to CDR A-164 unit and Floppy III unit were added back to profit. (ii) income of aforesaid two units minus other income, interest dividend, etc., was reduced from profit. AO, on other hand, reduced book profit by deduction admissible under s. 10A/10B of Act in respect of aforesaid units, calculated in accordance with provisions of Act. major difference in basis adopted by appellant and AO is on account of adjustment of depreciation. In books of account, depreciation has been calculated on Straight Line Method (SLM) and book profit has been computed taking into account aforesaid basis of book depreciation in terms of clear and unambiguous mandate contained in cl. (iii) of proviso to sub-s. (2) of s. 115JB providing that methods and rates adopted for calculating depreciation would be same as have been adopted for preparing accounts that are laid before annual general meeting convened as per provisions of s. 210 of Companies Act. AO, on other hand, has sought to exclude depreciation calculated o n basis of WDV as provided in s. 32 of Act while adding back book depreciation. As consequence of aforesaid, exclusion of income net of expenses relatable to units eligible for deduction under s. 10A/10B of Act has been taken by AO at Rs. 9,825.14 lacs as against Rs. 13,343.61 lacs excluded by appellant. action of AO is contrary to scheme of s. 115JB of Act, unambiguous provisions of cl. (f) and (ii) of Explanation thereto and settled judicial precedent in this regard. CBDT vide Circular No. 559, dt. 4th May, 1990 [(1990) 85 CTR (St) 1 : (1990) 184 ITR (St) 91],and also Circular No. 680, dt. 21st Feb., 1994 [(1994) 1 17 CTR (St) 215 : (1994) 206 ITR (St) 297], clarified that for purpose of s. 115J (which is pari material to s. 115JB of Act) deduction under s. 80HHC of Act that needs to be excluded (from book profits) in terms of cl. (iii) of Explanation is to be calculated with reference to book profits. In CIT vs. G.T.N. Textile Ltd. (2000) 164 CTR (Ker) 185 : (2001) 248 ITR 372 (Ker), Hon ble Kerala High Court, while considering cl. (iii) of Explanation to s. 115J of Act, held that deduction under s. 80HHC of Act excluded for purpose of said section had to be computed as per books of account and not calculated under provisions of Act. Special Bench of Tribunal in case of Syncome Formulations (I) Ltd. (supra), considering provisions of ss. 115JA and 115JB held that AO is not permitted to deviate from book profit while computing deduction under s. 80HHC of Act that is to be excluded in terms thereof relevant findings of Special Bench are extracted as under : "53..........The circular clarified that quantum of computation is to be worked out on basis of adjusted book profit. Revenue has also accepted above position for purpose of s. 115J. Now, question is whether subsequent changes brought in words and expressions in s. 115JA and 115JB have brought any deviation from position existed under s. 115J................. 56............Therefore, it is clear from successive changes brought in statute that relief with reference to book profit tax erstwhile given under s. 115J has been extended in more clearly spoken words in subsequent ss. 115JA and 115JB. In s. 115JA, it has been clearly stated that relief will be computed under s. 80HHC(3),(3A), subject to conditions under sub-cls. (4) and (4A) of that section. conditions are only that relief should be certified by chartered accountant. As for manner of calculation, it is very necessary to see that reference is made only to sub-ss. (3) and (3A), where there is Expln. (b) to sub-s. (3) referring to adjusted profit of business, which is required for purposes of ascertaining proportionate profits in respect of manufactured goods to be understood by definition of adjusted profits of business..................... 60. concept of book profit is product of MAT, introduced in s. 115J, similar to concept of Alternate Minimum Tax under United State Federal laws. intention was to tax zero tax companies on basis of book profit so that those companies which declare dividend out of their book profit and which do not pay taxes on basis of reliefs claimed by them, begin to pay some amount of tax to Government. This is on principle of ability to pay tax which is based on principle of equity. When it was initially introduced in s. 115J, it was steel-frame that tax shall be payable on book profit subject to certain adjustments of additions and deductions. No further deductions were available from said adjusted book profit. It was ultimate amount on which company has to pay taxes. But, later on, legislature itself thought it fit to protect concessions given to exporters, etc., so that exporters are not compelled to pay tax under MAT. Therefore, even steel-frame of s. 115J was mended by legislature by providing exemption to export profits. legislature itself has thus declared that adjusted book profit worked out under MAT scheme need not be ultimate amount on which assessee has to pay tax but deductions are still available in respect of export incentives, etc. 61. Once law itself has declared that adjusted book profit is amendable for further deductions on specified grounds, in case where s. 80HHC is operational, it becomes very clear that computation for deduction under s. 80HHC needs to be worked out on basis of very same adjusted book profit. above proposition is manifest in fact that deduction under s. 80HHC has been provided in ss. 115J, 115JA and 115JB themselves, instead of making reference under s. 80 to Hon ble High Court itself. It is made so because nexus between deduction under s. 80HHC and profit in MAT regime is between deduction and adjusted book profit. 66. deduction under s. 80HHC in MAT scheme is from taxable income, which is otherwise adjusted book profit. If no deduction is available to assessee, gross total income itself is taxable income of assessee. MAT scheme does not provide for deductions. Therefore, interpretation is that adjusted book profit of company itself is gross total income of assessee company. deduction under s. 80HHC is in that way income of assessee company. deduction under s. 80HHC is in that way given out of gross total income in case falling under MAT. This in turn means that s. 80HHC should be computed on adjusted book profit. Secs. 115J, 115JA and 115JB come into operation, as regular profits has been substituted by book profit. Once substitution is over, there is no way to go back to normal computation process of statutory profit, which has already been overwhelmed by ss. 115J, 115JA and 115JB. This reconciles alleged incompatibility pointed out by Revenue that deduction available to assessee under Chapter VI-A is subject to s. 80AB. Therefore, we find that deduction under s. 80HHC in case of MAT assessment is to be worked out on basis of adjusted book profit and not on basis of profit computed under regular provisions of law applicable to computation of profits and gains of business or profession." To same effect are following decisions of various Benches of Tribunals holding that exclusion of deduction under s. 80HHC, while computing book profits under s. 115JA/115JB is amount calculated as per book profits and not deduction admissible in terms of provisions of Act : (i) Dy. CIT vs. Govind Rubber (P) Ltd. (2004) 82 TTJ (Mumbai) 615 : (2004) 89 ITD 457 (Mumbai); (ii) Starchik Specialities Ltd. vs. Dy. CIT (2004) 90 TTJ (Hyd) 546 : (2004) 90 ITD 34 (Hyd); (iii) Smruthi Organics Ltd. vs. Dy. CIT (2006) 103 TTJ (Pune) 546 : (2006) 101 ITD 205 (Pune). Bombay Bench of Tribunal in case of Tushako Pumps Ltd. vs. Asstt. CIT (2005) 2 SOT 556 (Mumbai), while considering cl. (v) of Explanation to s. 115JA, held that profit of industrial undertaking eligible for exemption under s. 80-IA must be computed as per books of account. It was further held that provisions of Act cannot be applied and no adjustment can be made which is not permissible for purpose of computation of book profit as per s. 115JA of Act. Bombay Bench held as under : "From above provisions, it is notable that under Explanation, book profits cannot be increased by making any adjustment on account of depreciation. Further, book profits are required to be reduced by amount of profit derived by industrial undertaking which is eligible for exemption under s. 80-IA. Under cl. (v), there is no mention that profit derived by industrial undertaking must be calculated as per provisions of IT Act. Therefore, in our view, logical interpretation would be that profits derived by industrial undertaking as per books of account have to be reduced from book profits. In present case, while computing book profits, which is in consonance with P&L a/c prepared in accordance with provisions of Parts II and III of Sch. VI to Companies Act, depreciation as provided in books of account has been considered. If while computing profits derived by industrial undertaking, which is required to be reduced from book profits as per cl. (v), provisions of IT Act are applied and depreciation as admissible under IT Act is deducted, it would result into anomalous situation. While profit derived from industrial undertaking, which is included in book profits has been computed as per books and no adjustment for depreciation has been made, while computing income eligible for exemption under s. 80-IA, quantum of depreciation as per provisions of IT Act would be substantially enhanced. This would violate very purpose of s. 115JA. cases which have been relied upon by learned counsel for assessee support this view. We, therefore, hold that profit of industrial undertaking eligible for exemption under s. 80-IA must be computed as per books of account and provisions of IT Act cannot be applied and no adjustment can be made which is not permissible under section. We, therefore, reverse order of Revenue authorities on this point and direct AO to recompute book profits in light of observations made above." In case of Asstt. CIT vs. Varinder Agro Chemicals Ltd. (2007) 107 TTJ 842 (Chd), Chandigarh Bench of Tribunal following decision of Kerala High Court in case of G.T.N. Textile Ltd. (supra), held that for purpose of cl. (iv) of s. 115JA(2) of Act, what is deductible from net profits, is not cl. (iv) of s. 115JA(2) of Act, what is deductible from net profits, is not actual deduction of eligible undertaking under s. 80-IA of Act, but profit of eligible undertaking computed as per P&L a/c prepared in accordance with Parts II and III of Sch. VI to Companies Act, 1956. Tribunal also held that cl. (iv) of Explanation to s. 115JA of Act merely allows deduction of amount of profit derived by industrial undertaking while computing book profit and not amount of deduction computed under s. 80-IA of Act. Chandigarh Bench additionally held as follows : "(11) We also find action of AO as untenable on another angle. Hon ble Supreme Court in case of Apollo Tyres Ltd. (supra) has held, in context of s. 115J, that AO had no power to make adjustment to net profit as shown in P&L a/c for relevant section itself. permissible adjustments to net profit as shown in P&L a/c have been listed in Explanation below s. 115J(1A) of Act. analogy of decision of Supreme Court in case of Apollo Tyres Ltd. (supra) is also squarely applicable to section; we are presently dealing with i.e. s. 115JA of Act. As noted earlier, both sections stand on equal footing insofar as they relate to controversy on hand. In scheme of s. 115JA also, adjustments to net profit declared in P&L a/c which are permissible, to compute book profits are so provided for in Explanation below s. 115JA(2) of Act. clause (iv) of Explanation merely allows reduction of amount of profits and not amount of deduction computed under s. 80-IA of Act. Therefore, AO while reducing amount of deduction allowed under s. 80IA from net profits shown in P&L a/c for instant year prepared in accordance with provisions of Parts II and III of Sch. VI to Companies Act in order to compute book profit squarely fell in error. said action of AO is clearly not warranted by statutory provisions. Hence, in terms of ratio of decision of apex Court also, in instant case, AO exceeded his jurisdiction while computing book profits under s. 115JA of Act by seeking to exclude actual amount of deduction allowable under s. 80A in contract to actual profits of eligible unit." aforesaid decisions squarely apply to case of appellant and adjustment, in terms of cls. (ii)/(iii) (from) of Explanation to s. 115JB of Act has to be for amounts credited/debited to P&L a/c, as case may be. We accordingly hold that while computing book profit amount of Rs. 133.43 crores as claimed by assessee shall be reduced from book profit and not sum of Rs. 98.25 crores as computed by AO. In result, appeal is allowed. *** MOSER BAER INDIA LTD. v. DEPUTY COMMISSIONER OF INCOME TAX