The Commissioner has revised my assessment under s.263 saying the Assessing Officer never examined AMT. My only deduction is under s.10A. Does s.115JC even apply to me?
It does not. Section 115JC(2) is a closed list: adjusted total income is the total income increased only by deductions under Chapter VI-A heading C other than s.80P, by a deduction under s.10AA, and by a deduction under s.35AD net of the notional depreciation. A deduction under s.10A is not in that list, so where that is the only claim the provisions of s.115JC are clearly not applicable and the Assessing Officer was under no duty to enquire into them.
Decided by the ITAT (Amit Shukla, Judicial Member and O.P. Kant, Accountant Member (ITAT Delhi 'B' Bench)) on 2018-11-20, reported as ITA No.2715/Del/2018, Assessment Year 2013-14; heard 12 September 2018, pronounced 20 November 2018. It bears on section 115JC, section 115JC(2), section 10A, section 10A(1A), section 10AA, section 35AD, section 263, section 143(3), section 40(a)(i) of the Income Tax Act 1961, in Revision & Rectification, Assessment & Scrutiny and Deductions & Disallowances matters.
AMT is not a general minimum tax on non-corporates. It is triggered only by the three heads in s.115JC(2), and the distinction between s.10A and s.10AA is the one most often missed — they are neighbouring sections with similar language and only the second is a trigger. A firm or LLP claiming s.10A, or claiming a Chapter VI-A deduction under heading B rather than heading C, or claiming s.80P, is outside the charge. That reasoning is doing double work in this order, because a claim outside s.115JC(2) also means the assessment order cannot be called erroneous for want of an AMT enquiry, and the Explanation 2 to s.263 argument then fails on that issue. The wider point about s.263 also travels: where the law is clear and unambiguous, an assessing officer is not required to enquire into a provision that does not apply.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee is a partnership firm manufacturing and exporting gold and silver jewellery from the Noida Special Economic Zone. For AY 2013-14 it returned total income of Rs.1,87,80,244 after claiming a deduction under s.10A of Rs.1,85,25,293; the assessment under s.143(3) dated 29 December 2015 was completed at Rs.1,95,10,920. The Commissioner called for the record and by order dated 29 March 2018 held the assessment erroneous and prejudicial to the interest of the Revenue on four counts, the second being that the applicability of the minimum tax on adjusted total income under s.115JC had not been examined. Before the Tribunal the assessee submitted that s.115JC did not apply because it had made no claim of deduction under s.10AA or Chapter VI-A. The Departmental Representative relied on Explanation 2 to s.263 inserted by the Finance Act 2015 with effect from 1 June 2015 and submitted that the assessee was liable to pay the minimum tax on adjusted total income at 18.5 per cent and that the issue had not been examined or enquired into.
The appeal of the assessee was allowed and the Commissioner's order under s.263 cancelled. On the s.115JC issue, the deduction having been claimed under s.10A and not under any of the sections specified in s.115JC(2) for computing adjusted total income, the provisions of s.115JC are clearly not applicable; in view of the clear and unambiguous provisions of law the Assessing Officer was not required to enquire into the applicability of s.115JC and the Commissioner's contention that no enquiry had been made on the issue was rejected (paragraph 12).
The Tribunal accepted that after Explanation 2 to s.263, inserted with effect from 1 June 2015, an order passed without the enquiries which ought to have been made is deemed erroneous and prejudicial, and that the earlier authorities on lack of enquiry as against inadequate enquiry belong to the period before that Explanation; the s.263 order having been passed on 29 March 2018, the question was therefore whether the Assessing Officer was required to carry out enquiries on the four issues (paragraphs 6 and 7). On the AMT issue it reproduced s.115JC(1) and (2) and reasoned that adjusted total income is the total income before giving effect to the Chapter, increased only by deductions claimed under any section other than s.80P included in Chapter VI-A under heading C, by a deduction claimed under s.10AA, and by a deduction claimed under s.35AD as reduced by the depreciation that would have been allowable under s.32 (paragraph 11). It followed that if a deduction is claimed under Chapter VI-A or under s.10AA or under s.35AD, adjusted total income is the total income before those deductions and the assessee is liable to the minimum tax if the regular income-tax payable is less; but in the case before it the deduction had been claimed under s.10A and not under any of the specified sections, so s.115JC did not apply and no enquiry into it was required (paragraph 12).
But, in the instant case, the deduction has been claimed by the assessee under section 10A of the Act and not under the sections specified above for computing adjusted total income, thus, the provisions of section 115JC are clearly not applicable.
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Handle my notice → Ask a CA on WhatsAppIt does not. Section 115JC(2) is a closed list: adjusted total income is the total income increased only by deductions under Chapter VI-A heading C other than s.80P, by a deduction under s.10AA, and by a deduction under s.35AD net of the notional depreciation. A deduction under s.10A is not in that list, so where that is the only claim the provisions of s.115JC are clearly not applicable and the Assessing Officer was under no duty to enquire into them. This was decided by the ITAT (Amit Shukla, Judicial Member and O.P. Kant, Accountant Member (ITAT Delhi 'B' Bench)) and bears on section 115JC, section 115JC(2), section 10A, section 10A(1A), section 10AA, section 35AD, section 263, section 143(3), section 40(a)(i) of the Income Tax Act 1961. It is reported as ITA No.2715/Del/2018, Assessment Year 2013-14; heard 12 September 2018, pronounced 20 November 2018. AMT is not a general minimum tax on non-corporates. It is triggered only by the three heads in s.115JC(2), and the distinction between s.10A and s.10AA is the one most often missed — they are neighbouring sections with similar language and only the second is a trigger. A firm or LLP claiming s.10A, or claiming a Chapter VI-A deduction under heading B rather than heading C, or claiming s.80P, is outside the charge. That reasoning is doing double work in this order, because a claim outside s.115JC(2) also means the assessment order cannot be called erroneous for want of an AMT enquiry, and the Explanation 2 to s.263 argument then fails on that issue. The wider point about s.263 also travels: where the law is clear and unambiguous, an assessing officer is not required to enquire into a provision that does not apply. If it applies to you, the first step is this: Identify the exact section under which the deduction is claimed and check it against the three heads in s.115JC(2) — s.10AA, s.35AD, and Chapter VI-A heading C other than s.80P. Nothing else triggers AMT.
The assessee is a partnership firm manufacturing and exporting gold and silver jewellery from the Noida Special Economic Zone. For AY 2013-14 it returned total income of Rs.1,87,80,244 after claiming a deduction under s.10A of Rs.1,85,25,293; the assessment under s.143(3) dated 29 December 2015 was completed at Rs.1,95,10,920. The Commissioner called for the record and by order dated 29 March 2018 held the assessment erroneous and prejudicial to the interest of the Revenue on four counts, the second being that the applicability of the minimum tax on adjusted total income under s.115JC had not been examined. Before the Tribunal the assessee submitted that s.115JC did not apply because it had made no claim of deduction under s.10AA or Chapter VI-A. The Departmental Representative relied on Explanation 2 to s.263 inserted by the Finance Act 2015 with effect from 1 June 2015 and submitted that the assessee was liable to pay the minimum tax on adjusted total income at 18.5 per cent and that the issue had not been examined or enquired into. The matter was decided on 2018-11-20 by the ITAT (Amit Shukla, Judicial Member and O.P. Kant, Accountant Member (ITAT Delhi 'B' Bench)). On those facts the ITAT held as follows. The appeal of the assessee was allowed and the Commissioner's order under s.263 cancelled. On the s.115JC issue, the deduction having been claimed under s.10A and not under any of the sections specified in s.115JC(2) for computing adjusted total income, the provisions of s.115JC are clearly not applicable; in view of the clear and unambiguous provisions of law the Assessing Officer was not required to enquire into the applicability of s.115JC and the Commissioner's contention that no enquiry had been made on the issue was rejected (paragraph 12).
The Tribunal accepted that after Explanation 2 to s.263, inserted with effect from 1 June 2015, an order passed without the enquiries which ought to have been made is deemed erroneous and prejudicial, and that the earlier authorities on lack of enquiry as against inadequate enquiry belong to the period before that Explanation; the s.263 order having been passed on 29 March 2018, the question was therefore whether the Assessing Officer was required to carry out enquiries on the four issues (paragraphs 6 and 7). On the AMT issue it reproduced s.115JC(1) and (2) and reasoned that adjusted total income is the total income before giving effect to the Chapter, increased only by deductions claimed under any section other than s.80P included in Chapter VI-A under heading C, by a deduction claimed under s.10AA, and by a deduction claimed under s.35AD as reduced by the depreciation that would have been allowable under s.32 (paragraph 11). It followed that if a deduction is claimed under Chapter VI-A or under s.10AA or under s.35AD, adjusted total income is the total income before those deductions and the assessee is liable to the minimum tax if the regular income-tax payable is less; but in the case before it the deduction had been claimed under s.10A and not under any of the specified sections, so s.115JC did not apply and no enquiry into it was required (paragraph 12). In the words reproduced by the source cited on this page: "But, in the instant case, the deduction has been claimed by the assessee under section 10A of the Act and not under the sections specified above for computing adjusted total income, thus, the provisions of section 115JC are clearly not applicable."
It was decided by the ITAT on 2018-11-20 and is reported as ITA No.2715/Del/2018, Assessment Year 2013-14; heard 12 September 2018, pronounced 20 November 2018. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 115JC, section 115JC(2), section 10A, section 10A(1A), section 10AA, section 35AD, section 263, section 143(3), section 40(a)(i), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal of the assessee was allowed and the Commissioner's order under s.263 cancelled. On the s.115JC issue, the deduction having been claimed under s.10A and not under any of the sections specified in s.115JC(2) for computing adjusted total income, the provisions of s.115JC are clearly not applicable; in view of the clear and unambiguous provisions of law the Assessing Officer was not required to enquire into the applicability of s.115JC and the Commissioner's contention that no enquiry had been made on the issue was rejected (paragraph 12). It arises in Revision & Rectification, Assessment & Scrutiny and Deductions & Disallowances matters, on section 115JC, section 115JC(2), section 10A, section 10A(1A), section 10AA, section 35AD, section 263, section 143(3), section 40(a)(i) of the Income Tax Act 1961, and was decided by Amit Shukla, Judicial Member and O.P. Kant, Accountant Member (ITAT Delhi 'B' Bench). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where the claim is under s.10A, s.10B or a Chapter VI-A heading B deduction, say so in the reply and reproduce s.115JC(2); the point is one of plain reading and does not need authority beyond the section. Where s.115JC does apply, check the s.115JEE threshold before computing anything — the charge does not reach an individual, HUF, AOP, BOI or artificial juridical person whose adjusted total income does not exceed the statutory limit. If the point arises in s.263 proceedings, take it as a jurisdictional answer to Explanation 2: an enquiry into a provision that on a plain reading does not apply is not an enquiry that "should have been made". Keep the s.35AD arithmetic straight where it does apply — the add-back is the s.35AD deduction reduced by the depreciation that would have been allowable under s.32 had no s.35AD deduction been taken.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citedby: search returns two hits (ACIT v Kapoor Industries, ITAT Delhi, 28 May 2019 and Sterling Ornaments Pvt Ltd, ITAT Delhi, 9 November 2020); both concern withholding on commission paid to foreign agents and neither engages s.115JC. A second probe on the name with s.115JC returns only this order. No later decision adopting the holding that s.115JC(2) is a closed list which does not pick up a s.10A deduction was found, and no Delhi High Court appeal from it was traced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order reproduces s.115JC(1) and (2) and is usable as a source for that text. Two slips in the report: at paragraph 12 the Tribunal writes "if the deduction is claimed under chapter VIA or under section 10AA or under section 35D" where the section in the reproduced provision and throughout is s.35AD; and at paragraph 3.4 counsel's submission is recorded as referring to "Alternative Minimum Tax (MAT)" and at ground 4 as "section 115JC (Minimum Alternate Tax)", the correct expression being alternate minimum tax. At paragraph 18 the Tribunal cancels "the order of the Ld. CIT(A) passed under section 263", which must be read as the order of the Commissioner under s.263 — there was no CIT(A) order in issue. The order also decides three other s.263 issues (the fourth proviso to s.10A(1), s.40(a)(i) commission and s.10A on FDR interest); only the s.115JC issue is summarised here. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal of the assessee was allowed and the Commissioner's order under s.263 cancelled. On the s.115JC issue, the deduction having been claimed under s.10A and not under any of the sections specified in s.115JC(2) for computing adjusted total income, the provisions of s.115JC are clearly not applicable; in view of the clear and unambiguous provisions of law the Assessing Officer was not required to enquire into the applicability of s.115JC and the Commissioner's contention that no enquiry had been made on the issue was rejected (paragraph 12).
TaxSphere, “M/s Divya Creation v Pr. CIT — AMT under s.115JC is not attracted where the deduction claimed is under s.10A”, https://taxnotice.vittsphere.com/caselaw/case/divya-creation-115jc-amt-not-attracted-where-deduction-under-10a/ (validity last checked 2026-09-08)
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We missed the section 139(1) due date by a week and the IFSC unit's whole income is covered by section 80LA. Is the deduction still available, and does alternate minimum tax apply on top?
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