State Bank of Hyderabad, Hyderabad V. Dy. Commissioner of Income Tax, Hyderabad

ITA 1364/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74547 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 11-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: G KALYAN DAS
• Keywords: Question of law
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1364/HYD/2013 ASSESSMENT YEAR: 2005-06 STATE BANK OF HYDERABAD, APPELLAN T HYDERABAD. (PAN AADCS4009H) VS. DY. COMMISSIONER OF INCOME-TAX, RESPO NDENT CIRCLE - - 3(2), HYDERABAD. APPELLANT BY : SHRI G. KALYAN DAS RESPONDENT BY : SHRI D. SUDHAKAR RAO DATE OF HEARING : 05/02/2014 DATE OF PRONOUNCEMENT : 05/02/2014 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-IV HYDERABAD DATED 21/08/2013 FOR T HE ASSESSMENT YEAR 2005-06 WHEREIN THE ASSESSEE HAS RAISED THE FO LLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW AND THE FACTS 2. THE LEARNED CIT (A) ERRED IN SUSTAINING THE CONS EQUENTIAL ORDER OF THE ASSESSING OFFICER WHERE IN THE ASSESSI NG OFFICER LEVIED TAX U/S 115 JB OF THE ACT. 3. THE LEARNED ASSESSING OFFICER ACTED BEYOND HIS JURISDICTION IN LEVYING TAX U/S 115 JB OF THE ACT WHILE PASSING CONSEQUENTIAL ORDER TO GIVE EFFECT TO THE ORDERS OF THE HON'BLE TRIBUNAL HYDERABAD BENCH. 2 ITA NO. 1364/H/13 STATE BANK OF HYDERABAD, HYDERABAD. 4. SECTION 115JB IS AMENDED ONLY W.E.F AY 2013-14 TO ENLARGE THE SCOPE OF APPLICABILITY OF MAT TO THE OTHER COMP ANIES I E INSURANCE, BANKING, ELECTRICITY COMPANY. THEREFORE PRIOR TO AY 2013-14 PROVISION OF THIS SECTION IS NOT APPLICABLE TO BANKING COMPANIES LIKE OURS. 5. THE LEARNED ASSESSING OFFICER OUGHT TO HAVE FOLL OWED THE DIRECTIONS CONTAINED IN THE APPELLATE ORDERS STRICT LY WHILE PASSING IMPUGNED CONSEQUENTIAL ORDER. 6. WITHOUT PREJUDICE TO THE ABOVE, APPELLANT CONTEN DS THAT THE PROVISIONS OF THE SEC 115 JB OF THE ACT ARE NOT APP LICABLE TO THE APPELLANT BANK IN AS MUCH, APPELLANT BEING A SUBSID IARY OF STATE BANK INDIA NEITHER PREPARES PROFIT & LOSS ALC NOR ITS ACCOUNTS ARE LAID IN THE ANNUAL GENERAL MEETING AS REQUIRED UNDER SEC 210 OF THE COMPANIES ACT 1956. 7. THE APPELLANT THEREFORE CONTENDS LEVY OF TAX UND ER PROVISIONS OF SEC 115 JB ACT. 8. THE APPELLANT STATES THAT TAX PAYABLE ON THE BAS IS OF INCOME ADMITTED/ASSESSED SINCE WAS HIGHER THAN TAX PAYABLE U/S 115JB OF THE ACT, APPLICABILITY OF THE MAT PROV ISIONS BECOME ACADEMIC AND THEREFORE GROUND IN THIS REGARD WAS NOT PREPARED. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED BE FORE THE DISPOSAL OF APPEAL, TAX LEVIED U/S 115 JB OF THE AC T IN THE CONSEQUENTIAL ORDER BE DELETED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSMEN T ORDER IN THIS CASE HAD BEEN PASSED ON 22/03/2007 ASSESSING THE TO TAL INCOME AT RS. 997,18,16,799/- UNDER THE REGULAR PROVISIONS. T HE ASSESSING OFFICER ALSO HELD THAT THE ASSESSEE WAS LIABLE TO B E ASSESSED U/S 115JB. HOWEVER, SINCE THE TOTAL INCOME UNDER THE RE GULAR PROVISIONS WAS MORE THAN THE BOOK PROFITS, THE PROVISIONS OF S ECTION 115JB OF THE ACT WERE NOT INVOKED FOR THE YEAR. 3. AGAINST THE SAID ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) BY RAISING A GROUN D THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO T HE FACTS OF THE ASSESSEES CASE. 3 ITA NO. 1364/H/13 STATE BANK OF HYDERABAD, HYDERABAD. 4. AFTER HEARING AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT(A) HELD AS FOLLOWS ON THIS ISSUE: '14.2 .... IT IS CLEAR THAT THE APPELLANT HAS EARLIER BEEN ASSESSED IN THE STATUS OF A COMPANY PRIOR TO A. Y. 1969-70. THE APPELLANT HAS NOT BEEN ABLE TO FURNISH ANY COPI ES OF ASSESSMENT ORDERS FOR THE PERIOD PRIOR TO A. Y. 1970. B ESIDES, THE ARGUMENT THAT THE PROVISIONS OF SEC. 115JB WOULD APPLY ONLY IF THE COMPANY IS REQUIRED TO ADOPT ITS ACCOUNTS INCLUDING THE P&L ACCOUNT AND PLACE IT BEFORE THE COMPANY IN THE AGM, IS ITSELF NOT VERY C ONVINCING. THOUGH, THE FIRST PROVISO TO SEC. 115JB(2) PUT SUCH A CONDITION IN PLACE, THE SAID CONDITION ITSELF CANNO T BE CONSIDERED AS THE FINAL CRITERIA FOR APPLICABILITY OF THE PROVISIONS OF SEC. 115JB. I, THEREFORE, CONCUR WITH THE FINDING OF THE AO THAT IN VIEW OF THE FACTS NARRATED IN THE ASSESSMENT ORDER, THE PROVISIONS OF SEC. 115JB ARE APPLICABLE IN THE APPELLANT'S CASE. AS REGARDS THE ADOPTION OF NET PROFIT OF RS. 713,21,55,919/-, THE AO IS DIRECTED TO COMPUTE THE SAME AFTER OBTAINING NECESSARY DETAILS IN THIS REGARD FROM THE APPELLANT AND COMPARE THE TAX PAYAB LE THEREON VIS-A-VIS THE TAX PAYABLE UNDER NORMAL PROV ISIONS TO ARRIVE AT THE TAX PAYABLE BY THE APPELLANT FOR THE YEAR.' 5. AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 19 TH MARCH, 2010 IN ITA NO. 584/HYD08 & 681/HYD/08 HELD AS FOLLOWS: 16. GROUNDS OF APPEAL NO. 5 & 6 OF THE ASSESSEE IN THIS APPEAL READ AS FOLLOWS: 5. THE LEARNED CIT(A) IS NOT CORRECT IN HOLDING THA T THE PROVISION U/S 36(1)(VIIA) IS ALLOWED TO THE APPELLA NT BANK SUBJECT TO MAKING PROVISION IN THE BOOKS OF ACCOUNT , WHICH WE CONTENDED IS AGAINST SPIRIT OF LAW. 6. THE LEARNED CIT(A) IS NOT CORRECT IN HOLDING THA T THE PROVISION OF SECTION 115JB OF THE IT ACT, 1961 OF T HE ACT ARE APPLICABLE TO THE BANK ALTHOUGH THE APPELLANT B ANK BEING A SUBSIDIARY OF SBI NEITHER IS REQUIRED TO HO LD ANNUAL GENERAL MEETING NOR ADOPT ITS ACCOUNTS WHICH IS MANDATORY AS PER THE PROVISION OF SECTION 115JB OF THE ACT, OF THE INCOME TAX AC, 1961. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASS ESSEE DID NOT 4 ITA NO. 1364/H/13 STATE BANK OF HYDERABAD, HYDERABAD. PRESS FOR THESE GROUNDS. THESE GROUNDS ARE ACCORDIN GLY REJECTED AS NOT PRESSED. 6. CONSEQUENTLY, THE ASSESSING OFFICER PASSED CONSE QUENTIAL ORDER ON 28/03/2011. IN HIS CONSEQUENTIAL ORDER DATED 28.3.2011, THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME AT RS. (-) 21,56,15,732/- UNDER THE REGULAR PROVISIONS. SINCE THIS WAS LESS THAN THE BOOK PROFIT OF RS.713,21,55,919/- U/S 115J B, THE ASSESSING OFFICER ASSESSED THE TOTAL INCOME U/S 115 JB. 7. AGAINST THE SAID CONSEQUENTIAL ORDER OF THE ASS ESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E CIT(A) AND THE CIT(A) VIDE ORDER DATED 21/08/2013 OBSERVED AS FOLL OWS: 5.0 THE THRUST OF THE GROUNDS OF APPEAL AND THE SU BMISSIONS OF THE AR IN THE COURSE OF THE APPELLATE PROCEEDING S IS THAT THE SEC.115JB WAS NOT APPLICABLE TO THE APPELLANT. IT NEEDS TO BE BORNE IN MIND THAT THE PRESENT APPEAL IS FILE D AGAINST THE CONSEQUENTIAL ORDER GIVING EFFECT TO THE ORDER OF THE ITAT. WHAT CAN BE ADJUDICATED UPON IN THIS APPEAL ARE MER ELY THE GRIEVANCES ARISING OUT OF THE MANNER IN WHICH E FFECT HAS BEEN GIVEN TO THE ORDER OF THE ITAT. THE GRIEVANCE OF THE APPELLANT IN THE GROUNDS FILED, HOWEVER, RELATE TO THE DECISION OF THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT . GRIEVANCES OF THE APPELLANT AGAINST THE ASSESSMENT ORDER DATED 22.3.2007 CAN NO LONGER BE AGITATED AT THIS S TAGE. WHETHER OR NOT SEC.115JB CAN BE APPLIED TO THE APPE LLANT HAS ALREADY BEEN ADJUDICATED UPON BY MY PREDECESSOR IN HIS ORDER DATED 31.01.2008 CITED ABOVE AND IS NOT OPEN TO ADJUDICATION ANY MORE. 6. INDEED, THIS ISSUE HAS BEEN ADJUDICATED UPON EVE N BY THE ITAT AS SEEN FROM THE EXTRACTS OF THE ITAT O RDER CITED ABOVE. THE APPELLANT HAVING CHOSEN TO NOT PRE SS THIS ISSUE BEFORE THE ITAT CANNOT BE PERMITTED TO RAISE THIS ISSUE AFRESH AT THIS STAGE. THE APPEAL IS, THEREFOR E, DISMISSED. 8. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US AGAIN ST THE SAID ORDER OF THE CIT(A). 5 ITA NO. 1364/H/13 STATE BANK OF HYDERABAD, HYDERABAD. 9. BEFORE US, THE LEARNED AR OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAS NOT FOREGONE HIS CLAIM IN THE FIRST R OUND OF LITIGATION AND, THEREFORE, THE FINDINGS OF THE TRIBUNAL ARE NO T RATIO-DECIDENDI. BEING SO, THE AO HAS TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE ORDER OF THE TRIBUNAL FOR AY 2007-08 IN ASSESSEES OWN CASE IN ITA NOS. 779 & 578/HYD/2010 VIDE ORDER DATED 7 TH SEPTEMBER, 2012 WHEREIN THE TRIBUNAL HELD AS FOLLOWS: 12. THE NEXT ISSUE IS REGARDING THE APPLICABILITY OF PROVISION OF SEC.115JB TO THE ASSESSEE BANK. THE C ONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE BEING A BANK, THE PROVISIONS OF COMPANIES ACT WILL NOT APPLY TO THE A SSESSEE AND HENCE THE ASSESSEE WILL NOT BE LIABLE TO TAX U/ S.115JB. 13. THE PROVISIONS OF SEC.115JB WILL BE APPLICABLE TO ALL COMPANIES. HOWEVER, IT IS CONTENDED THAT SEC.115JB WILL BE APPLICABLE ONLY WHERE THE ASSESSEE IS REQUIRED TO S HOW PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH SCHEDULE VI OF CO MPANIES ACT. AS THE BANKS ARE REQUIRED TO PREPARE BALANCE SHEET AND PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH THE BANKIN G REGULATION ACT, PROVISION OF 115JB CANNOT BE APPLIE D TO THE BANKS. IN THE CASE OF MAHARASHTRA STATE ELECTRICIT Y BOARD VS. JCIT (82 ITD 422) IT WAS HELD THAT PROVISIONS OF BO OK PROFIT CANNOT BE APPLIED TO ELECTRICITY COMPANIES. BANKING COMPANIES AND COMPANIES ENGAGED IN GENERATION AND S UPPLY OF ELECTRICITY DO NOT HAVE TO PREPARE THEIR ACCOUNT S IN ACCORDANCE WITH PARTS II AND III OF SCH. VI OF THE COMPANIES ACT BY THE VIRTUE OF PROVISO TO SEC 211(2) OF THE C OMPANIES ACT. W E FIND THAT BY THE FINANCE ACT 2012, WITH EFFECT FR OM 1.4.2013, EVEN COMPANIES TO WHICH PROVISO TO SEC 21 1(2) APPLIES (THE BANKING COMPANIES AND COMPANIES ENGAGE D IN GENERATING AND DISTRIBUTION OF ELECTRICITY), SHOULD PREPARE THEIR P&L AND BALANCE SHEET IN CCORDANCE WITH THE P ROVISIONS OF THE ACT GOVERNING SUCH COMPANIES. THIS WOULD MEA N THAT PRIOR TO AY 2013-14, PROVISIONS OF SEC 115JB WILL N OT APPLY TO COMPANIES TO WHICH PROVISO TO SEC 211(2) OF THE COM PANIES ACT, 1956 APPLIES. THE ASSESSEE BEING A COMPANY TO WHICH PROVISO TO SEC 211(2) OF THE COMPANIES ACT 1956 APP LIES, WILL NOT BE LIABLE TO BE TAXED UNDER SEC 115JB. 14. THE MUMBAI TRIBUNAL IN THE CASE OF KRUNG THAI BANK VS. JCIT (133 TTJ 435), TO WHICH ONE OF US IS A P ARTY HAS HELD THAT PROVISION OF SEC.115JB CANNOT BE APPLIED TO THE BANKING COMPANY. 6 ITA NO. 1364/H/13 STATE BANK OF HYDERABAD, HYDERABAD. 15. IN VIEW OF THE ABOVE, AS THE AMENDMENT TO SEC 1 15JB BY THE FINANCE ACT 2012 WILL BE APPLICABLE ONLY FRO M THE AY 2013-2014, WE UPHOLD THE CLAIM OF THE ASSESSEE THAT PROVISION OF SEC.115JB WILL NOT BE APPLICABLE TO TH E ASSESSEE BANK AND SET ASIDE THE ASSESSMENT MADE U/S 115JB ON THE ASSESSEE COMPANY. 9.1 THE LEARNED AR HAS ALSO RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF INDIAN OIL COR PORATION LTD. VS. STATE OF BIHAR AND OTHERS, 167 ITR 897 (SC) WHE REIN IT WAS HELD AS UNDER: 6. IT IS NOT THE POLICY OF THIS COURT TO ENTERTAIN SP ECIAL LEAVE PETITIONS AND GRANT LEAVE UNDER ART.136 OF THE CONSTITUTION SAVE IN THOSE CASES WHERE SOME SUBSTANTIAL QUESTION OF LAW OF GENERAL OR PUBL IC IMPORTANCE IS INVOLVED OR THERE IS MANIFEST INJUSTICE RESULTING F ROM THE IMPUGNED ORDER OR JUDGMENT. THE DISMISSAL OF A SPECIAL LEAVE PETIT ION IN LIMINE BY NON- SPEAKING ORDER DOES NOT, THEREFORE, JUSTIFY ANY INF ERENCE THAT BY NECESSARY IMPLICATION THE CONTENTIONS RAISED IN THE SPECIAL LEAVE PETITION ON THE MERITS OF THE CASE HAVE BEEN REJECTED BY THI S COURT. IT MAY ALSO BE OBSERVED THAT HAVING REGARD TO THE VERY HEAVY BA CKLOG OF WORK IN THIS COURT AND THE NECESSITY TO RESTRICT THE INTAKE OF F RESH CASES BY STRICTLY FOLLOWING THE CRITERIA AFOREMENTIONED, IT HAS VERY OFTEN BEEN THE PRACTICE OF THIS COURT NOT TO GRANT SPECIAL LEAVE EXCEPT WHE RE THE PARTY CANNOT CLAIM EFFECTIVE RELIEF BY APPROACHING THE CONCERNED HIGH COURT UNDER ART.226 OF THE CONSTITUTION. IN SUCH CASES ALSO, TH E SPECIAL LEAVE PETITIONS ARE QUITE OFTEN DISMISSED ONLY BY PASSING A NON-SPEAKING ORDER ESPECIALLY IN VIEW OF THE RULINGS ALREADY GIVEN BY THIS COURT, IN THE TWO DECISIONS AFORECITED, THAT SUCH DISMISSAL OF THE SP ECIAL LEAVE PETITION WILL NOT PRECLUDE THE PARTY FROM MOVING THE HIGH COURT F OR SEEKING RELIEF UNDER ART.226 OF THE CONSTITUTION. IN SUCH CASES, I T WOULD WORK EXTREME HARDSHIP AND INJUSTICE IF THE HIGH COURT WERE TO CL OSE ITS DOORS TO THE PETITIONER AND REFUSE HIM RELIEF UNDER ART.226 OF T HE CONSTITUTION ON THE SOLE GROUND OF DISMISSAL OF THE SPECIAL LEAVE PETIT ION. 10. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT THE ARGUMENTS OF THE LEARNED AR OF THE ASSESSEE ARE MIS CONCEIVED AND MISLEADING AS IN THE EARLIER OCCASION BEFORE THIS T RIBUNAL FOR THIS ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE H AS NOT PRESSED THIS GROUND AND ACCORDINGLY THE TRIBUNAL DI SMISSED THE GROUND OF APPEAL RAISED BY THE ASSESSEE AS NOT PRES SED. HE, 7 ITA NO. 1364/H/13 STATE BANK OF HYDERABAD, HYDERABAD. THEREFORE, CONTENDED THAT THE ASSESSEE HAS NO RIGHT OR ANY GROUND TO CHALLENGE THE SAME AT THIS JUNCTURE. 11. AFTER HEARING THE PARTIES AND PERUSING THE RECO RD, WE ARE OF THE OPINION THAT THE PLEA OF THE ASSESSEE IS TOTALL Y MISCONCEIVED AS SUBMITTED BY THE LEARNED DR. ADMITTEDLY, THE ASSESS EE HAS NOT CHALLENGED THIS ISSUE IN AN EARLIER OCCASION BEFORE THE TRIBUNAL AND STATED THAT THE ASSESSEE DID NOT WANT TO PRESS THE GROUND. AFTER HEARING BOTH THE PARTIES, THE TRIBUNAL DISMISSED TH E GROUND RAISED BY THE ASSESSEE AS NOT PRESSED. IT MEANS THAT THE T RIBUNAL ADJUDICATED THE GROUND AND THEREAFTER, THE AO PASSE D IMPUGNED CONSEQUENTIAL ORDER, WHICH IS IN CONSONANCE WITH TH E ORDER OF THE TRIBUNAL. NOW, THE ASSESSEES COUNSEL WANTED TO RE -ARGUE THE CASE, WHICH IS NOT PERMISSIBLE, AS UNLESS AND UNTIL THE EARLIER ORDER OF THE TRIBUNAL DATED 19 TH MARCH, 2010 IS DISTURBED BY ANY PROCESS OF LAW. THEREFORE, THE ASSESSEE IS NOT AT ALL AT L IBERTY TO CHALLENGE THE FINDING OF THE TRIBUNAL IN THE SECOND ROUND OF LITIGATION BY WAY OF REARGUING THE ISSUE, WHICH HAS ALREADY BEEN ADJU DICATED BY THE TRIBUNAL IN AN EARLIER OCCASION. IT IS A SETTLED LA W THAT THE TRIBUNAL HAS NO POWER TO REVIEW ITS OWN ORDER AND, THEREFORE , IF THE ASSESSEE WANTS TO AGITATE THE ISSUE, WHICH HAS ALRE ADY BEEN DECIDED BY THE TRIBUNAL, THE TRIBUNAL HAS NO POWER AND REMEDY LIES ELSEWHERE. THE CASE LAW RELIED UPON BY THE AR IN THE CASE OF INDIAN OIL CORPORATION LTD. (SUPRA) IS NOTHING TO D O WITH THE PRESENT CASE AS IT WAS DELIVERED ON DIFFERENT SET O F FACTS. ACCORDINGLY, IN OUR CONSIDERED OPINION, THE CIT(A) HAS RIGHTLY DISMISSED THE ASSESSEES APPEAL AND THE ACTION OF T HE CIT(A) IS HEREBY UPHELD DISMISSING THE GROUNDS RAISED BY THE ASSESSEE ON THIS COUNT. 8 ITA NO. 1364/H/13 STATE BANK OF HYDERABAD, HYDERABAD. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 05/02/2014. SD/- SD/- (SAKTIJIT DEY) (CHANDRA POOJARI) JUDICIAL MEMBER ACCO UNTANT MEMBER HYDERABAD, DATED: 05/02/2014. KV COPY TO:- 1) DGM, SBH, ACCOUNTS & SERVICES DEPT., HYBANK TOW ERS, HEAD OFFICE, HYDERABAD, GUNFOUNDRY, HYDERABAD 500 001. 2) DCIT, CIRCLE 3(2), IT TOWERS, AC GUARDS, HYDER ABAD. 3) CIT(A)-IV, HYDERABAD 4) CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T. A.T., HYDERABAD.