BANK OF INDIA, MUMBAI V. DCIT 2(1), MUMBAI

ITA 2028/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1446 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 08-04-2015
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMARDR
• Section: 244A; 115JB

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.2028/MUM/2015 ASSESSMENT YEARS: 2002-03 BANK OF INDIA, 8 TH FLOOR, STAR HOUSE, TAXATION DEPARTMENT, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. DCIT - 2(1), AAYAKAR BHAVAN, MUMBAI-40020 ( ! /ASSESSEE) ( & / REVENUE) PA NO.:-AAACB0472C ! / ASSESSEE BY SHRI C. NARESH & / REVENUE BY SHRI SUMAN KUMAR-DR ' &( ) ! * / DATE OF HEARING : 06/04/2017 ) ! * / DATE OF ORDER: 10/04/2017 ITA NO.2028/MUM/2015 BANK OF INDIA 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 08/01/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE FIRST GROUND RAISED BY THE ASSESSEE PERTAINS TO APPLYING THE PROVISIONS OF SECTION 115JB OF THE INCOME TAX A CT, 1961 (HEREINAFTER THE ACT) TO THE ASSESSEE BANK AND CONS EQUENTLY, CONFIRMING THE ACTION OF THE ASSESSING OFFICER. 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, SHRI C. NARESH, CLAIMED THAT THE IMPU GNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE, BY THE DECISION IN THE CASE OF ASSESSEE ITSELF FOR ASSESSMENT YEAR 200 2-03 (ITA NO.3001/MUM/2014) ORDER DATED 22/12/2016. THIS FACT UAL MATRIX WAS NOT CONTROVERTED BY LD. DR, SHRI SUMAN K UMAR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM AFORESAID ORDER OF THE TRIBUNAL DATED 22/12/20 16 FOR READY REFERENCE AND ANALYSIS. 3. THE ONLY GROUND AGITATED BY THE LD. COUNSEL FOR THE ASSESSEE IS GROUND NO.2A AND 2B, IN THE GROUNDS OF APPEAL, WHICH PERTAINS TO APPLYING THE PROVISIONS O F SECTION 115JB, RELATING TO MAT TO THE ASSESSEE BANK AND THU S, CONFIRMING THE STAND OF THE LD. ASSESSING OFFICER. AT THE OUTSET, THE LD. COUNSEL CLAIMED THAT THE IMPUGNED I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE TRIBUNAL, IN THE CASE OF ASSESSEE ITSELF, FOR ASSES SMENT YEAR ITA NO.2028/MUM/2015 BANK OF INDIA 3 2001-02 (ITA NO.1498/MUM/2011), ORDER DATED 09/04/2014. THIS FACTUAL ASSERTION WAS NOT CONTRO VERTED BY THE LD. CIT-DR. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE ORDER DATED 09/04/2014 FOR READY REFERENCE AND ANALYSIS:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20.12.2010 OF CIT(A) FOR A.Y. 2001-02. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- XXXXXXXXXXXXXXXXX 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HONOURABLE CIT (A) HAS ERRED IN HOLDING THAT TH E PROVISIONS OF SECTION 115JB RELATING TO MINIMUM ALTERNATE TAX (MA T) ARE APPLICABLE TO THE APPELLANT-BANK. THE LEARNED ACIT BE DIRECTED NOT TO APPLY THE PROVISIONS OF SECTION 115JB RELATI NG TO MINIMUM ALTERNATE TAX (MAT) TO THE APPELLANT BANK. XXXXXXXXXXXXXXXXXXXX 6. GROUND NO. 5 IS REGARDING APPLICABILITY OF PROVI SIONS OF SECTION 115JB IN CASE OF BANK. 6.1 THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE P ROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO A BANKING COMPA NY SINCE THE ACCOUNTS OF BANKS ARE PREPARED UNDER SCHEDULE III O F BANKING REGULATION ACT AND NOT IN ACCORDANCE WITH THE SCHED ULE VI OF THE COMPANYS ACT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE FOLLOWING DECISIONS: (I) KURUNG THAI BANK PCL DATED 30.09.2010 (ITA 3390/MUM/2009) (II) MAHARASHTRA STATE ELECTRICITY BOARD (82 ITD 42 2) (III) KERALA STATE ELECTRICITY BOARD (329 ITR 91) ( HC) ITA NO.2028/MUM/2015 BANK OF INDIA 4 (IV) UNION BANK OF INDIA DATED 30.06.2011 (ITA NO. 4702/MUM/2010) (V) ICICI LOMBARD GENERAL INSURANCE VS. DEPARTMENT OF INCOME TAX (ITA 4286/MUM/2009). 6.2 ON THE OTHER HAND, THE LD. DR HAS RELIED UPON T HE ORDERS OF AUTHORITIES BELOW. 6.3 HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THIS ISSUE HAS BEE N CONSIDERED BY THIS TRIBUNAL IN THE SERIES OF DECISIONS INCLUDING THE DECISION RELIED UPON BY THE LD. AR OF THE ASSESSEE. IN THE C ASE OF ICICI LOMBARD GENERAL INSURANCE (SUPRA) THE COORDINATE BE NCH OF THIS TRIBUNAL HAS CONSIDERED AND DECIDED AN IDENTICAL IS SUE IN PARA 6 AS UNDER:- 6. WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY US IN ASSESSEES OWN CASE FOR THE AY 2003-04 IN ITA NO. 2398/MUM/2009 AS UNDER: 9 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO QUARREL ON THE POINT THAT THE ASSESSEE, BEING AN INSURANCE COMPANY IS NO T REQUIRED TO PREPARE ITS ACCOUNTS AS PER PART II & III OF SCH EDULE VI OF THE COMPANIES ACT 1956. SUB. SECTION (2) OF SEC 211 ARE REQUIRED EVERY P&L ACCOUNTS OF THE COMPANIES SHALL BE PREPAR ED AS PER THE REQUIREMENT OF PART II OF SCHEDULE VI. HOWEVER, THE PROVISO TO SUB. SEC (2) OF SEC. 211 OF THE COMPANIES ACT CR EATES AN EXEMPTION OF APPLICABILITY OF SUB. SEC. (2) INTER-A LIA IN RESPECT OF INSURANCE COMPANIES OR BANKING COMPANIES OR ANY OTH ER COMPANIES ENGAGED IN GENERATION AND SUPPLY OF ELECT RICITY FOR WHICH A FORM OF PROFIT AND LOSS ACCOUNT HAS BEEN SP ECIFIED IN OR UNDER THE ACT GOVERNING SUCH CLASS OF COMPANY. EVEN IF AN INSURANCE COMPANY DOES NOT DISCLOSE ANY MATTER IN T HE BALANCE SHEET AND P&L ACCOUNT BECAUSE THE SAME IS NOT REQUI RED TO BE DISCLOSED BY THE INSURANCE ACT SHALL NOT BE TREATED UN-DISCLOSER OF A TRUE AND FAIR VIEW OF THE STATE OF AFFAIRS OF THE COMPANY AS THE SAID CONDITION HAS BEEN RELAXED BY SUB.SEC 5 OF SEC 211 OF THE COMPANIES ACT . 9.1 IT IS TO BE NOTED THAT IN ORDER TO ALIGN THE P ROVISIONS OF THE I T ACT WITH THE COMPANIES ACT , AN AMENDMENT HAS BEE N ITA NO.2028/MUM/2015 BANK OF INDIA 5 BROUGHT INTO THE STATUTE BY THE FINANCE ACT 2012 WH EREBY SEC 115JB HAS BEEN AMENDED W.E.F 2013 AND THEREFORE, PR IOR TO 1.4.2013, THE PROVISIONS OF SEC. 115JB CANNOT BE AP PLIED IN CASE OF INSURANCE, BANKING, ELECTRICITY, GENERATION AND DISTRIBUTION COMPANIES AND OTHER CLASS OF COMPANIES, WHICH ARE N OT REQUIRED TO PREPARE THEIR ACCOUNTS AND PARTICULARLY BALANCE SHEET AND P&L ACCOUNT AS PER PART II & III OF SCHEDULE VI OF THE COMPANIES ACT. 9.2 THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF STATE BANK OF HYDERABAD (SUPRA) HAS CONSIDERED AND DECIDE D A SIMILAR ISSUE; THOUGH IN THE CASE OF BANK IN PARAS 13 & 14 AS UNDER: 13. THE PROVISIONS OF SEC.1153B 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 COMP ANIES ACT. AS THE BANKS ARE REQUIRED TO PREPARE BALANCE SHEET AND PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH THE BANKING REGULAT ION ACT, PROVISION OF 115JB CANNOT BE APPLIED TO THE BANKS. IN THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD VS. )CIT (82 LT D 422) IT WAS HELD THAT PROVISIONS OF BOOK PROFIT CANNOT BE APPLI ED TO ELECTRICITY COMPANIES. BANKING COMPANIES AND COMPAN IES ENGAGED IN GENERATION AND SUPPLY OF ELECTRICITY DO NOT HAVE TO PREPARE THEIR ACCOUNTS IN ACCORDANCE WITH PARTS II AND III OF SCH. VI OF THE COMPANIES ACT BY THE VIRTUE OF PROVISO TO SEC 21 1(2) OF THE COMPANIES ACT. WE FIND THAT BY THE FINANCE ACT 2012, WITH EFFECT FROM 1.4.2013, EVEN COMPANIES TO WHICH PROVI SO TO SEC 211(2) APPLIES (THE BANKING COMPANIES AND COMPANIES ENGAGED IN GENERATING AND DISTRIBUTION OF ELECTRICITY), SHO ULD PREPARE THEIR P&LAND BALANCE SHEET IN ACCORDANCE WITH THE P ROVISIONS OF THE ACT GOVERNING SUCH COMPANIES. THIS WOULD MEAN T HAT PRIOR TO AY 2013-14,PROVISIONS OF SEC 115)B WILL NOT APPL Y 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 APPLIES, WILL NOT BE LIABLE TO BE TAXED UNDER SEC 115JB. 14. THE MUMBAI TRIBUNAL IN THE CASE OF KRUNG THAI B ANK VS. JCIT (133 TTJ 435), TO WHICH ONE OF US IS A PARTY HAS HE LD THAT PROVISIONS OF SEC 115JB CANNOT BE APPLIED TO THE BA NKING COMPANY. 9.3 SIMILARLY, IN THE CASE OF RELIANCE ENERGY (SUPR A), THE COORDINATE BENCH OF THIS TRIBUNAL HAS HELD IN PARAS 28 & 29 AS UNDER: 28 AS DISCUSSED ABOVE WHEN IT IS NOT POSSIBLE TO P REPARE THE ACCOUNTS UNDER THE COMPANIES ACT FOR THE PURPOSE OF ITA NO.2028/MUM/2015 BANK OF INDIA 6 COMPUTATION U/S 115JB, THEREFORE, THE ASSESSEE CANN OT BE FORCED TO PREPARE THE ACCOUNTS WHEN IT IS NOT POSSI BLE. THEREFORE, WE ARE IN AGREEMENT WITH THE CONTENTIONS OF THE ASSESSEE IN AS MUCH AS THE ACCOUNTING POLICIES FOLL OWED IN THE ELECTRICITY ACCOUNTS IF FOLLOWED FOR THE PREPARATIO N OF COMPANIES ACT ACCOUNT WILL NOT DISCLOSE TRUE AND FAIR VIEW AN D WILL NOT BE IN ACCORDANCE WITH PART II AND III OF SCHEDULE V OF TH E COMPANIES ACT. THE RATIO OF THE DECISIONS OF THE HONBLE SUPR EME COURT AND THE RATIO OF THE DECISION OF THE TRIBUNAL DISCUSSED ABOVE ARE IN SUPPORT OF THE CONTENTIONS OF THE ASSESSEE. WE FURT HER FOUND THAT THE ISSUE OF APPLICABILITY OF SEC. 115J CAME B EFORE THE TRIBUNAL FOR AY 88-89. TAKING INTO CONSIDERATION TH E PREPARATION OF ACCOUNTS UNDER THE ELECTRICITY ACT AND OTHER CON TENTIONS THE ASSESSEE INCLUDING THE DECISIONS OF THE SUPREME COU RT IN THE CASE OF B.C.SRINIVASA SETTY (SUPRA), THE TRIBUNAL H AS HELD THAT THE PROVISIONS OF SEC. 115J ARE NOT ATTRACTED ON TH E FACTS OF THE PRESENT CASE. 29 AS DISCUSSED ABOVE, THE ASSESSEE IS FOLLOWING TH E ACCOUNTING POLICIES UNDER THE ELECTRICITY SUPPLY ACT AND PREPA RED ITS ACCOUNTS IN VIEW OF THOSE VERY POLICIES. FOLLOWING THOSE VERY POLICIES, THE ACCOUNTS IN ACCORDANCE WITH PART II & III OF SCHEDULE VI OF THE COMPANIES ACT ARE NOT APPLICABLE AT ALL. ONCE THERE IS NO POSSIBILITY FOR PREPARING THE ACCOUNTS IN ACCORD ANCE WITH THE PART II & II OF SCHEDULE VI OF COMPANIES ACT THEN T HE PROVISIONS OF SEC. 115JB CANNOT BE FORCED. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE HONBLE SUPREME COURT AND THE DECI SION OF THE TRIBUNAL FOR AY 88-89, WE HOLD THAT PROVISIONS OF S EC. 115JB ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 10 FOLLOWING THE DECISIONS OF THE COORDINATE BENCHE S OF THIS TRIBUNAL, WE HOLD THAT WHEN THE INSURANCE COMPANIES , BANKING COMPANIES AND ELECTRICITY GENERATION AND DISTRIBUTI ONS COMPANIES ARE TREATED IN THE SAME CLASS AS PER THE PROVISIONS OF SEC. 211 OF THE COMPANIES ACT IN PREPARING THEIR FI NAL ACCOUNTS, THEN THESE COMPANIES CANNOT BE TREATED DIFFERENTLY FOR THE PURPOSE OF SEC. 115JB AND ACCORDINGLY, THE PROVISIO NS OF SEC. 115JB ARE NOT APPLICABLE IN THE CASE OF THE ASSESSE E. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 6.4 THOUGH , SECTION 115 JB HA S BEEN AMENDED TO B RIN G ALL THE COMPANIES IN ITS AMBIT VIDE FINANCE ACT 2012, W.E.F 1.4.2013, HOWEVER, THE SAID AMENDMENT IS NOT APPLICABLE IN THE ASSESSME NT YEAR UNDER CONSIDERATION. ITA NO.2028/MUM/2015 BANK OF INDIA 7 6.5 FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF T HIS TRIBUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. WE NOTE THAT WHILE COMING TO THIS CONCLUSION, THE T RIBUNAL DULY CONSIDERED THE FOLLOWING CASES:- (I) KURUNG THAI BANK PCL DATED 30.09.2010 (ITA 3390/MUM/2009) (II) MAHARASHTRA STATE ELECTRICITY BOARD (82 ITD 42 2) (III) KERALA STATE ELECTRICITY BOARD (329 ITR 91) ( HC) (IV) UNION BANK OF INDIA DATED 30.06.2011 (ITA NO. 4702/MUM/2010) (V) ICICI LOMBARD GENERAL INSURANCE VS. DEPARTMENT OF INCOME TAX (ITA 4286/MUM/2009). CONSIDERING THE RATIO LAID DOWN IN THE AFOREMENTION ED CASES ON IDENTICAL ISSUES, THE TRIBUNAL DELIBERATED UPON AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. N O CONTRARY DECISION WAS BROUGHT TO OUR NOTICE BY EITH ER SIDE AND MORE SPECIFICALLY THE REVENUE. IT IS ALSO NOTED THAT SECTION 115JB WAS AMENDED TO BRING ALL THE COMPANIE S IN ITS AMBIT, VIDE FINANCE ACT, 2012, W.E.F. 01/04/201 3. THE ASSESSMENT YEAR BEFORE US 2002-03, THEREFORE, THE S AID AMENDMENT IS NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME , CONCLUSION DRAWN IN THE IMPUGNED ORDER, ORDER OF TH E TRIBUNAL DATED 22/12/2016, MATERIAL AVAILABLE ON RE CORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT WHILE COMI NG TO THE AFORESAID CONCLUSION, THE TRIBUNAL HAS RELIED U PON VARIOUS JUDICIAL PRONOUNCEMENTS DISCUSSED IN PARA-6 (PAGE- 3), IT IS NOTED THAT SECTION 115JB WAS AMENDED TO B RING ALL ITA NO.2028/MUM/2015 BANK OF INDIA 8 COMPANIES IN ITS AMBIT (FINANCE ACT 2012 W.E.F. 01/04/2003), THE ASSESSMENT YEAR BEFORE IS 2002-03, THEREFORE, THE AMENDMENT IS NOT APPLICABLE TO THE P RESENT ASSESSMENT YEAR, MORE SPECIFICALLY, WHEN NEITHER CO NTRARY FACTS WERE BROUGHT TO OUR NOTICE NOR ANY CONTRARY D ECISION WAS CITED BY THE REVENUE, THEREFORE, FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, THIS GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE. 3. THE NEXT GROUND RAISED BY THE ASSESSEE PERTAINS GRANT OF INTEREST U/S 244A OF THE ACT. THE LD. COUN SEL FOR THE ASSESSEE, DURING HEARING, DID NOT PRESS THIS GROUND . THE LD. DR HAD NO OBJECTION TO THE SUBMISSION OF THE LD. CO UNSEL FOR THE ASSESSEE, THEREFORE, THIS GROUND IS DISMISSED A S NOT PRESSED. 4. NEXT GROUND PERTAINS TO COMPUTATION OF INTEREST U/S 234D AND CONSEQUENT DIRECTION TO RE-COMPUTE THE INT EREST. THIS GROUND WAS ARGUED TO BE CONSEQUENTIAL IN NATUR E. THE LD. DR ALSO DID NOT CONTROVERT THE SUBMISSION OF TH E ASSESSEE. IN THE LIGHT OF THE FOREGOING DISCUSSION, THIS GROU ND IS DECIDED TO BE CONSEQUENTIAL IN NATURE. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 06/04/2017. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' ( MUMBAI; + DATED : 10/04/2017 ITA NO.2028/MUM/2015 BANK OF INDIA 9 F{X~{T? P.S / ,& !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. 3 3 ' 4! ( -. ) / THE CIT, MUMBAI. 4. 3 3 ' 4! / CIT(A)- , MUMBAI 5. 5&61! , 3 -.*- 7 , ' / DR, ITAT, MUMBAI 6. 89 / GUARD FILE. ! / BY ORDER, 25.!1! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' / ITAT, MUMBAI,