BANK OF INDIA, MUMBAI V. ASST CIT 2(1), MUMBAI

ITA 3001/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1377 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 30-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rectification of order
• Section: 115JB; 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3001/MUM/2014 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, M.K. ROAD, MUMBAI-400020 ( ! /ASSESSEE) ( ' / REVENUE) PAN. NO. AAACB0472C ! / ASSESSEE BY SHRI C. NARESH ' / REVENUE BY SHRI N.P.SINGH-CIT-DR # '$ % ! & / DATE OF HEARING : 22/12/2016 % ! & / DATE OF ORDER: 22/12/2016 ITA NO.3001/MUM/2014 BANK OF INDIA 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 12/02/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. 2. DURING HEARING OF THIS APPEAL, LD. COUNSEL FOR THE ASSESSEE, SHRI C. NARESH, DID NOT PRESS GROUND NO.1 , WITH RESPECT TO CHALLENGING RECTIFICATION ORDER U/S 154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). THE LD . CIT-DR, SHRI N.P. SINGH, HAD NO OBJECTION IF THIS GROUND IS DISMISSED. CONSIDERING THE REQUEST OF THE ASSESSEE AND NO OBJE CTION FROM LD. CIT-DR, THIS GROUND OF THE ASSESSEE IS DISMISSE D AS NOT PRESSED. 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 OF SECTIO N 115JB, RELATING TO MAT TO THE ASSESSEE BANK AND THUS, CONF IRMING THE STAND OF THE LD. ASSESSING OFFICER. AT THE OUTSET, THE LD. COUNSEL CLAIMED THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL, IN THE CASE OF ASSESSEE ITSELF, FOR ASSESSMENT YEAR 2001-02 (ITA NO.1498/MUM/2011), ORDER DATED 09/04/2014. THIS F ACTUAL ASSERTION WAS NOT CONTROVERTED 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 PORTION F ROM THE ORDER DATED 09/04/2014 FOR READY REFERENCE AND ANAL YSIS:- ITA NO.3001/MUM/2014 BANK OF INDIA 3 THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20.12.2010 OF CIT(A) FOR A.Y. 2001-02. THE AS SESSEE 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 THE PROVISIONS OF SECTION 115JB RELATING TO MINIMUM ALTERNATE TAX (MAT) ARE APPLICABLE TO THE A PPELLANT-BANK. THE LEARNED ACIT BE DIRECTED NOT TO APPLY THE PROVISION S OF SECTION 115JB RELATING TO MINIMUM ALTERNATE TAX (MAT) TO THE APPELLANT BAN K. 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 I II OF BANKING REGULATION ACT AND NOT IN ACCORDANCE WITH T HE SCHEDULE 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) (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. ITA NO.3001/MUM/2014 BANK OF INDIA 4 6.3 HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THIS ISSU E HAS BEEN CONSIDERED BY THIS TRIBUNAL IN THE SERIES OF DECISI ONS INCLUDING THE DECISION RELIED UPON BY THE LD. AR OF THE ASSES SEE. IN THE CASE OF ICICI LOMBARD GENERAL INSURANCE (SUPRA) THE COORDINATE BENCH OF THIS TRIBUNAL HAS CONSIDERED AN D DECIDED AN IDENTICAL ISSUE 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 IDEN TICAL 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 NOT REQ UIRED TO PREPARE ITS ACCOUNTS AS PER PART II & III OF SCHEDU LE 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 CREAT ES 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 BEEN BROUGHT INTO THE STATUTE BY THE FINANCE ACT 2012 WHEREBY SE C 115JB HAS BEEN AMENDED W.E.F 2013 AND THEREFORE, PRIOR TO 1.4 .2013, THE PROVISIONS OF SEC. 115JB CANNOT BE APPLIED IN CASE OF INSURANCE, BANKING, ELECTRICITY, GENERATION AND DISTRIBUTION C OMPANIES AND OTHER CLASS OF COMPANIES, WHICH ARE NOT REQUIRED TO PREPARE THEIR ACCOUNTS AND PARTICULARLY BALANCE SHEET AND P&L ACC OUNT 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: ITA NO.3001/MUM/2014 BANK OF INDIA 5 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 REGULATION A CT, PROVISION OF 115JB CANNOT BE APPLIED TO THE BANKS. IN THE CAS E 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 COMPANIES 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 PROVISO TO S EC 211(2) APPLIES (THE BANKING COMPANIES AND COMPANIES ENGAGE D IN GENERATING AND DISTRIBUTION OF ELECTRICITY), SHOULD PREPARE THEIR P&LAND BALANCE SHEET IN ACCORDANCE WITH THE PROVISI ONS OF THE ACT GOVERNING SUCH COMPANIES. THIS WOULD MEAN THAT PRIOR TO AY 2013-14,PROVISIONS OF SEC 115)B WILL NOT APPLY TO C OMPANIES TO WHICH PROVISO TO SEC 211(2) OF THE COMPANIES ACT, 1 956 APPLIES. THE ASSESSEE BEING A COMPANY TO WHICH PROVISO TO SE C 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 COMPUTATION U/S 115JB, THEREFORE, THE ASSESSEE CANN OT BE FORCED TO PREPARE THE ACCOUNTS WHEN IT IS NOT POSSIBLE. TH EREFORE, WE ARE IN AGREEMENT WITH THE CONTENTIONS OF THE ASSESSEE I N AS MUCH AS THE ACCOUNTING POLICIES FOLLOWED IN THE ELECTRICITY ACCOUNTS IF FOLLOWED FOR THE PREPARATION OF COMPANIES ACT ACCOU NT WILL NOT DISCLOSE TRUE AND FAIR VIEW AND WILL NOT BE IN ACCO RDANCE WITH PART II AND III OF SCHEDULE V OF THE COMPANIES ACT. THE RATIO OF THE DECISIONS OF THE HONBLE SUPREME COURT AND THE RATI O OF THE DECISION OF THE TRIBUNAL DISCUSSED ABOVE ARE IN SUP PORT OF THE CONTENTIONS OF THE ASSESSEE. WE FURTHER FOUND THAT THE ISSUE OF APPLICABILITY OF SEC. 115J CAME BEFORE THE TRIBUNAL FOR AY 88-89. TAKING INTO CONSIDERATION THE PREPARATION OF ACCOUN TS UNDER THE ITA NO.3001/MUM/2014 BANK OF INDIA 6 ELECTRICITY ACT AND OTHER CONTENTIONS THE ASSESSEE INCLUDING THE DECISIONS OF THE SUPREME COURT IN THE CASE OF B.C.S RINIVASA SETTY (SUPRA), THE TRIBUNAL HAS HELD THAT THE PROVISIONS OF SEC. 115J ARE NOT ATTRACTED ON THE 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 VER Y POLICIES, THE ACCOUNTS IN ACCORDANCE WITH PART II & III OF SCHEDU LE VI OF THE COMPANIES ACT ARE NOT APPLICABLE AT ALL. ONCE THERE IS NO POSSIBILITY FOR PREPARING THE ACCOUNTS IN ACCORDANC E WITH THE PART II & II OF SCHEDULE VI OF COMPANIES ACT THEN THE PR OVISIONS OF SEC. 115JB CANNOT BE FORCED. THEREFORE, IN VIEW OF THE A BOVE FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE HONBLE SUPREME COURT AND THE DECISION OF THE T RIBUNAL FOR AY 88-89, WE HOLD THAT PROVISIONS OF SEC. 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 RING ALL THE COMPANIES IN ITS AMBIT VIDE FINANCE ACT 2012, W .E.F 1.4.2013, HOWEVER, THE SAID AMENDMENT IS NOT APPLIC ABLE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 6.5 FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSE SSEE. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. WE NOTE THAT WHILE COMING TO THIS CONCLUSION, THE TRIBUNAL 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 422) ITA NO.3001/MUM/2014 BANK OF INDIA 7 (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. NO CO NTRARY DECISION WAS BROUGHT TO OUR NOTICE BY EITHER SIDE A ND MORE SPECIFICALLY THE REVENUE. IT IS ALSO NOTED THAT SEC TION 115JB WAS AMENDED TO BRING ALL THE COMPANIES IN ITS AMBIT , VIDE FINANCE ACT, 2012, W.E.F. 01/04/2013. THE ASSESSME NT YEAR BEFORE US 2002-03, THEREFORE, THE SAID AMENDMENT IS NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATI ON. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE T RIBUNAL, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 22/12/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; ' DATED :22/12/2016 F{X~{T? P.S/. . . ITA NO.3001/MUM/2014 BANK OF INDIA 8 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / # 0! ( )* ) / THE CIT, MUMBAI. 4. / / # 0! / CIT(A)- , MUMBAI 5. 2'3 -! , / )*& ) 4 , # $ / DR, ITAT, MUMBAI 6. 5 6$ / GUARD FILE. / BY ORDER, .2*! -! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI