Indian Bank, CHENNAI V. Additiional CIT, CHENNAI

ITA 469/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51651 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 03-08-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 12-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Keywords: Advance ruling
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER) .. I.T.A. NO. 469/MDS/2010 ASSESSMENT YEAR : 2000-01 M/S INDIAN BANK, HEAD OFFICE, 66, RAJAJI SALAI, CHENNAI 600 001. PAN : AAACI1607G (APPELLANT) V. THE ADDITIONAL COMMISSIONER OF INCOME TAX, COMPANY RANGE II, CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI C. NARESH RESPONDENT BY : DR. I. VI JAYAKUMAR, CIT-DR O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY ASSESSEE FOR THE ASSESSME NT YEAR 2000- 2001 AGAINST AN ORDER DATED 21.01.2010 OF COMMISSIO NER OF INCOME TAX (APPEALS)-III, CHENNAI. I.T.A. NO. 469/MDS/10 2 2. GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE WAS N OT PRESSED BY THE LD. A.R. OF THE ASSESSEE AT THE TIME OF HEARING . 3. GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS AG AINST THE ORDER OF THE LD. CIT(A) IN REJECTING THE CLAIM THAT THE PROVISIONS OF SECTION 115JB OF THE INCOME-TAX ACT, 1961 [IN SHORT , THE ACT] IS NOT APPLICABLE TO THE ASSESSEE BANK AS THE SAME IS NOT A COMPANY UNDER THE COMPANIES ACT, 1956 AS HELD IN MAHARASHTRA STAT E ELECTRICITY BOARD VS. JCIT 82 ITD 427. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER OBSERVED THAT IT CANNOT BE SAID THAT THE PROVISIONS OF SECTI ON 115JB OF THE ACT ARE NOT APPLICABLE TO THE BANK. THE ASSESSING OFFI CER OBSERVED THAT THE PROFIT AND LOSS ACCOUNT AS PER BANKING REGULATI ON ACT, WAS TO BE CONSIDERED AND WRITE OFF COULD NOT BE ALLOWED IN CO MPUTING THE BOOK PROFITS. THE ASSESSING OFFICER RELIED ON THE PROVISIONS OF SECTION 616 AND 211 OF THE COMPANIES ACT IN ARRIVIN G AT HIS CONCLUSION. THE ASSESSING OFFICER ALSO RELIED ON T HE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU MERCANTILE I.T.A. NO. 469/MDS/10 3 BANK 255 ITR 205 AND STATED THAT THE HIGH COURT HAS IMPLIEDLY ACCEPTED THAT THE PROVISIONS OF COMPANIES ACT WERE APPLICABLE TO THE BANK. 4. ON APPEAL, THE LD. CIT(A) HELD THAT HE WAS UNABL E TO AGREE WITH THE CONTENTION OF THE ASSESSEE THAT SINCE IT W AS NOT REQUIRED TO PREPARE PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH SCHEDULE VI, NO COMPUTATION COULD BE MADE U/S 115JB OF THE ACT. TH E LD. CIT(A) OBSERVED THAT SUB-SECTION (2) OF SECTION 115JB PROV IDES THAT EVERY ASSESSEE BEING A COMPANY, SHALL FOR THE PURPOSE OF THIS SECTION PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVAN T PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PARTS II AND III OF SCHEDULE VI OF COMPANIES ACT, 1956, AND ASSESSEE BEING A COMPANY, IS THEREFORE, MANDATORILY REQUIRED TO PREPARE ITS PROFIT AND LOSS ACCOUNT AS PER SCHEDULE VI OF THE COMPANIES ACT, 1956. 5. WITH REGARD TO RELIANCE PLACED ON THE DECISION O F THE MAHARASHTRA STATE ELECTRICITY BOARD [SUPRA], THE LD . CIT(A) HELD THAT THE FACTS OF THAT CASE ARE DIFFERENT FROM THAT OF T HE PRESENT I.T.A. NO. 469/MDS/10 4 ASSESSEE. ACCORDING TO HIM, IN THAT CASE, THE ASSE SSEE WAS AN ELECTRICITY BOARD WHEREAS IN THE PRESENT CASE, THE ASSESSEE IS A BANK. THE LD. A.R. OF THE ASSESSEE HAS NOT GIVEN A NY REASONS AS TO HOW THE SAID DECISION WAS APPLICABLE TO THE ASSESSE ES CASE. THEREFORE, HE REJECTED THE CONTENTION OF THE ASSESS EE THAT THE PROVISIONS OF SECTION 115JB WILL NOT APPLY IN ITS C ASE. 6. THE LD. A.R. OF THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE THE LD. CIT(A) AND ON THE OTHER HAND, THE LD . D.R. SUPPORTED THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ONLY DISPUTE RAISED BY THE ASSESS EE IS THAT SINCE IT IS A BANK AND IS REQUIRED TO PREPARE ITS ACCOUNTS A CCORDING TO BANKING REGULATION ACT, 1949 AND NOT ACCORDING TO S CHEDULE VI PART II AND III OF THE COMPANIES ACT, 1956, THE PROVISIO NS OF SECTION 115JB ARE NOT APPLICABLE TO IT WHILE COMPUTING THE INCOME UNDER MAT. WE FIND THAT RECENTLY THE MUMBAI BENCH OF THE TRIBU NAL IN THE CASE I.T.A. NO. 469/MDS/10 5 OF IN THE CASE OF KRUNG THAI BANK PCL VS. JOINT DIR ECTOR OF INCOME TAX [INTERNATIONAL TAXATION] [2010] 45 DTR 218 HAS HELD HAS UNDER: 7. THE PLEA OF THE ASSESSEE IS INDEED WELL TAKEN, A ND IT MEETS OUR APPROVAL. THE PROVISIONS OF S. 115JB CAN O NLY COME INTO PLAY WHEN THE ASSESSEE IS REQUIRED TO PREPARE I TS P&L A/C IN ACCORDANCE WITH THE PROVISIONS OF PARTS II AND I II OF SCH. VI TO THE COMPANIES ACT. THE STARTING POINT OF COMPUTAT ION OF MAT UNDER S. 115JB IS THE RESULT SHOWN BY SUCH A P&L A/C. IN THE CASE OF BANKING COMPANIES, HOWEVER, THE PROVISI ONS OF SCH. VI ARE NOT APPLICABLE IN VIEW OF EXEMPTION SET OUT UNDER PROVISO TO S. 211(2) OF THE COMPANIES ACT. THE FINA L ACCOUNTS OF THE BANKING COMPANIES ARE REQUIRED TO BE PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THE BANKING REGULA TION ACT. THE PROVISIONS OF S. 115JB CANNOT THUS BE APPLIED T O THE CASE OF A BANKING COMPANY. 8. FURTHER, IT MAY BE NOTED THAT THE AUTHORITY FOR ADVANCE RULING IN THE CASE OF THE TIMKEN COMPANY, IN RE [2010-TII- 25-ARA-INTL AND PRAXAIR PACIFIC LTD IN RE [2010-TII-25-ARA-INTL ] HAS HELD THAT MAT PROVISIONS ARE APPLICABLE TO A FOREIGN COMPANY THAT DOES NOT HAVE A PHYSICAL PRESENCE IN INDIA, AS SUCH, COMPANI ES ARE NOT I.T.A. NO. 469/MDS/10 6 REQUIRED TO PREPARE ITS ACCOUNTS AS PER COMPANIES A CT. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE CITED DECISIONS OF THE TRIBUNAL, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND A LLOW THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE BANK IS NOT REQ UIRED TO PREPARE ITS PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PART II AND PART III OF SCHEDULE VI TO THE COMPANIES ACT AND THEREFORE, THE PROVISIONS OF MAT IN SECTION 115JB IS NOT APPLI CABLE TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 3 RD AUGUST, 2011. SD/- SD/- (HARI OM MARATHA) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 3 RD AUGUST, 2011. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-III, CHENNAI (5) D.R (4) CIT, CHENNAI-I, CHENNAI (6) GUARD FILE