ACIT, LTU - 2, Kolkata , Kolkata V. M/s. UCO Bank, Kolkata

ITA 584/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1679 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-11-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Assessee Lawyers: D S DAMLE
• Keywords: Capital asset; Depreciation; Earning of tax free income; Deemed to accrue or arise in india; Cost of acquisition; Non-deduction of tax; Difference of opinion; TDS; Rule 8D
• Section: 143(3); 14A; 115JB; 40(a)(ia); 80IB; 10B; 195; 80IA; 201; 113; 13

Judgement Text

ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 ASSISTANT COMMISSIONER OF INCOME TAX,.............. ......................APPELLANT LTU-2, KOLKATA, AAYAKAR BHAWAN POORVA, 9 TH FLOOR, LARGE TAX PAYER UNIT-2, 110, SHANTIPALLY, KOLKATA-700107 -VS.- M/S. UCO BANK,..................................... .......................................RESPONDENT 10, B.T.M. SARANI, KOLKATA-700001 [PAN:AAACU3561B] APPEARANCES BY: DR. A.K. NAYAK, CIT, D.R., FOR THE APPELLANT SHRI D.S. DAMLE, FCA, FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : NOVEMBER 06, 2019 DATE OF PRONOUNCING THE ORDER : DECEMBER 11, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-11, KOLKATA DA TED 09.02.2018. 2. THE COMMON ISSUE RAISED IN GROUNDS NO. 1 & 2 REL ATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANC E OF RS.1,17,97,270/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(I A) OF THE INCOME TAX ACT, 1961. ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 2 3. THE ASSESSEE IN THE PRESENT CASE IS A BANKING CO MPANY, WHICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON ON 28.09.2010 DECLARING TOTAL INCOME AT NIL. IN THE COMPUTATION OF TOTAL INCOME FILED ALONG WITH THE SAID RETURN, DISALLOWANCE OF RS.1,17 ,97,270/- WAS SUO MOTU MADE BY THE ASSESSEE UNDER SECTION 40(A)(IA). DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS, HOWEVER, SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT IT WAS A CASE OF SHORT DEDUCTION OF TAX FROM THE RELEVANT PAYMENT AND NOT A CASE OF NON-DEDUCTION OF TAX AS ENVISAGED IN SECTION 40(A)(IA). IT WAS CONTENDED THAT THE DISALLOWANCE THUS WAS MADE IN THE COMPUTATION OF TOTAL INCOME UN DER SECTION 40(A)(IA) INADVERTENTLY AND THE SAME SHOULD BE ALLOWED AS DED UCTION. SINCE THIS CLAIM WAS NOT MADE BY THE ASSESSEE IN THE RETURN OF INCOME, THE ASSESSING OFFICER RELIED ON THE DECISION OF THE HONBLE SUPRE ME COURT IN THE CASE OF GOETZE INDIA LIMITED REPORTED IN 284 ITR 323 AND DI D NOT ENTERTAIN THE CLAIM OF THE ASSESSEE. ON APPEAL, THE LD. CIT(APPEA LS) NOT ONLY ENTERTAINED THE CLAIM OF THE ASSESSEE BUT ALSO DELE TED THE DISALLOWANCE UNDER SECTION 40(A)(IA) BY FOLLOWING THE DECISION O F THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF DCIT VS.- S.K. TEKRIWAL (361 ITR 432), WHEREIN IT WAS HELD THAT IF THERE IS ANY SHORT-FALL DUE TO ANY DIFFERENCE OF OPINION AS TO THE TAXABILITY OF ANY ITEM OR THE NATURE OF P AYMENT FALLING UNDER VARIOUS TDS PROVISIONS, THE ASSESSEE COULD BE DECLA RED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201, BUT NO DISALLOWANCE C OULD BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. D.R. HAS RELIED ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN TH E CASE OF CIT VS.- PVS MEMORIAL HOSPITAL LIMITED (380 ITR 284) IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE, IT IS OBSERVED THAT THE DECISIO N OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF S.K. TEKRIWAL (SUPRA) REL IED UPON BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER TO GIVE RELIEF T O THE ASSESSEE ON THIS ISSUE SQUARELY COVERS THIS ISSUE IN FAVOUR OF THE A SSESSEE. WE, THEREFORE, ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 3 RESPECTFULLY FOLLOW THE SAID DECISION OF THE HONBL E JURISDICTIONAL HIGH COURT AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT( APPEALS) DELETING THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA). GROUND N O. 1 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 5. GROUNDS NO. 3 TO 5 INVOLVE A COMMON ISSUE RELATI NG TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANCE OF RS.3 6,60,39,331/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE INCO ME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 6. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAD EARNED INCOME OF RS.54,88,59,161/-, WHICH WAS EXEMPT FROM TAX. IN THE COMPUTATION OF TOTAL INCOME, EXPENDITURE IN RELATIO N TO THE SAID EXEMPT INCOME WAS NOT DISALLOWED BY THE ASSESSEE AS REQUIR ED BY SECTION 14A OF THE ACT. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 23.03.2013, THE ASSESSING OFFICER WORKED OUT SUCH EXPENSES BY APPLYING RULE 8D AT RS.36,60,39,331/- AND DISALLOWA NCE TO THAT EXTENT WAS MADE BY HIM UNDER SECTION 14A OF THE ACT. ON AP PEAL, THE LD. CIT(APPEALS) DELETED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER BY RELYING ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF DCIT VS.- GULSHAN INVESTMENT CO. LIMITED [11 TAXMAN.COM 113]. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT A SIMILAR ISSUE WAS INVOLVED IN ASSESSEES OWN CASE FOR A.Y. 2012-1 3 AND THE TRIBUNAL VIDE ITS ORDER DATED 21.08.2018 PASSED IN ITA NO. 1 615/KOL/2016 DECIDED THE SAME IN FAVOUR OF THE ASSESSEE UPHOLDIN G THE DECISION OF THE LD. CIT(APPEALS) DELETING THE SIMILAR DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A READ WITH RULE 8D. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LIMITED VS. - CIT [402 ITR 640] TO CONTEND THAT THE RELEVANT SHARES HAVING BEEN HEL D BY THE ASSESSEE AS ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 4 STOCK-IN-TRADE, DISALLOWANCE UNDER SECTION 14A IS L IABLE TO BE MADE AS RIGHTLY HELD BY THE ASSESSING OFFICER. IT IS, HOWEV ER, OBSERVED THAT THIS ASPECT HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL WHILE DECIDING A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE FOR A.Y. 20 12-13, AS IS EVIDENT FROM PARAS 11 TO 13 OF THE ORDER OF THE TRIBUNAL DATED 2 1.08.2018, WHICH ARE EXTRACTED BELOW:- 11. HAVING CONSIDERED THE SUBMISSIONS OF THE PARTI ES, WE FIND THAT THE ISSUE INVOLVED IN THE REVENUE'S APPEAL IS SQUARELY COVERED IN ASSESSEE'S FAVOUR BY THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD (383 ITR 529). IN THAT CASE ALSO THE ISSUE BEFORE THE HO N'BLE BOMBAY HIGH COURT WAS WHETHER ANY PART OF THE INTEREST PAI D BY THE BANK COULD BE DISALLOWED U/S 14A READ WITH RULE 80( 2)(II). ON APPEAL THIS TRIBUNAL AND THEREAFTER THE HON'BLE BOM BAY HIGH COURT HELD THAT SINCE THE BANK'S OWN FUNDS WERE SUB STANTIALLY MORE THAN THE COST OF INVESTMENTS YIELDING TAX FREE INCOME, NO PART OF THE INTEREST PAID WAS LIABLE FOR DISALLOWAN CE. THE VIEW OF THE HON'BLE BOMBAY HIGH COURT WAS FOLLOWED WITH APPROVAL BY THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CA SE OF CIT VSRASOI LTD (ITA NO. 109 OF 2016). 12. WE ALSO FIND MERIT IN THE ASSESSEE'S ALTERNATE CONTENTION THAT NO DISALLOWANCE OUT OF INTEREST PAID WAS WARRA NTED BECAUSE AFTER NETTING OFF INTEREST PAID AGAINST INT EREST RECEIVED, THE ASSESSEE HAD MADE NET INTEREST GAIN O F RS.3902.1O CRORES. THE HON'BLE GUJARAT HIGH COURT IN ITS RECEN T JUDGMENT IN THE CASE OF PR. CIT VS. NIRMA CREDIT & CAPITAL P VT. LTD (SUPRA) HAS HELD THAT THE EXPRESSION USED IN RULE 8 0(2)(II) IS 'INTEREST EXPENDITURE' AND NOT 'INTEREST PAID' AND ACCORDINGLY THE EXPENDITURE IN THIS CONTEXT MUST MEAN INTEREST PAID MINUS TAXABLE INTEREST EARNED. APPLYING THE RATIO LAID DO WN IN THIS JUDGMENT TO THE FACTS OF THE PRESENT CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(APPEALS) DELETING THE I NTEREST DISALLOWANCE MADE UNDER RULE 80(2)(II). 13. IN SO FAR AS DISALLOWANCE OF RS.2,90,37,4901- U NDER RULE 80(2)(III) IS CONCERNED, WE FIND THAT BEFORE THE LO WER AUTHORITIES THE ASSESSEE HAD RAISED THE PLEA THAT N O DISALLOWANCE U/S 14A WAS WARRANTED SINCE THE ASSESS EE WAS A DEALER IN SHARES ALTHOUGH IN ITS BALANCE SHEET, SHA RES WERE DISCLOSED UNDER THE HEAD 'INVESTMENTS'. WE FIND THA T THE HON'BLE SUPREME COURT IN ITS RECENT JUDGMENT DATED 12.02.2018 IN THE CASE OF MAXOPP INVESTMENT LTD VS CIT (SUPRA) DID NOT UPHOLD THIS LINE OF ARGUMENT AND HELD THAT EVEN IN THE CASE OF A DEALER IN SHARES, EARNING DIVIDEND INCOME FROM ITS STOCK-IN- TRADE, MAY EXPOSE HIS TO THE RIGORS OF SECTION 14A OF THE ACT. WE HOWEVER FIND MERIT IN THE LD. AR'S SUBMISSIONS T HAT IN THE SAID JUDGMENT, THE HON'BLE SUPREME COURT ALSO EXTEN SIVELY ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 5 DEALT WITH THE REVENUE'S APPEAL IN THE CASE OF STAT E BANK OF PATIALA ARISING FROM THE DECISION OF THE HORI'BLE P UNJAB & HARYANA HIGH COURT REPORTED IN 391 ITR 218. IN THE SAID JUDGMENT THE HON'BLE PUNJAB & HARYANA HIGH COURT HA D TAKEN NOTE OF THE FACT THAT THE BANKING COMPANIES IN THE COURSE OF CARRYING ON THEIR BANKING BUSINESS WERE REQUIRED TO HOLD SHARES & SECURITIES AND THE EXPENSES WERE INCURRED IN CONNECTION WITH SUCH BANKING BUSINESS AND THE INCOM E THEREFROM WAS ASSESSABLE UNDER THE HEAD 'PROFITS & GAINS OF BUSINESS'. THE HON'BLE HIGH COURT HAD TAKEN NOTE OF THE BOARD'S CIRCULAR NO. 18 DATED 02.11.2015 WHEREIN TH E BOARD HAD DIRECTED THE AOS TO ASSESS THE INCOME DERIVED F ROM SECURITIES HELD IN THE COURSE OF CARRYING ON BANKIN G BUSINESS UNDER THE HEAD 'PROFITS & GAINS OF BUSINESS' AND NO T UNDER THE HEAD 'OTHER SOURCES'. THE HIGH COURT HAD ALSO TAKEN NOTE OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT VS. NAWANSHAHAR CENTRAL CO-OPERATIVE BANK LTD (289 ITR 6). APPLYING THE RATIO IN THE SAID DECISION THE HON'BLE PUNJAB & HARYANA HIGH COURT HELD THAT THE INVESTMENTS HELD B Y THE ASSESSEE BANK WAS PART OF ITS BANKING BUSINESS AND INCOME ARISING FROM TRADING IN SECURITIES WAS ATTRIBUTABLE TO BANKING BUSINESS OF THE ASSESSEE. THE HON'BLE PUNJAB & HARY ANA HIGH COURT THEREFORE HELD THAT IN ASSESSING THE INCOME O F THE ASSES SEES ENGAGED IN BANKING BUSINESS, NO DISALLOWANCE U /S 14A WAS WARRANTED BECAUSE IN SUCH CASES THE EXPENDITURE WAS INCURRED IN RELATION TO ITS BANKING BUSINESS AND NOT IN RELA TION TO EARNING ANY TAX FREE INCOME. THE REVENUE'S APPEAL A GAINST THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT WAS DISMISSED BY THE HON'BLE SUPREME COURT. WE THEREFOR E FIND THAT QUA THE ASSESSEES ENGAGED IN THE BANKING BUSINESS, THE HON'BLE SUPREME COURT UPHELD THE JUDGMENT OF THE HON'BLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF PR. CIT VS STATE BANK OF PATIALA (SUPRA) AS PER WHICH NO DISALLOWANCE U/S 14 A IS PERMISSIBLE IN TERMS OF RULE 8D IN CASE OF ASSESSEE S ENGAGED IN BANKING BUSINESS. RESPECTFULLY FOLLOWING THE JUDGME NT OF THE SUPREME COURT IN CASE OF STATE BANK OF PATIALA (SUP RA), WE DIRECT THE LD. AO TO DELETE THE DISALLOWANCE OF RS. 2,90,37,490/- MADE UNDER RULE 8D(2)(III). GROUND NO. 2 OF THE REV ENUE'S APPEAL IS THEREFORE DISMISSED AND THE GROUNDS OF AS SESSEE'S CO ARE ALLOWED. 8. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDER ATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO A.Y. 2012-13, WE RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL FO R A.Y. 2012-13 AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) D ELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 14A READ WITH RULE 8D. GROUNDS NO. 3 TO 5 OF THE REVENUES APPEAL ARE ACCORDINGLY DISMISSED. ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 6 9. IN GROUNDS NO. 6 TO 9, THE REVENUE HAS CHALLENGE D THE DECISION OF THE LD. CIT(APPEALS) HOLDING THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE-COMPANY. 10. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3 ) VIDE AN ORDER DATED 23.03.2013, THE BOOK PROFIT OF THE ASSESSEE-C OMPANY UNDER SECTION 115JB WAS COMPUTED BY THE ASSESSING OFFICER AT RS.9 ,58,79,63,443/- AND TAX PAYABLE THEREON AT THE RATE OF 15% WAS WORKED O UT AT RS.1,43,81,94,516/-. IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS), THE ASSESSEE-COMPANY CHALLENGED THIS ACTION OF THE ASSE SSING OFFICER ON THE GROUND THAT IT BEING A BANKING COMPANY GOVERNED BY THE BANKING REGULATION ACT, THE PROVISIONS OF SECTION 115JB COU LD NOT BE APPLIED TO IT AS THE SAME WERE APPLICABLE TO THE ENTITIES, WHICH ARE GOVERNED BY THE COMPANIES ACT. SINCE THIS STAND TAKEN BY THE ASSESE SE-COMPANY WAS DULY SUPPORTED, INTER ALIA, BY THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y. 2002-03 RENDERED VIDE AN ORDER DATED 27.11.2015 PASSED IN ITA NO. 1768/KOL/2009, THE LD. CIT(APPEALS) ACCEPTE D THE SAME AND HELD THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLIC ABLE IN THE CASE OF THE ASSESSEE. 11. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, THE LD. D.R. MADE THE FOLLOWING SUBMISSIONS IN WRITING IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE:- 2. THE DECISION OF THE TRIBUNAL REQUIRES RECONSIDE RATION. THE REASONS ARE THAT THE TRIBUNAL HAS PRESUMED THAT IF A COMPANY DOES NOT MAINTAIN ACCOUNTS AS PER SCHEDULE VI EITHE R BECAUSE OF EXEMPTION PROVIDED IN THAT ACT OR IF SOME OTHER STATUTE PROVIDES A DIFFERENT SYSTEM OF MAINTENANCE OF ACCOU NTS, THEN PROVISIONS OF SECTION 115JB WILL NOT BE APPLICABLE TO SUCH COMPANY. THERE IS NO SUCH EXEMPTION PROVIDED UNDER THE INCOME-TAX ACT. SECONDLY, THE TRIBUNAL HAS IGNORED THE PROVISIONS OF SUB-SECTION (2) OF SECTION 115JB WHIC H PROVIDES THE MECHANISM FOR MAINTENANCE OF ACCOUNTS BY A COMP ANY. IT MAY BE NOTED THAT THIS SUB-SECTION USES THE WORD 'S HALL' WHICH MAKES IT MANDATORY FOR THE ASSESSEE-COMPANY, TO PRE PARE THE ACCOUNTS IN ACCORDANCE WITH SCHEDULE VI. ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 7 SUB-SECTION (1) OF SECTION 115JB PROVIDES THAT THE PROVISIONS OF THIS SECTION ARE APPLICABLE IN CASE OF EVERY COMPAN Y. IT DOES NOT CARVE OUT ANY EXCEPTION. THE MOMENT IT IS PROVED TH AT THE ASSESSEE IS A COMPANY IT HAS TO CONSIDER TO APPLY T HE PROVISIONS OF SECTION 115JB, WORK OUT BOOK PROFIT AND COMPARE IT WITH TOTAL INCOME AS COMPUTED UNDER NORMAL PROVISIONS OF THE ACT. SUB-SECTION (1) ALSO USES THE WORD 'SHALL'. THE MEA NING OF THIS WORD CANNOT BE 'MAY' PROVIDING ANY DISCRETION TO EI THER ASSESSING OFFICER OR THE ASSESSEE. IT IS CLEARLY A CHARGING SECTION AS IT BEGINS WITH A NON OBSTANTE CLAUSE. 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT'. IN OTHER WORDS, IF THE CONDITION LAID DO WN UNDER THIS SUB-SECTION THAT TOTAL INCOME COMPUTED UNDER NORMAL PROVISIONS OF THE ACT IS LESS THAN A PARTICULAR PER CENTAGE OF BOOK PROFIT IS SATISFIED, THEN CONSEQUENCE AS LAID DOWN UNDER SUBSEQUENT PART OF THAT SUB-SECTION WOULD FOLLOW, T HAT IS, ITS BOOK PROFIT SHALL BE TOTAL INCOME OF THE ASSESSEE. FROM THIS, IT FOLLOWS THAT THE MEANING OF THE WORD 'SHALL' CANNOT BE 'MAY' OTHERWISE ENTIRE PROVISION WILL BECOME OTIOSE SUB-S ECTION (2) BEGINS WITH 'EVERY ASSESSEE, BEING A COMPANY, SHALL , FOR THE PURPOSES OF THIS SECTION'. IT MANDATES THAT 'EVERY COMPANY'. NO EXCEPTION IS PROVIDED TO SOME OR ANY CLASS OF COMPA NIES ON WHATSOEVER BASIS IRRESPECTIVE OF THE FACT THAT SUCH COMPANY IS REGULATED UNDER OTHER STATUTE SAY, BANKING REGULATI ON ACT OR UNDER ELECTRICITY ACT. IT FURTHER SAYS 'SHALL'. IT IS CLEARLY MANDATORY FOR EVERY ASSESSEE-COMPANY TO DO WHAT FOL LOWS IN THAT SUB-SECTION. A DIFFERENT MEANING TO THIS WORD CANNOT BE ASSIGNED WHILE ALSO INTERPRETING SUB-SECTION (2). T HE USE OF THE EXPRESSION 'FOR THE PURPOSES OF THIS SECTION' IN SU B-SECTION (2) CAN ONLY MEAN THAT THE PURPOSE OF THIS SECTION CANN OT BE ACHIEVED UNLESS EVERY ASSESSEE-COMPANY DOES WHAT FO LLOWS THEREAFTER. THAT IS FOR ACHIEVING THE PURPOSE OF SE CTION 115JB, THE LEGISLATURE MANDATES, BY USING WORD 'SHALL', TH AT EVERY COMPANY SHALL 'PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE SCHED ULE VI TO THE COMPANIES ACT, 1956'. FROM THIS, IT FOLLOWS THA T EVEN IF AN ASSESSEE-COMPANY HAS NOT MAINTAINED ACCOUNTS IN ACC ORDANCE WITH SCHEDULE VI, STILL THEN IT HAS TO PREPARE PROF IT AND LOSS ACCOUNT IN ACCORDANCE WITH THE COMPANIES ACT, 1956 FOR THE PURPOSES OF THIS SECTION. AN EXCEPTION HAS BEEN CAR VED OUT BY THE PROVISO TO SUB-SECTION (2) ACCORDING TO WHICH ' (I) THE ACCOUNTING POLICIES (II) THE ACCOUNTING STANDARDS A DOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS A CCOUNT AND (HI) THE METHOD AND RATES ADOPTED FOR CALCULATING T HE DEPRECIATION' WOULD BE THE SAME FOR PREPARING THE A NNUAL ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT AS HAS B EEN ADOPTED 'FOR THE PURPOSE OF PREPARING SUCH ACCOUNTS INCLUDI NG PROFIT AND LOSS ACCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVISIONS O F SECTION 210 OF THE COMPANIES ACT.' IT CLEARLY SHOWS THAT A COMPANY WILL ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 8 HAVE TWO SETS OF PROFIT AND LOSS ACCOUNTS ONE THAT IS PREPARED FOR BEING LAID AT ITS ANNUAL GENERAL MEETING AND OT HER FOR THE PURPOSES OF SECTION 115JB BEING THE ACCOUNTS PREPAR ED AS PER SCHEDULE VI OF COMPANIES ACT. COMMON FACTORS BETWEE N THE TWO WOULD BE '(I) THE ACCOUNTING POLICIES (II) THE ACCO UNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLU DING PROFIT AND LOSS ACCOUNT AND (HI) THE METHOD AND RATES ADOP TED FOR CALCULATING THE DEPRECIATION.' IT IS POSSIBLE THAT ACCOUNTS FOR BEING LAID BEFORE AGM AND PREPARED AS PER SCHEDULE VI OF THE COMPANIES ACT ARE THE SAME. BUT IT DOES NOT NECESSA RILY FOLLOW THAT WHERE ACCOUNTS DIFFERENT FROM SCHEDULE VI OF T HE COMPANIES ACT ARE PREPARED TO COMPLY WITH THE PROVI SIONS OF THE REGULATING ACT, THEN SUCH COMPANIES ARE EXEMPTE D FROM PREPARING ACCOUNTS AS PER SCHEDULE VI OF THE COMPAN IES ACT. KEEPING ACCOUNT BY TWO METHODS IS NOT UNCOMMON. ACC OUNTS ARE REQUIRED TO BE KEPT FOR MEETING OBLIGATION UNDE R OTHER STATUTE WHEREAS DIFFERENT METHODS FOR KEEPING ACCOU NTS ARE ADOPTED FOR COMPUTING INCOME UNDER THE INCOME-TAX A CT. MANDATE UNDER OTHER STATUTE TO KEEP ACCOUNTS IN A P ARTICULAR MANNER CANNOT MAKE THE PROVISIONS TO PREPARE ACCOUN TS IN DIFFERENT MANNER UNDER INCOME-TAX ACT OTIOSE. ON TH E OTHER HAND, THE INCOME-TAX ACT IS SPECIAL STATUTE; ITS PR OVISIONS WILL HAVE PRECEDENCE OVER PROVISIONS OF OTHER STATUTE IF THEY ARE IN CONFLICT WITH EACH OTHER IN THE FIELD OF COMPUTATIO N OF INCOME AND TAX THEREFROM. PREPARATION OF ACCOUNTS UNDER TH E BANKING REGULATION ACT SERVES THE PURPOSE UNDER THAT ACT WH ICH COULD HAVE BEEN FOLLOWED UNDER THE INCOME-TAX ACT IF THER E WOULD NOT HAVE BEEN SPECIFIC PROVISIONS TO THAT EFFECT. FURTH ER, THE PROVISIONS OF SECTION 115JB ARE SPECIAL PROVISIONS AS MENTIONED IN THE HEADLINE OF THE SECTION. OTHER PROVISIONS OF THE ACT CANNOT OVERRIDE THESE PROVISIONS. THE QUESTION OF T HE PROVISIONS OF BANKING REGULATION ACT OVERRIDING THE PROVISIONS OF SECTION 115JB SHOULD NOT ARISE. FURTHER, AS PER THE BANKING COMPANIES(ACQUISITION A ND TRANSFER OF UNDERTAKINGS) ACT, 1970, SEC 4 THE BANK IS A 'BODY CORPORATE' AND THEREFORE, GOVERNED BY COMPANI ES ACT,1956. FOR EASY REFERENCE, SEC 4 IS QUOTED AS BE LOW- '(4) EVERY CORRESPONDING NEW BANK SHALL BE A BODY CORPORATE WITH PERPETUAL SUCCESSION AND A COMMON SEAL WITH POWER, SUBJECT TO THE PROVISIONS OF THIS ACT, TO ACQUIRE, HOLD AND DISPOSE OF PROPERTY, AND TO CONTRACT, AND MAY SUE AND BE SUED IN ITS NAME'. MOREOVER, FOR APPLICATION OF SEC 115JB, IT IS NOT M ANDATORY REQUIREMENT THAT THE BODY CORPORATE NEED BE REGISTE RED UNDER COMPANIES ACT. WHAT IS REQUIRED IS WHETHER PROVISIO NS OF THE ACT ARE APPLICABLE TO THE ENTITY OR NOT WHICH IS DE FINITELY APPLICABLE IN THE CASE AS BODY CORPORATE IS DEFINED IN SEC 2(7) OF THE COMPANIES ACT,1956. THEREFORE, LD TRIBUNAL'S RELIANCE ON DEFINITION OF COMPANY AND CONSEQUENTLY TREATING THE BANK AS NOT REGISTERED UNDER COMPANIES ACT, 1956 ARE OF THE MARK. IN ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 9 THE INSTANT CASE, THE BANK IS A BODY CORPORATE AND COMPANIES ACT ARE APPLICABLE. THE HON'BLE BOMBAY HIGH COURT DECIDED THE CASE OF U NION BANK OF INDIA AGAINST REVENUE ON THE GROUND THAT THE PRO VISIO TO SUBSECTION 2 OF SEC 115JB READ WITH SCH VI LEADS TO AN UNWORKABLE MACHINERY SECTION AND THEREFORE, CHARGIN G SECTION ALSO CAN NOT BE INVOKED. I HUMBLY SUBMIT WITH GREAT EST RESPECT TO THE COURT THAT THIS JUDGEMENT IS PER-INCURIAM FO R THE SIMPLE REASON THAT BOTH THE ACCOUNTS, PREPARED UNDER DIFFE RENT METHODS CAN BE SAME ALSO. FURTHER, THE LD. HIGH COU RT TREATED THE EXPLANATION 3 AS MEANINGLESS AND OTIOSE. IN MY HUMBLE SUBMISSION, IF WE ARE ALIVE TO SUCH A POSSIBILITY T HAT TWO ACCOUNTS MAY ALSO BE SAME OR DIFFERENT AS THE CASE MAY BE, EXPLANATION 3 WILL NOT GET REDUNDANT. CONCLUSION 3. THE DECISION OF THE TRIBUNAL, IN THE ABOVE CASE, THEREFORE, REQUIRES RECONSIDERATION AS IT HAS IGNORED VITAL PR OVISION IN SUB-SECTION (2) OF SECTION 115JB AND INTERPRETATED THE PROVISION IN SUCH A MANNER THAT IT HAS PRACTICALLY CARVED OUT AN EXCEPTION FROM THE APPLICABILITY OF THESE SPECIAL P ROVISIONS WHEN NO SUCH EXCEPTION REALLY EXISTS. IT HAS MADE T HE APPLICATION OF SECTION 115JB INEFFECTIVE IN THOSE C ASES WHERE ACCOUNTS ARE REQUIRED TO BE KEPT UNDER OTHER STATUT ES ALSO IGNORING THE MANDATORY NATURE OF PROVISIONS OF SUB- SECTION (2) WHICH OVERRIDES NOT ONLY OTHER PROVISIONS OF INCOME -TAX ACT BUT ALSO OTHER STATUTES. 12. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STRONGLY RELIED ON THE ORDER OF THE TRIBUNAL DATED 27.11.2015 (SUPR A) PASSED IN ASSESSEES OWN CASE FOR A.Y. 2002-03 IN SUPPORT OF THE ASSESSEES CASE ON THIS ISSUE AND SUBMITTED THAT ALL THE RELEVANT ASPE CTS HAVE BEEN DULY CONSIDERED BY THE TRIBUNAL AND THE ISSUE IS DECIDED BY PASSING A WELL DISCUSSED AND WELL REASONED ORDER. HE ALSO SUBMITTE D THAT A SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN VARIOUS CASES A ND THE SAME HAVE BEEN REFERRED TO AND DISCUSSED IN THE ORDER OF THE TRIBU NAL PASSED IN ASSESSEES OWN CASE FOR A.Y. 2002-03. HE FURTHER SU BMITTED THAT THIS ISSUE IS ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF UNION BANK OF INDIA (263 TAXMAN 686). ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 10 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT A SIMILAR ISSUE RELATING TO THE APPLICABILITY OF SECTION 115JB OF T HE ACT IN THE CASE OF THE ASSESSEE BEING A BANKING COMPANY WAS ALSO INVOLVED IN ASSESSEES OWN CASE FOR A.Y. 2002-03 AND THE COORDINATE BENCH OF T HIS TRIBUNAL DECIDED THE SAME IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPH N O. 7 (INCLUDING PARA NO. 7.1 TO 7.7) OF ITS ORDER DATED 27.11.2015 PASSE D IN ITA NO. 1768/KOL/2009 AS UNDER:- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE VARIOUS CASE LAWS RELIED UPON BY THE COUNSELS FOR B OTH THE SIDES. AT THE OUTSET, WE FIND IT APPROPRIATE TO REPRODUCE THE FOLLOWING PROVISIONS OF INCOME TAX ACT, 1961 , COMPANIES ACT, 1956, BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDE RTAKINGS) ACT, 1970 AND BANKING REGULATION ACT, 1949 ON WHICH THE IMPUGNED ISSUE DWELLS UPON :- 7.1 SECTION 115JB(2) OF THE INCOME TAX ACT, 1961. SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COM PANIES (2) [EVERY ASSESSEE,- (A) BEING A COMPANY, OTHER THAN ACOMPANY REFERRED T O IN CLAUSE (B), SHALL, FOR THE PURPOSES OF THIS SECTION, PREPA RE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCO RDANCE WITH THE PROVISIONS OF PART II OF SCHEDULE VI TO THE COM PANIES ACT, 1956 (L OF 1956); OR (B) BEING A COMPANY, TO WHICH THE PROVISO TO SUB-SE CTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 (L OF 1956 I S APPLICABLE, SHALL, FOR THE PURPOSES OF THIS SECTION, PREPARE IT S PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANC E WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANY:] PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS I NCLUDING PROFIT AND LOSS ACCOUNT,- (I) THE ACCOUNTING POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL BE THE SAME AS HAVE BEEN ADOPTED FOR THE PURP OSE OF PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF THE COMPANIES ACT, 195 6 (1 OF 1956) : PROVIDED FURTHER THAT WHERE THE COMPANY HAS ADOPTED OR ADOPTS THE FINANCIAL YEAR UNDER THE COMPANIES ACT, 1956 (1 OF 1956), WHICH IS DIFFERENT FROM THE PREVIOUS YEAR UNDER THIS ACT,- (I) THE ACCOUNTING POLICIES; ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 11 (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL CORRESPOND TO THE ACCOUNTING POLICIES, ACCOUN TING STANDARDS AND THE METHOD AND RATES FOR CALCULATING THE DEPREC IATION WHICH HAVE BEEN ADOPTED FOR PREPARING SUCH ACCOUNTS INCLU DING PROFIT AND LOSS ACCOUNT FOR SUCH FINANCIAL YEAR OR PART OF SUCH FINANCIAL YEAR FALLING WITHIN THE RELEVANT PREVIOUS YEAR. ' 7.2 SECTION 211(1), 211(2), 211(3), 211(3A), 211(3B ) AND 211(3C) OF COMPANIES ACT 1956: 211. FORM AND CONTENTS OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (1) EVERY BALANCE SHEET OF A COMPANY SHALL GIVE A T RUE AND FAIR VIEW OF THE STATE OF AFFAIRS OF THE COMPANY AS AT T HE END OF THE FINANCIAL YEAR AND SHALL, SUBJECT TO THE PROVISIONS OF THIS SECTION, BE IN THE FORM SET OUT IN PART I OF SCHEDULE VI, OR AS NEAR THERETO AS CIRCUMSTANCES ADMIT OR IN SUCH OTHER FORM AS MAY BE APPROVED BY THE CENTRAL GOVERNMENT EITHER GENERALLY OR IN AN Y PARTICULAR CASE; AND IN PREPARING THE BALANCE SHEET DUE REGARD SHALL BE HAD, AS FAR AS MAY BE, TO THE GENERAL INSTRUCTIONS FOR P REPARATION OF BALANCE SHEET UNDER THE HEADING 'NOTES' AT THE END OF THAT PART: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY INSURANCE OR A BANKING COMPANY OR ANY COMPANY E NGAGED IN THE GENERATION OR SUPPLY OF ELECTRICITY, OR TO ANY OTHER CLASS OF COMPANY FOR WHICH A FORM OF BALANCE SHEET HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVERNING SUCH CLASS OF COMPANY. (2) EVERY PROFIT AND LOSS ACCOUNT OF A COMPANY SHAL L GIVE A TRUE AND FAIR VIEW OF THE PROFIT OR LOSS OF THE COMPANY FOR THE FINANCIAL YEAR AND SHALL, SUBJECT AS AFORESAID, COMPLY WITH T HE REQUIREMENTS OF PART II OF SCHEDULE VI, SO FAR AS THEY ARE APPLI CABLE THERETO: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY TO ANY INSURANCE OR BANKING COMPANY OR ANY COMPANY ENG AGED IN THE GENERATION OR SUPPLY OF ELECTRICITY, OR TO ANY OTHER CLASS OF COMPANY FOR WHICH A FORM OF PROFIT AND LOSS ACCOUNT HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVERNING SUCH CLASS OF COMPANY. (3) THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, EXEMPT ANY CLASS OF COMPANIES FROM COMPLIA NCE WITH ANY OF THE REQUIREMENTS IN SCHEDULE VI IF, IN ITS OPINI ON, IT IS NECESSARY TO GRANT THE EXEMPTION IN THE PUBLIC INTEREST. ANY SUCH EXEMPTION MAY BE GRANTED EITHER UNCONDITIO NALLY OR SUBJECT TO SUCH CONDITIONS AS MAY BE SPECIFIED IN T HE NOTIFICATION. [(3A) EVERY PROFIT AND LOSS ACCOUNT AND BALANCE SHE ET OF THE COMPANY SHALL COMPLY WITH THE ACCOUNTING STANDARDS. (3B) WHERE THE PROFIT AND LOSS ACCOUNT AND THE BALA NCE SHEET OF THE COMPANY DO NOT COMPLY WITH THE ACCOUNTING STAND ARDS, SUCH ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 12 COMPANIES SHALL DISCLOSE IN ITS PROFIT AND LOSS ACC OUNT AND BALANCE SHEET, THE FOLLOWING, NAMELY;- (A) THE DEVIATION FROM THE ACCOUNTING STANDARDS; (B) THE REASONS FOR SUCH DEVIATION; AND (C) THE FINANCIAL EFFECT, IF ANY, ARISING DUE TO SU CH DEVIATION. (3C) FOR THE PURPOSES OF THIS SECTION, THE EXPRESSI ON 'ACCOUNTING STANDARDS' MEANS THE STANDARDS OF ACCOUNTING RECOMM ENDED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA CON STITUTED UNDER THE CHARTERED ACCOUNTANTS ACT, 1949 (38 OF 1949), A S MAY BE PRESCRIBED BY THE CENTRAL GOVERNMENT IN CONSULTATIO N WITH THE NATIONAL ADVISORY COMMITTEE ON ACCOUNTING STANDARDS ESTABLISHED UNDER SUB-SECTION (L) OF SECTION 210A: PROVIDED THAT THE STANDARDS OF ACCOUNTING SPECIFIED BY THE 1NSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA SHALL B E DEEMED TO BE THE ACCOUNTING STANDARDS UNTIL THE ACCOUNTING STAND ARDS ARE PRESCRIBED BY THE CENTRAL GOVERNMENT UNDER THIS SUB - SECTION.] ' 7.3 EXPLANATION 3 TO SECTION 115JB OF THE INCOME TA X ACT, 1961 'FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT FOR THE PURPOSES OF THIS SECTION, THE ASSESSEE, BEING A COM PANY TO WHICH THE PROVISO TO SUB-SECTION (2) OF SECTION 211 OF TH E COMPANIES ACT, 1956 (L OF 1956) IS APPLICABLE, HAS, FOR AN ASSESSM ENT YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2012, AN OPTION TO PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVAN T PREVIOUS YEAR EITHER IN ACCORDANCE WITH THE PROVISIONS OF PART II AND PART III OF SCHEDULE VI7 TO THE COMPANIES ACT, 1956 OR IN ACCOR DANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANY.] 7.3.1. THE EXPLANATION 3 TO SECTION 115JB OF THE AC T HAS BEEN INSERTED BY THE FINANCE ACT 2012 TO CLARIFY THAT ON LY ASSESSES BEING COMPANIES AND TO WHOM PROVISIONS OF THE COMPA NIES ACT, 1956 ARE APPLICABLE CAME WITHIN THE AMBIT OF SECTIO N 115JB OF THE ACT. IN OTHER WORDS, UNLESS AN ASSESSEE COMES WITHI N THE AMBIT OF SECTION 211 OF THE COMPANIES ACT, 1956, IT WAS NOT COVERED BY THE EXPLANATION 3 TO SECTION 115JB AND AS A NECESSARY C OROLLARY SECTION 115JB WAS NOT APPLICABLE TO IT. IN THIS REG ARD, IT IS THEREFORE NECESSARY TO ASCERTAIN WHETHER THE ASSESS EE BANK CAN LEGALLY BE CONSIDERED AS A 'COMPANY' FOR THE PURPOS E OF APPLYING THE PROVISO TO SECTION 211(2) OF THE COMPANIES ACT, 1956. IN VIEW OF THE LANGUAGE USED IN SECTION 211(3), WHAT NEEDS TO BE EXAMINED IS WHETHER IT IS POSSIBLE TO CLASSIFY THE ASSESSEE AS A 'BANKING COMPANY' AND THEREBY COME TO A CONCLUSION WHETHER I N TERMS OF EXPLANATION 3, SECTION 115JB IS APPLICABLE TO THE A SSESSEE WHO CARRIED ON BANKING BUSINESS. 7.3.2. THE TERM 'BANKING COMPANY' HAS BEEN DEFINED IN SECTION 2(5) OF THE COMPANIES ACT, 1956 AS FOLLOWS:- 'BANKING COMPANY' HAS THE SAME MEANING AS IN THE BA NKING COMPANIES ACT, 1949 (10 OF 1949)'. ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 13 7.3.3. THE TERM 'BANKING COMPANY' HAS BEEN DEFINED IN SECTION 5(C) OF BANKING REGULATION ACT, 1949, AS ANY COMPAN Y WHICH TRANSACTS THE BUSINESS OF BANKING IN INDIA. 7.3.4. THE TERM 'COMPANY' HAS BEEN DEFINED IN SECTI ON 5(D) OF BANKING REGULATION ACT, 1949 TO MEAN ANY COMPANY AS DEFINED IN SECTION 3 OF COMPANIES ACT, 1956 AND INCLUDES A FOR EIGN COMPANY WITHIN THE MEANING OF SECTION 591 OF THAT ACT. 7.3.5. THE TERM 'COMPANY' HAS BEEN DEFINED IN SECTI ON 3 OF COMPANIES ACT, 1956 AS FOLLOWS:- IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE EXPRESSIONS 'COMPANY', 'EXISTING COMPANY', 'PRIVATE COMPANY' AN D 'PUBLIC COMPANY' , SHALL, SUBJECT TO THE PROVISIONS OF SUB SECTION (2) , HAVE THE MEANINGS SPECIFIED BELOW:- (I) 'COMPANY' MEANS A COMPANY FORMED AND REGISTERED UNDER THIS ACT OR AN EXISTING COMPANY AS DEFINED IN CLAUSE (II ); (II) 'EXISTING COMPANY' MENAS A. COMPANY FORMED AND REGISTERED UNDER ANY OF THE PREVIOUS COMPANIES LAWS SPECIFIED BELOW:- (A) ANY ACT OR ACTS RELATING TO COMPANIES IN FORCE BEFORE THE INDIAN COMPANIES ACT, 1866 (10 OF 1866) AND REPEALE D BY THAT ACT; (B) THE INDIAN COMPANIES ACT, 1866 (L0 OF 1866); (C) THE INDIAN COMPANIES ACT, 1882 (6 OF 1882); (D) THE INDIAN COMPANIES ACT, 1913 (7 OF 1913); (E) THE REGISTRATION OF TRANSFERRED COMPANIES ORDIN ANCE, 1942 (54 OF 1942); AND (F) ANY LAW CORRESPONDING TO ANY OF THE ACT OR THE ORDINANCE AFORESAID AND IN FORCE IN THE MERGED TERRITORIES OR IN A PART B STATE, OR ANY PART THEREOF, BEFORE THE EXTENSION TH ERETO OF THE INDIAN COMPANIES ACT, 1913 (7 OF 1913)'. 7.3.6. AS DEMONSTRATED IN EARLIER PARAGRAPHS, THE A SSESSEE WAS ESTABLISHED UNDER THE BANKING COMPANIES (ACQUISITIO N AND TRANSFER OF UNDERTAKINGS) ACT, 1970. THE ASSESSEE I S NEITHER A 'COMPANY' REGISTERED UNDER COMPANIES ACT, 1956 NOR IS IT AN EXISTING COMPANY REGISTERED UNDER THE ACTS SPECIFIE D IN CLAUSE (II) OF SECTION 3(1) OF THE COMPANIES ACT, 1956. IN THE CIRCUMSTANCES, EVEN THOUGH 'THE ASSESSEE IS ASSESSED IN THE STATUS OF A 'COMPANY' FOR TAX PURPOSES, IT IS NOT A 'COMPANY' WITHIN THE MEANING ASSIGNED TO THAT EXPRESSION BY SECTION 3 OF THE COM PANIES ACT, 1956. WE FIND THAT THE NEWLY INSERTED EXPLANATION 3 TO SECTION 115JB OF THE ACT AMPLIFIES THE INTENTION OF THE LEG ISLATURE AND CATEGORICALLY CLARIFIES THAT THE ASSESSES TO WHICH SECTION 115JB IS APPLICABLE ARE ONLY THOSE WHO ARE 'COMPANIES' TO WH ICH PROVISO TO SUBSECTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 IS APPLICABLE AND NOT TO ASSESSES WHICH ARE ASSESSED I N THE STATUS OF 'COMPANY' FOR TAX PURPOSES. TO ILLUSTRATE THIS POIN T, IT MAY BE ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 14 STATED THAT HDFC BANK LTD, KOTAK MAHINDRA BANK LTD ETC ARE 'BANKING COMPANIES' AS DEFINED IN SECTION 5(C) & (D ) OF BANKING REGULATION ACT, 1949. THESE BANKING COMPANIES ARE I NCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. THESE ASSESSEES CARRY ON BUSINESS OF BANKING. AS SUCH PROVISO TO SE CTION 211(2) IS APPLICABLE TO THESE BANKING COMPANIES AND THEREFORE THESE BANKING COMPANIES PREPARE THEIR ACCOUNTS IN CONFORM ITY WITH SCHEDULE II OF BANKING REGULATION ACT, 1949. BY VIR TUE OF EXPLANATION 3 TO SECTION 115JB , SUCH BANKING COMPA NIES ARE RETROACTIVELY MADE LIABLE TO PAY TAX ON THE DEEMED INCOME COMPUTABLE WITH RESPECT TO NET PROFIT AS DISCLOSED BV PROFIT AND LOSS ACCOUNT PREPARED BY SUCH BANKING COMPANIES IN CONFORMITY WITH THE PROVISIONS OF BANKING REGULATION ACT, 1949 . THIS LEGAL POSITION HAS BEEN VERY ABLY ILLUSTRATED BY THE MUMB AI BENCH OF THE TRIBUNAL IN THE CASE OF MAHARASHTRA STATE ELECT RICITY BOARD VS JCIT REPORTED IN (2002) 82 ITD 422 (MUM TRIB) WHICH IS RELIED UPON HEREINBELOW. 7.4. THE NOTES TO CLAUSES TO FINANCE ACT, 2012 ON T HE SUBJECT OF MINIMUM ALTERNATE TAX (MAT) IS REPRODUCED BELOW:- (I). UNDER THE EXISTING PROVISIONS OF SECTION 115LB OF THE ACT, A COMPANY IS LIABLE TO PAY MAT OF EIGHTEEN AND ONE HA LF PER CENT OF ITS BOOK PROFIT IN CASE OF TAX ON ITS TOTAL INCOME COMPUTED UNDER THE PROVISIONS OF THE ACT IS LESS THAN MAT LIABILIT Y. BOOK PROFIT FOR THIS PURPOSE IS COMPUTED BY MAKING CERTAIN ADJUSTME NTS TO THE PROFIT DISCLOSED IN THE PROFIT AND LOSS ACCOUNT PRE PARED BY THE COMPANY IN ACCORDANCE WITH THE SCHEDULE VI OF THE C OMPANIES ACT, 1956. AS PER SECTION 115LB, EVERY COMPANY IS REQUIRED TO PREPARE ITS ACCOUNTS AS PER SCHEDULE VI OF THE COMPANIES ACT, 1 956. HOWEVER, AS PER THE PROVISIONS OF THE COMPANIES ACT, 1956, C ERTAIN COMPANIES E.G. INSURANCE, BANKING OR ELECTRICITY CO MPANY ARE ALLOWED TO PREPARE THEIR PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS SPECIFIED IN THEIR REGULATORY A CTS. IN ORDER TO ALIGN THE PROVISIONS OF INCOME-TAX ACT WITH THE COM PANIES ACT, 1956, IT IS PROPOSED TO AMEND SECTION 115JB TO PROV IDE THAT THE COMPANIES WHICH ARE NOT REQUIRED UNDER SECTION 211 OF THE COMPANIES ACT TO PREPARE THEIR PROFIT AND LOSS ACCO UNT IN ACCORDANCE WITH THE SCHEDULE VI OF THE COMPANIES AC T, 1956, PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THEIR REGULATORY ACTS SHALL BE TAKEN AS A BASIS FOR COMPUTING THE BOOK PROFIT UNDER SECTION 115JB. (II). IT IS NOTED THAT IN CERTAIN CASES, THE AMOUNT STANDING IN THE REVALUATION RESERVE IS TAKEN DIRECTLY TO GENERAL RE SERVE ON DISPOSAL OF A REVALUED ASSET. THUS, THE GAINS ATTRI BUTABLE TO REVALUATION OF THE ASSET IS NOT SUBJECT TO MAT LIAB ILITY. IT IS, THEREFORE, PROPOSED TO AMEND SECTION 115JB T O PROVIDE THAT THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB SH ALL BE INCREASED BY THE AMOUNT STANDING IN THE REVALUATION RESERVE R ELATING TO THE ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 15 REVALUED ASSET WHICH HAS BEEN RETIRED OR DISPOSED, IF THE SAME IS NOT CREDITED TO THE PROFIT AND LOSS ACCOUNT. (III) IT IS ALSO PROPOSED TO OMIT THE REFERENCE OF PART III OF THE SCHEDULE VI OF THE COMPANIES ACT, 1956 FROM SECTION 115JB IN VIEW OF OMISSION OF PART III IN THE REVISED SCHEDULE VI UNDER THE COMPANIES ACT 1956. THESE AMENDMENTS WILL TAKE EFFECT FROM 1 ST APRIL, 2013 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2013-14 AND SUBSEQUENT ASSESSMENT YEARS. ' 7.5. IN VIEW OF THE ABOVE, WE HOLD THAT IN VIEW OF THE LEGISLATIVE CHANGE BROUGHT ABOUT BY THE INTRODUCTION OF EXPLANA TION 3 IN SECTION 115JB OF THE ACT BY THE FINANCE ACT, 2012 , THE ASSESSEE'S CONTENTION IN FACT STANDS MORE FORTIFIED. THE EXPLA NATION 3 TO SECTION 115JB MAKES IT EVIDENTLY CLEAR THAT SECTION 115JB IS APPLICABLE ONLY TO ENTITIES REGISTERED AND RECOGNIZ ED TO BE COMPANIES UNDER THE COMPANIES ACT, 1956. SINCE THE ASSESSEE IS NOT A COMPANY WITHIN THE MEANING OF COMPANIES ACT, 1956, SECTION 211(2) AND PROVISO THEREON IS NOT APPLICABL E AND THEREFORE CONSEQUENTLY WE HOLD THAT THE PROVISIONS OF SECTION 115JB OF THE ACT ARE ALSO NOT APPLICABLE. 7.6. THE BASIC INTENTION OF MAT U/S 115JB IS ONLY T O TAX THE BOOK PROFITS IRRESPECTIVE OF NIL OR LESSER TAXABLE INCOM E DUE TO VARIOUS EXEMPTIONS I DEDUCTIONS LIKE SECTIONS 10A/10B/80IA/ 80IB ETC. THE INTENTION OF MAT IS THAT THE COMPANIES WERE DECLARI NG HUGE PROFITS AS PER THEIR COMPANIES ACT AND DECLARING DI VIDENDS TO ITS SHAREHOLDERS BUT PAYING NIL TAX OR LESSER TAX UNDER THE IT ACT DUE TO VARIOUS EXEMPTIONS/DEDUCTIONS LIKE SECTIONS 10A/10B/80IA/80IB. TO JUSTIFY THE IMPOSITION, REAL INCOME THEORY WAS STRESSED AND IT WAS HELD THAT THE COMPANIES CAN NOT BE ALLOWED TO HAVE TWO FACES, ONE FOR SHAREHOLDER AND ANOTHER FOR TAXMAN. SECTION 115JA WAS ENACTED BY RESTRUCTURING THE PROVISIONS OF SECTION 115J WITH CERTAIN MINOR CHANG ES AND THEREAFTER SECTION 115JB WAS ENACTED BY BRINGING MI NOR CHANGES IN SECTION 115JA. THE PROVISIONS OF SECTION 115J, 1 15JA AND 115JB ARE BY AND LARGE SIMILAR TO EACH OTHER. 7.6.1. THE SCOPE AND EFFECT OF SECTION 115JA WAS EL ABORATED IN THE DEPARTMENT CIRCULAR NO. 762 DATED LS.2.1998. THE RE LEVANT PORTION IS REPRODUCED HEREUNDER:- 'ALTERNATE MINIMUM TAX ON COMPANIES- 46.1 IN RECENT TIMES, THE NUMBER OF ZERO-TAX COMPAN IES AND COMPANIES MARGINAL TAX HAS GROWN. STUDIES HAVE SHOW N THAT IN SPITE OF THE FACT THAT COMPANIES HAVE ENTERED SUBST ANTIAL BOOK PROFITS AND HAVE PAID HANDSOME DIVIDENDS, NO TAX HA S BEEN PAID BY THEM TO THE EXCHEQUER. 46.2 THE FINANCE (NO.2) ACT, 1996, HAS INSERTED A N EW SECTION 115JA OF THE INCOME-TAX ACT, SO AS TO LEVY A MINIMU M TAX ON ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 16 COMPANIES WHO ARE HAVING BOOK PROFITS AND PAYING DI VIDENDS BUT ARE NOT PAYING ANY TAXES. THE SCHEME ENVISAGES THE PAYMENT OF A MINIMUM TAX BY DEEMING 30 PER CENT OF THE BOOK PROF ITS COMPUTED UNDER THE COMPANIES ACT, AS TAXABLE INCOME, IN A CA SE WHERE THE TOTAL INCOME AS COMPUTED UNDER THE PROVISIONS OF TH E INCOME-TAX ACT, IS LESS THAN 30 PER CENT OF THE BOOK PROFIT. W HERE THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF T HE INCOME- TAX ART, IS MORE THAN 30 PER CENT OF THE BOOK PROFI T, TAX SHALL BE CHARGED ON THE SAME. 7.6.2. THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE (NO. 2) BILL, 1996 CATEGORISE THE AMENDMENT UNDER T HE CAPTION 'RATIONALISATION AND SIMPLIFICATION'. THE RELEVANT PORTION IS REPRODUCE HEREUNDER:- 'RATIONALISATION AND SIMPLICATIONS MINIMUM ALTERNATIVE TAX ON COMPANIES IN RECENT TIMES, THE NUMBER OF ZERO-TAX COMPANIES A ND COMPANIES PAYING MARGINAL TAX HAS GROWN. STUDIES HAVE SHOWN T HAT INSPITE OF THE FACT THAT COMPANIES HAVE EARNED SUBSTANTIAL BOOK PROFITS AND HAVE PAID HANDSOME DIVIDENDS, NO TAX HAS BEEN P AID BY THEM TO THE EXCHEQUER. THE NEW PROPOSAL PROVIDES FOR THOSE COMPANIES TO PA Y TAX ON 30% OF THE BOOK PROFITS, WHOSE TOTAL INCOME AS COMPUTED UNDER THE INCOME-TAX ACT IS LESS THAN 30% OF THE BOOK PROFITS AS PER THE BOOKS OF ACCOUNT PREPARED IN ACCORDANCE WITH PARTS IL AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956. 'BOOK PROFI TS' IS DEFINED AND CERTAIN ADJUSTMENTS ARE PROVIDED IN THE PROPOSE D SECTION. THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1-4-19 97, AND WILL ACCORDINGLY, APPLY IN RELATION TO ASSESSMENT YEAR 1 997-98 AND SUBSEQUENT YEARS. ' 7.6.3. THE HON'BLE APEX COURT IN THE CASE OF SURANA STEELS P LTD VS DCIT REPORTED IN (1999) 237 ITR 777 AT PAGE 783 CON SIDERED THE LEGISLATIVE INTENT FOR THE INTRODUCTION OF SECTION 1151. IT WAS FOUND THAT THE SECTION WAS INTRODUCED TO TAKE CARE OF THE PHENOMENON OF PROSPEROUS ZERO-TAX COMPANIES WHICH H AD CONTINUED INSPITE OF THE ENACTMENT OF SECTION 80VV A. THESE WERE COMPANIES WHICH WERE PAYING NO INCOME TAX THOUGH TH EY HAD PROFITS AND WERE DECLARING DIVIDENDS. A MINIMUM COR PORATE TAX WAS SOUGHT TO BE ENSURED ON PROSPEROUS COMPANIES. 7.6.4. IN FACT IN SECTION 1151B, ORIGINALLY THE COM PANIES ENTITLED FOR EXEMPTIONS U/S 10A/ 10B AND DEDUCTIONS U/S 80IA /80IB WERE ELIGIBLE FOR DEDUCTION FROM BOOK PROFITS U/S 1151B. BUT LATER TO BE IN LINE WITH THE UNDERLYING INTENTION BEHIND INTROD UCTION OF MAT PROVISIONS TO TAX THE COMPANIES DECLARING HUGE DIVI DENDS TO SHAREHOLDERS BY REPORTING HIGHER PROFITS AS PER COM PANIES ACT BUT PAYING LESSER TAX UNDER I.T. ACT, THE AMENDMENT WAS BROUGHT OUT IN THE STATUTE BOOK WHEREIN THE COMPANIES ELIGIBLE TO CLAIM EXEMPTIONS AND DEDUCTIONS U/S 10A/10B/80IA/80IB ALS O WOULD ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 17 COME UNDER THE AMBIT OF MAT. FROM THIS, IT COULD BE SAFELY CONCLUDED THAT THE LEGISLATURE IN ITS WISDOM HAD TI ME AND AGAIN APPLIED THE HEYDEN'S RULE TO PREVENT POSSIBLE MISCH IEF IN THE TAXING PROVISION. IN THIS REGARD, IT IS RELEVANT TO REPRODUCE THE FOLLOWING:- 'TO ARRIVE AT THE REAL MEANING, IT IS ALWAYS NECESS ARY TO GET AN EXACT CONCEPTION OF THE AIM, SCOPE AND OBJECT OF TH E WHOLE ACT, TO CONSIDER - (I) WHAT WAS THE LAW BEFORE THE ACT WAS PASSED; (II) WHAT WAS THE MISCHIEF OR DEFECTFOR WHICH THE L AW HAD NOT PROVIDED; (III) WHAT REMEDY THE PARLIAMENT HAS APPOINTED; AND (IV) THE REASON OF THE REMEDY. ' 7.6.5. A STATUTORY PROVISION MUST BE SO CONSTRUED, IF POSSIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED. THE TASK OF A JUDGE IS TO GO BY THE INTENT OF THE STATUTE AND FILL THE GAPS. THE TWO RULES OF MOST GENERAL APPLICATION IN CONSTRUING A STATUTE AR E THAT - FIRST THAT IT SHALL, IF POSSIBLE, BE SO INTERPRETED UT RE S MAGIS VALEAT QUAM PEREAT (THAT THE THING MAY RATHER HAVE EFFECT THAN BE DESTROYED) AND SECONDLY, THAT SUCH A MEANING SHALL BE GIVEN TO IT AS MAY CARRY OUT AND EFFECTUATE TO THE FULLEST EXTE NT THE INTENTION OF THE LEGISLATURE. EACH LAW CONSISTS OF TWO PARTS VIZ., OF BODY, AND SOUL. THE LETTER OF THE LAW IS THE BODY OF LAW AND THE SENSE AND REASON OF THE LAW IS THE SOUL OF THE LAW. LAW TO A LARGE EXTENT, LIVES IN THE LANGUAGE EVEN IF IT EXPANDS WITH THE S PIRIT OF THE STATUTE. 7.6.6. ADMITTEDLY, THE ASSESSEE BANK IS DECLARING D IVIDENDS TO SHAREHOLDERS AND ALSO PAYING HUGE INCOME TAX UNDER IT ACT. APPLYING THE BACKGROUND ON WHICH THE AFORESAID AMEN DMENT IS BROUGHT IN STATUTE AND THE UNDERLYING INTENTION OF MAT PROVISIONS, IT CAN SAFELY BE CONCLUDED THAT IT WAS NEVER THE INTENTION OF THE LEGISLATURE TO IMPOSE MAT ON BANKI NG COMPANIES. 7.7. WE FIND THAT THE DECISION RELIED UPON BY THE L EARNED AR IN THE CASE OF NIKO RESOURCES LTD VS CIT REPORTED IN (1998 ) 234 ITR 828 (AAR) IS NOT APPLICABLE TO THE FACTS OF THE ASSESSE E'S CASE AS THE AAR ONLY DEALT WITH THE APPLICABILITY OF SECTION 11 5JA OF THE ACT ON FOREIGN COMPANIES. THE TERM 'COMPANY' HAS BEEN D EFINED IN SECTION 5(D) OF BANKING REGULATION ACT, 1949 TO MEA N ANY COMPANY AS DEFINED IN SECTION 3 OF COMPANIES ACT, 1 956 AND INCLUDES A FOREIGN COMPANY WITHIN THE MEANING OF SE CTION 591 OF THAT ACT. HENCE THERE IS LOGIC IN INCLUDING THE FOR EIGN COMPANIES UNDER THE AMBIT OF MAT PROVISIONS. HOWEVER, THE SAM E IS NOT APPLICABLE FOR ASSESSEE WHICH IS A BANK. 14. A SIMILAR ISSUE AS INVOLVED IN THE YEAR UNDER C ONSIDERATION THUS WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESS EE FOR A.Y. 2002-03 ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 18 AFTER TAKING INTO CONSIDERATION NOT ONLY THE PROVIS IONS OF SECTION 115JB BUT ALSO THE RELEVANT PROVISIONS OF THE COMPANIES A CT, 1956. THE TRIBUNAL ALSO CONSIDERED THE CIRCULARS ISSUED BY THE BOARD F ROM TIME TO TIME IN THIS REGARD AND TOOK NOTE OF THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF SURANA STEELS PVT. LIMITED (SUPRA), WHE REIN THE LEGISLATIVE INTENT OF SECTION 115J WAS CONSIDERED. AS RIGHTLY C ONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, A SIMILAR ISSUE THUS HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR A.Y. 2002-03 BY PASSING A WELL DISCUSSED AND WELL REASONED ORDER AND WE DO NOT FIN D ANY JUSTIFIABLE REASON TO RECONSIDER THE SAID DECISION AS SOUGHT BY THE LD. D.R. IT IS ALSO NOTED THAT THE TRIBUNAL IN ORDER TO ARRIVE AT THE S AID DECISION RELIED UPON THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (I) KURUNG THAI BANK VS.- JCIT [49 SOT 12 (MUMBA I)]; (II) KERALA STATE ELECTRICITY BOARD VS.- DCIT [329 ITR 91(KERALA)]; (III) MAHARASHTRA STATE ELECTRICITY BOARD VS.- JCI T [82 ITD 422 (MUM. TRIBUNAL); (IV) UNION BANK OF INDIA VS.- ACIT [ITA NOS. 4702 TO 4706/MUM/2010]; (V) INDIAN BANK VS.- ADDL. CIT [ITA NO. 469/MDS/20 10]; (VI) STATE BANK OF HYDERABAD VS.- DCIT [33 TAXMAN. COM 312 (HYD.-TRIBUNAL)]; (VII) BANK OF INDIA VS.- ADDL. CIT [ITA NO. 1498/M UM./2011] THE AMENDMENT MADE IN SECTION 115JB BY THE FINANCE ACT, 2012 BY INSERTING EXPLANATION 3 WAS ALSO TAKEN INTO CONSIDE RATION BY THE TRIBUNAL IN ITS ORDER FOR A.Y. 2002-03 AND IT WAS HELD THAT THE PROVISIONS OF SECTION 115JB OF THE ACT WERE NOT APPLICABLE IN THE CASE OF THE ASSESSEE FOR A.Y. 2002-03 AS THE AMENDMENT BROUGHT IN SECTION 115JB O F THE ACT READ WITH EXPLANATION 3 THERETO BY THE FINANCE ACT, 2012 WAS APPLICABLE ONLY WITH EFFECT FROM ASSESSMENT YEAR 2013-14. ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 19 15. IT IS ALSO OBSERVED THAT EVEN THE HONBLE BOMBA Y HIGH COURT IN THE CASE OF CIT VS.- UNION BANK OF INDIA [263 TAXMAN 6 85] HAD AN OCCASION TO CONSIDER A SIMILAR ISSUE AND THE SAME WAS DECIDED B Y THEIR LORDSHIPS IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE PROVISIO NS OF SECTION 115JB AS MADE PRIOR TO ITS AMENDMENT BY VIRTUE OF THE FINANC E ACT, 2012 WOULD NOT BE APPLICABLE TO A BANKING COMPANY GOVERNED BY THE PROVISIONS OF BANKING REGULATION ACT, 1949. WHILE ARRIVING AT THE SAID CONCLUSION, HONBLE BOMBAY HIGH COURT TOOK NOTE OF THE RELEVANT STATUTORY PROVISIONS AND THE LEGISLATIVE HISTORY AS ALSO THE AMENDMENT M ADE IN SECTION 115JB BY THE FINANCE ACT, 2012 W.E.F. 1 ST APRIL, 2012. THE RELEVANT DISCUSSION MADE BY THE HONBLE BOMBAY HIGH COURT AND THE OBSER VATIONS RECORDED BY THEM IN THIS CONTEXT AS CONTAINED IN PARAGRAPH N O. 8 TO 20 ARE EXTRACTED BELOW:- 8. IN ORDER TO RESOLVE THE CONTROVERSY, WE MAY TAK E NOTE OF THE STATUTORY PROVISIONS AND THE LEGISLATIVE HISTORY. A S IS WELL KNOWN, SECTION 115JB OF THE ACT, PERTAINS TO SPECIA L PROVISIONS FOR PAYMENT OF TAX BY CERTAIN COMPANIES AND PROVIDE S A FORMULA FOR PAYMENT OF MINIMUM TAX IN CASE OF COMPA NIES, WHOSE TAX PAYABLE ON THE TOTAL INCOME WORKS OUT TO BE BELOW A CERTAIN MINIMUM THRESHOLD PERCENTAGE OF ITS BOOK PR OFIT. THIS PROVISION IS A SUCCESSOR TO SECTION L15JA OF THE AC T, WHICH WAS ALSO INTRODUCED FOR THE SAME PURPOSE. IN FACT, THE FIRST LEGISLATIVE INTRODUCTION OF THE PROVISIONS PERTAINI NG TO WHAT IS POPULARLY REFERRED TO AS MAT COMPANIES (MINIMUM ALT ERNATIVE TAX) WAS SECTION L15J. THE CIRCULAR NO.762 DATED 18 TH FEBRUARY, 1998 ISSUED BY THE CENTRAL BOARD OF DIREC T TAX ('CBDT' FOR SHORT) EXPLAINS THE OBJECTS FOR INTRODU CTION OF SUCH MAT PROVISIONS. THE CIRCULAR CLARIFIES THAT NEW SEC TION 115JA HAS BEEN INSERTED BY THE FINANCE ACT, SO AS TO LEVY A MINIMUM TAX ON COMPANIES, WHO ARE HAVING BOOK PROFITS AND P AYING DIVIDENDS, BUT NOT PAYING ANY TAXES. RELEVANT PORTI ON OF SECTION 115JB AS IS STOOD AT THE RELEVANT TIME READS AS UND ER:- 'SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN CO MPANIES: 115JB. (1) NOTWITHSTANDING ANYTHING CONTAINED IN AN Y OTHER PROVISION OF THIS ACT, WHERE IN THE CASE OF AN ASSE SSEE, BEING A COMPANY, THE INCOME-TAX, PAYABLE ON THE TOTAL INCOM E AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AF TER THE 1 ST DAY OF APRIL, (2007) IS LESS THAN (TEN PERCENT) OF ITS BOOK PROFIT, (SUCH) BOOK PROFIT SHALL BE DEEMED TO BE TH E TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABLE BY THE A SSESSEE ON ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 20 SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF (TEN PERCENT). (2) EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR THE PURPOSES OF THIS SECTION, PREPARE ITS PROFIT AND LOSS ACCOUNT F OR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PARTS 11 AND III OF SCHEDULE VI TO THE COMPANIES ACT, 1956 (1 OF 1956). PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS I NCLUDING PROFIT AND LOSS ACCOUNT,- (I) THE ACCOUNTING POLICES, (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL BE THE SAME AS HAVE BEEN ADOPTED FOR THE PURP OSE OF PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF THE COMPANIES ACT, 195 6(1 OF 1956): PROVIDED FURTHER THAT WHERE THE COMPANY HAS ADOPTED OR ADOPTS THE FINANCIAL YEAR UNDER THE COMPANIES ACT, 1956 (1 OF 1956), WHICH IS DIFFERENT FROM THE PREVIOUS YEAR UNDER THIS ACT,- (I) THE ACCOUNT POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL CORRESPOND TO THE ACCOUNTING POLICIES, ACCOUN TING STANDARDS AND THE METHOD AND RATES FOR CALCULATING THE DEPREC IATION WHICH HAVE BEEN ADOPTED FOR PREPARING SUCH ACCOUNTS INCLU DING PROFIT AND LOSS ACCOUNT FOR FINANCIAL YEAR OR PART OF SUCH FIN ANCIAL YEAR FALLING WITHIN THE RELEVANT PREVIOUS YEAR.' 9. IN TERMS OF SUB-SECTION (1) OF SECTION 115JB OF THE ACT THUS NOTWITHSTANDING ANYTHING CONTAINED IN ANY OF THE PR OVISIONS OF THE ACT IN CASE OF AN ASSESSEE BEING A COMPANY WHERE TH E INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE A CT, IS LESS THAN PRESCRIBED PERCENTAGE OF ITS BOOK PROFIT, SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE. IN S O FAR AS THE LANGUAGE USED UNDER SUB-SECTION (I) OF SECTION 115J B IS CONCERNED, THE SAME PAUSES NO CHALLENGE. SUB-SECTION (1) OF SE CTION 115JB TAKES WITHIN ITS SWIP ALL COMPANIES WITH NO FURTHER BIFURCATION OR DISTINCTION BETWEEN COMPANIES. HOWEVER, THE QUESTIO N THAT CALLS FOR OUR CONSIDERATION IS WHETHER THE MACHINERY PROVISIO N PROVIDED UNDER SUB-SECTION (2) OF SECTION 115 JB OF THE ACT IS WORKABLE WHEN IT COMES TO THE BANKING COMPANIES AND SUCH OTHER SP ECIAL COMPANIES GOVERNED BY THE RESPECTIVE ACTS. IN THE CONTEXT, TH E QUESTION WOULD ALSO BE OF THE LEGISLATIVE INTENT TO COVER SUCH COM PANIES WITHIN THE SWIP OF SECTION I 15JB OF THE ACT. THESE QUESTIONS ARISE BECAUSE OF THE LANGUAGE USED IN SUB-SECTION (2) OF SECTION 115 1B. THESE PROVISIONS WE MAY PERUSE MORE MINUTELY. AS PER SUB- SECTION (2) OF ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 21 SECTION 115JB, EVERY ASSESSEE BEING A COMPANY WOULD FOR THE PURPOSES OF THE SAID SECTION PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE P ROVISIONS OF PARTS 11 AND III OF SCHEDULE VI OF THE COMPANIES AC T, 1956. IT IS UNDISPUTED THAT THE RESPONDENT-A BANKING COMPANY IS NOT REQUIRED TO PREPARE ITS ACCOUNTS IN ACCORDANCE WITH THE PROV ISIONS OF PARTS II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956. THE ACCOUNTS OF THE BANKING COMPANY ARE PREPARED AS PER THE PROVISI ONS CONTAINED IN BANKING REGULATION ACT. 1949. THE COUNSEL FOR TH E REVENUE MAY STILL ARGUE THAT IRRESPECTIVE OF SUCH REQUIREMENTS, FOR THE PURPOSES OF THE SAID ACT AND SPECIAL REQUIREMENTS OF SECTION 115JB OF THE ACT, A BANKING COMPANY IS OBLIGED TO PREPARE ITS PROFIT AND LOSS ACCOUNT AS PER THE PROVISIONS OF THE COMPANIES ACT, AS MAND ATED BY SUB- SECTION (2) OF SECTION 115JB OF THE ACT. HIS CONTEN TION WOULD BE THAT SUCH LEGISLATIVE MANDATE IS NOT IMPERMISSIBLE. 10. AT THE FIRST BLUSH, THIS ARGUMENT SEEMS ATTRACT IVE. HOWEVER, WHEN WE READ SUB-SECTION (2) FURTHER, CERTAIN COMPL ICATIONS ARISE IN THIS LINE OF ARGUMENT. THE FIRST PROVISO TO SUB-SEC TION (2) OF SECTION 115JB PROVIDES THAT WHILE PREPARING ANNUAL ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT THE ACCOUNTING POLICIES AND ACCOUNTING STANDARDS ADOPTED FOR PREPARING THE ACCOUNT AND THE METHOD AND RULES ADOPTED IN CALCULATING THE DEPRECIATION SHALL BE THE SAME AS HAVE BEEN ADOPTED FOR THE PURPOSE OF PREPARING SUCH ACCOUNTS AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETI NG IN ACCORDANCE WITH PROVISIONS OF SECTION 210 OF THE CO MPANIES ACT, 1956. THERE IS NO DISPUTE THAT THE RESPONDENT-BANK IN TERMS OF SECTION 210 OF THE COMPANIES ACT, 1956 IS ALSO REQU IRED TO LAY ITS ACCOUNTS BEFORE THE ANNUAL GENERAL MEETING. HOWEVER , SUCH ACCOUNTS WOULD NECESSARILY BE PREPARED IN ACCORDANC E WITH THE PROVISIONS OF BANKING REGULATION ACT, 1949 AND NEVE R BE THOSE WHICH EVEN HAD IT BEEN POSSIBLE TO BE PREPARED, IN ACCORDANCE WITH PARTS II AND III OF SCHEDULE VI OF THE COMPANIES AC T, 1956. THE APPLICABILITY OF THIS PROVISO THEREFORE, IN CASE OF A BANKING COMPANY WOULD IMMEDIATELY CREATE COMPLICATIONS. ON ONE HAND , IN TERMS OF SECTION 210 OF THE COMPANIES ACT, 1956, THE BANK WO ULD BE UNDER AN OBLIGATION TO LAY BEFORE ANNUAL GENERAL MEETING ITS ANNUAL ACCOUNTS INCLUDING THE PROFIT AND LOSS ACCOUNT. THESE ACCOUN TS WOULD BE PREPARED IN TERMS PROVISIONS CONTAINED IN BANKING R EGULATION ACT, 1949. SUB-SECTION (2) REQUIRES PREPARATION OF THE A CCOUNTS IN TERMS OF THE COMPANIES ACT. PROVISO TO SUB-SECTION (2) WO ULD REQUIRE MAINTAINING THE SAME PARAMETERS IN RELATION TO THE ACCOUNTING POLICIES, ACCOUNTING STANDARDS AND METHOD AND RATE OF DEPRECIATION AS ADOPTED FOR THE PURPOSE OF PREPARING THE ACCOUNT S, WHICH WOULD ULTIMATELY BE LAID BEFORE THE ANNUAL GENERAL MEETIN G. A BANKING COMPANY IN TERMS OF SUB-SECTION (2) OF SECTION 115J B CAN PREPARE ADDITIONAL ACCOUNTS AS PER PROVISIONS OF PARTS II A ND III OF SCHEDULE VI OF THE COMPANIES ACT OR FULFIL THE REQUIREMENTS OF THE PROVISO TO SUB-SECTION (2) BUT CANNOT FULFIL BOTH THE CONDITIO NS. 11. THIS LEGAL DICHOTOMY EMERGING FROM THE PROVISIO NS OF SUB- SECTION (2) OF SECTION 115JB PARTICULARLY HAVING RE GARD TO THE FIRST ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 22 PROVISO CONTAINED THEREIN IN CASE OF A BANKING COMP ANY, WOULD CONVINCE US THAT MACHINERY PROVISION PROVIDED IN SU B-SECTION (2) OF SECTION L15JB OF THE ACT, WOULD BE RENDERED WHOLLY UNWORKABLE IN SUCH A SITUATION. IN A WELL KNOWN JUDGMENT THE SUPR EME COURT IN CASE OF CIT V. B.C. SRINIVASA SETTY [1981] 128 ITR 294/5 TAXMAN 1 HAD OBSERVED THAT IN THE INCOME TAX ACT, A CHARING SECTION AND THE COMPUTING PROVISIONS TOGETHER CONSTITUTE AN INTEGRA TED CODE. IN A CASE WHERE THE COMPUTATION PROVISION CAN NOT APPLY, IT WOULD BE EVIDENT THAT SUCH A CASE WAS NOT INTENDED TO FALL W ITHIN THE CHARGING SECTION. IT WAS A CASE OF CHARGING A PARTN ERSHIP FIRM FOR TRANSFER OF A CAPITAL ASSET IN THE NATURE OF GOODWI LL. THE SUPREME COURT WAS OF THE OPINION THAT IT WOULD NOT BE POSSI BLE TO ENVISAGE A COST OF ACQUISITION OF GOODWILL. SINCE COMPUTATION OF CAPITAL GAIN CANNOT BE DONE WITHOUT ASCERTAINING THE COST OF ACQ UISITION, IT WAS HELD THAT NO CAPITAL GAIN TAX CAN BE LEVIED. 12. FOR THE COMPLETENESS OF THE DISCUSSION, WE MAY NOTE THAT SECTION 211 OF THE COMPANIES ACT, 1956 PERTAINS TO FORM OF CONTENTS OF BALANCE-SHEET AND PROFIT AND LOSS ACCOUNT, SUB-SECT ION (1) OF SECTION 211 PROVIDED THAT EVERY BALANCE SHEET OF A COMPANY SHALL GIVE TRUE AND FAIR VIEW ON THE STATE OF AFFAIRS OF THE COMPAN Y AT THE END OF THE FINANCIAL YEAR AND WOULD BE SUBJECT TO THE PROVISIO NS OF THE SAID SECTION AND BE IN THE FORM SET OUT IN THE FORMS 1 A ND 2 OF SCHEDULE VI. THIS SUB-SECTION CONTAINED A PROVISO PROVIDING THAT NOTHING CONTAINED IN SAID SUB-SECTION WOULD APPLY TO A BANK ING COMPANY OR ANY COMPANY ENGAGED IN GENERATION OR SUPPLY OF ELEC TRICITY OR TO ANY OTHER CLASS OF COMPANY FOR WHICH A FORM OF BALA NCE SHEET SHALL BE SPECIFIED IN OR UNDER THE ACT GOVERNING SUCH COM PANY. THUS, COMPANIES ACT, 1956 EXCLUDED THE INSURANCE OR BANKI NG COMPANIES, COMPANIES ENGAGED IN GENERATION OR SUPPLY OF ELECTR ICITY OR COMPANIES FOR WHICH BALANCE-SHEET WAS SPECIFIED IN THE GOVERNING ACT, FROM THE PURVIEW OF SUB-SECTION (1) OF SECTION 211 OF THE COMPANIES ACT, 1956 AND AS A CONSEQUENCE FROM THE P URVIEW OF SECTION 115JB OF THE ACT. 13. WHAT WE HAVE HELD ABOVE IS DULY SUPPORTED BY TH E DIVISION BENCH JUDGMENT OF KERALA HIGH COURT. IT WAS A CASE IN WHI CH THE ASSESSEE BEFORE THE COURT WAS KERALA STATE ELECTRICITY BOARD , A STATUTORY CORPORATION CONSTITUTED UNDER SECTION 5 OF THE ELEC TRICITY (SUPPLY) ACT, 1948. THE REVENUE SOUGHT TO COVER THE SAID ELE CTRICITY BOARD UNDER THE PROVISIONS OF SECTION 115JB WHICH THE ASS ESSEE OPPOSED. THE ISSUE REACHED THE KERALA HIGH COURT. THE COURT REFERRED TO AND RELIED UPON THE DECISION OF THE SUPREME COURT IN CA SE OF B.C. SHRINIVASA SETTY (SUPRA). IT WAS NOTICED THAT THE B OARD WAS REQUIRED TO KEEP AND MAINTAIN ITS ACCOUNT IN THE MANNER SPEC IFIED BY THE CENTRAL GOVERNMENT AND NOT IN THE MANNER SPECIFIED IN THE COMPANIES ACT. IN THAT VIEW OF THE MATTER IT WAS HE LD THAT SECTION 115JB WOULD NOT APPLY TO THE ELECTRICITY BOARD. LEA RNED COUNSEL FOR THE ASSESSEE HAS ALSO BROUGHT TO OUR NOTICE DECISIO NS OF DELHI HIGH COURT HOLDING THAT SUCH MAT PROVISIONS WOULD NOT AP PLY TO THE INSURANCE COMPANIES AND TO THE BANKING COMPANIES. ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 23 14. THERE ARE CERTAIN SIGNIFICANT LEGISLATIVE CHANG ES MADE BY FINANCE ACT, 2012, WHICH MUST BE NOTED BEFORE CONCL UDING THIS ISSUE. IN THE PRESENT FORM, POST AMENDMENT BY FINANCE ACT, 2012, RELEVANT PORTION OF SECTION 115JB OF THE ACT READS AS UNDER- 'SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN CO MPANIES. 115JB. (1) NOTWITHSTANDING ANYTHING CONTAINED IN AN Y OTHER PROVISION OF THIS PAYABLE ON THE TOTAL INCOME AS CO MPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, (2012) , IS LESS THAN (EIGHTEEN AND ONE-HALF PERCENT) OF ITS BOOK PROFIT, (SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSES SEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF (EIGHTEEN AND ONE-HALF PE RCENT). (2) EVERY ASSESSEE,- (A) BEING A COMPANY, OTHER THAN A COMPANY REFERRED TO IN CLAUSE (B), SHALL, FOR THE PURPOSES OF THIS SECTION, PREPA RE ITS (STATEMENT OF PROFIT AND LOSS) FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF (SCHEDULE ILL) TO THE (COMPANIES ACT, 2013 (18 OF2013); OR (B) BEING A COMPANY, TO WHICH THE (SECOND PROVISO T O SUB-SECTION (1) OF SECTION 129) OF THE (COMPANIES ACT, 2013 (18 OF 2013) IS APPLICABLE, SHALL, FOR THE PURPOSES OF THIS SECTION , PREPARE ITS (STATEMENT OF PROFIT AND LOSS) FOR THE RELEVANT PRE VIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANY:) PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS I NCLUDING (STATEMENT OF PROFIT AND LOSS),- (I) THE ACCOUNTING POLICIES; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING (STATEMENT OF PROFIT AND LOSS); (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION, SHALL BE THE SAME AS HAVE BEEN ADOPTED FOR THE PURP OSE OF PREPARING SUCH ACCOUNTS INCLUDING (STATEMENT OF PROFIT AND LO SS) AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVISIONS OF (SECTION 129) OF THE (COMPAN IES ACT, 2013(18 OF2013)' 15. THE MEMORANDUM EXPLAINING THE PROVISIONS MADE I N THE FINANCE BILL, 2012, IN RELATION TO MINIMUM ALTERNATIVE TAX STATED AS UNDER :- 'MINIMUM ALTERNATE TAX (MAT) I. UNDER THE EXISTING PROVISIONS OF SECTION 115JB O F THE ACT, A COMPANY IS LIABLE TO PAY MAT OF EIGHTEEN AND ON HAL F PERCENT OF ITS BOOK PROFIT IN CASE TAX ON ITS TOTAL INCOME COMPUTE D UNDER THE PROVISIONS OF THE ACT IS LESS THAN THE MAT LIABILIT Y. BOOK PROFIT FOR THIS PURPOSE IS COMPUTED BY MAKING CERTAIN ADJUSTME NTS TO THE ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 24 PROFIT DISCLOSED IN THE PROFIT AND LOSS ACCOUNT PRE PARED BY THE COMPANY IN ACCORDANCE WITH THE SCHEDULE VI OF THE C OMPANIES ACT, 1956. AS PER SECTION 115JB, EVERY COMPANY IS REQUIRED TO PREPARE ITS ACCOUNTS AS PER SCHEDULE VI OF THE COMPANIES ACT, 1 956. HOWEVER, AS PER THE PROVISIONS OF THE COMPANIES ACT, 1956, CERT AIN COMPANIES, E.G. INSURANCE, BANKING OR ELECTRICITY COMPANY, ARE ALLOWED TO PREPARE THEIR PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS SPECIFIED IN THEIR REGULATORY ACTS. IN O RDER TO ALIGN THE PROVISIONS OF INCOME-TAX ACT WITH THE COMPANIES ACT , 1956, IT IS PROPOSED TO AMEND SECTION 115JB TO PROVIDE THAT THE COMPANIES WHICH ARE NOT REQUIRED UNDER SECTION 211 OF THE COM PANIES ACT TO PREPARE THEIR PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH SCHEDULE VI OF THE COMPANIES ACT, 1956, PROFIT AND LOSS ACCO UNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THEIR REGULATORY ACTS SHALL BE TAKEN AS A BASIS FOR COMPUTING THE BOOK PROFIT UNDE R SECTION 115JB. II. IT IS NOTED THAT IN CERTAIN CASES, THE AMOUNT S TANDING IN THE REVALUATION RESERVE IS TAKEN DIRECTLY TO GENERAL RE SERVE ON DISPOSAL OF A REVALUED ASSET. THUS, THE GAINS ATTRIBUTABLE T O REVALUATION OF THE ASSET IS NOT SUBJECT TO MAT LIABILITY. IT IS, THEREFORE, PROPOSED TO AMEND SECTION 115JB T O PROVIDE THAT THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB SHALL BE INCREASED BY THE AMOUNT STANDING IN THE REVALUATION RESERVE RELA TING TO THE REVALUED ASSET WHICH HAS BEEN RETIRED OR DISPOSED, IF THE SAME IS NOT CREDITED TO THE PROFIT AND LOSS ACCOUNT. III. IT IS ALSO PROPOSED TO OMIT THE REFERENCE OF P ART III OF SCHEDULE VI OF THE COMPANIES ACT, 1956 FROM SECTION 115JB IN VIEW OF OMISSION OF PART III IN THE REVISED SCHEDULE VI UND ER THE COMPANIES ACT, 1956. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL, 2 013 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2013-14 AND SUBSEQUENT ASSESSMENT YEARS.' 16. IT CAN BE SEEN THAT SUB-SECTION (2) OF SECTION LL5JB OF THE ACT HAS NOW BEEN BIFURCATED IN TWO PARTS COVERED IN THE CLA USES (A) AND (B). CLAUSE (A) WOULD COVER ALL COMPANIES OTHER THAN THO SE REFERRED TO IN CLAUSE (B). SUCH COMPANIES WOULD PREPARE THE STATEM ENT OF PROFIT AND LOSS IN ACCORDANCE TO THE PROVISIONS OF SCHEDUL E III OF THE COMPANIES ACT, 2013 (WHICH HAS NOW REPLACED THE OLD COMPANIES ACT, 1956). CLAUSE (B) REFERS TO A COMPANY TO WHICH SECOND PROVISO TO SUB-SECTION (1) OF SECTION 129 OF THE COMPANIES ACT, 2013 IS APPLICABLE. SUCH COMPANIES, FOR THE PURPOSE OF SECT ION 115JB, WOULD PREPARE THE STATEMENT OF PROFIT AND LOSS IN ACCORDA NCE WITH THE PROVISIONS OF THE ACT GOVERNING THE COMPANY. SECTIO N 129 OF THE COMPANIES ACT, 2013 PERTAINS TO FINANCIAL STATEMENT . UNDER SUB- SECTION (I) OF SECTION 129 IT IS PROVIDED THAT THE FINANCIAL STATEMENT SHALL GIVE A TRUE AND FAIR VIEW OF THE STATE OF AFF AIRS OF THE COMPANY, ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 25 COMPLY WITH THE ACCOUNTING STANDARD NOTIFIED UNDER SECTION 113 AND SHALL BE IN THE FORM AS MAY BE PROVIDED FOR DIFFERE NT CLASSES OF COMPANIES. SECOND PROVISO TO SUB-SECTION (I) OF SEC TION 129 READS AS UNDER:- 'PROVIDED FURTHER THAT NOTHING CONTAINED IN THIS SU B-SECTION SHALL APPLY TO ANY INSURANCE OR BANKING COMPANY OR ANY CO MPANY ENGAGED IN THE GENERATION OR SUPPLY OF ELECTRICITY, OR TO ANY OTHER CLASS OF COMPANY FOR WHICH A FORM OF FINANCIAL STAT EMENT HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVERNING SUCH CLASS OF COMPANY: 17. THIS PROVISO THUS REFERS ANY INSURANCE OR BANKI NG COMPANIES OR COMPANIES ENGAGED IN THE GENERATION OR SUPPLY OF EL ECTRICITY OR TO ANY OTHER CLASS OF COMPANY IN WHICH FORM OF FINANCI AL STATEMENT HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVERNING SUCH C LASS OF COMPANY. COMBINED READING OF THIS PROVISO TO SUB-SECTION (1) OF SECTION 129 OF THE ACT, 2013 AND CLAUSE (B) OF SUB-SECTION (2) OF SECTION 115JB OF THE ACT WOULD SHOW THAT IN CASE OF INSURANCE OR BAN KING COMPANIES OR COMPANIES ENGAGED IN GENERATION OR SUPPLY OF ELE CTRICITY OR CLASS OF COMPANIES FOR WHOM FINANCIAL STATEMENT HAS BEEN SPECIFIED UNDER THE ACT GOVERNING SUCH COMPANY, THE REQUIREMENT OF PREPARING THE STATEMENT OF ACCOUNTS IN TERMS OF PROVISIONS OF THE COMPANIES ACT, IS NOT MADE. CLAUSE (B) OF SUB-SECTION (2) PROVIDES THAT IN CASE OF SUCH COMPANIES FOR THE PURPOSE OF SECTION 115JB THE PREPARATION OF STATEMENT OF PROFIT AND LOSS ACCOUNT WOULD BE IN AC CORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANIES. THIS LEGISLATIVE CHANGE THUS ALIENS CLASS OF COMPANIES WHO UNDER THE GOVERNING ACTS WERE REQUIRED TO PREPARE PROFIT AND LOSS ACCOUNTS N OT IN ACCORDANCE WITH THE COMPANIES ACT, BUT IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SUCH GOVERNING ACT. THE EARLIER DICHOT OMY OF SUCH COMPANIES ALSO, IF WE ACCEPT THE REVENUE'S CONTENTI ON, HAVING THE OBLIGATION OF PREPARING ACCOUNTS AS PER THE PROVISI ONS OF THE COMPANIES ACT HAS BEEN REMOVED. 18. THESE AMENDMENTS IN SECTION 115JB ARE NEITHER D ECLARATORY NOR CLASSIFICATORY BUT MAKE SUBSTANTIVE AND SIGNIFICANT LEGISLATIVE CHANGES WHICH ARE ADMITTEDLY APPLIED PROSPECTIVELY. THE MEMORANDUM EXPLAINING THE PROVISION OF THE FINANCE BILL, 2012 WHILE EXPLAINING THE AMENDMENTS UNDER SECTION 115JB OF THE ACT NOTES THAT IN CASE OF CERTAIN COMPANIES SUCH AS INS URANCE, BANKING AND ELECTRICITY COMPANIES, THEY ARE ALLOWED TO PREP ARE THE PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE SECTIONS SP ECIFIED IN THEIR REGULATORY ACTS. TO ALIGN THE INCOME TAX ACT WITH T HE COMPANIES ACT, 1956 IT WAS DECIDED TO AMEND SECTION 115JB TO PROVIDE THAT THE COMPANIES WHICH ARE NOT REQUIRED UNDER SECTION 211 OF THE COMPANIES ACT, TO PREPARE PROFIT AND LOSS ACCOUNT I N ACCORDANCE WITH SCHEDULE VI OF THE COMPANIES ACT, PROFIT AND L OSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THEIR REGULATORY ACT SHALL BE TAKEN AS BASIS FOR COMPUTING BOOK PROFIT U NDER SECTION 115 JB OF THE ACT. ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 26 19. BEFORE CLOSING, WE MAY ALSO TAKE NOTE OF EXPLAN ATION (3) BELOW SUB-SECTION (2) OF SECTION 115 JB OF THE ACT WHICH READS AS UNDER :- 'EXPLANATION 3-FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT FOR THE PURPOSES OF THIS SECTION, THE ASSESSEE , BEING A COMPANY TO WHICH THE PROVISO TO SUB-SECTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 (1 OF 1956) IS APPLICABL E, HAS, FOR AN ASSESSMENT EAR COMMENCING ON OR BEFORE THE 1 ST DAY OF APRIL, 2012, AN OPTION TO PREPARE ITS PROFIT AND LOSS ACCO UNT FOR THE RELEVANT PREVIOUS YEAR EITHER IN ACCORDANCE WITH TH E PROVISIONS OF PART II AND PART III OF SCHEDULE VI TO THE COMPA NIES ACT, 1956 OR IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOV ERNING SUCH COMPANY.' 20. THIS EXPLANATION STARTS WITH THE EXPRESSION 'FOR THE REMOVAL OF DOUBTS'. IT DECLARES THAT FOR T HE PURPOSE OF THE SAID SECTION IN CASE OF AN ASSESSEE-COMPANY TO WHICH SECOND PROVISO TO SECTION 129(1) OF THE COMPANIES ACT, 201 3 IS APPLICABLE, WOULD HAVE AN OPTION FOR THE ASSESSMENT YEAR COMMENCING ON OR BEFORE 1 ST APRIL, 2012 TO PREPARE ITS STATEMENT OF PROFIT AND LOSS EITHER IN ACCORDANCE WITH THE PR OVISIONS OF SCHEDULE III TO THE COMPANIES ACT, 2013 OR IN ACCOR DANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANY. T O OUR MIND, THIS IS SOME WHAT CURIOUS PROVISION. IN THE ORIGINA L FORM, SUB- SECTION (2) OF SECTION 115JB OF THE ACT DID NOT OFF ER ANY SUCH OPTION TO A BANKING COMPANY, INSURANCE COMPANY OR E LECTRICITY COMPANY TO PREPARE ITS PROFIT AND LOSS ACCOUNT AT I TS CHOICE EITHER IN TERMS OF ITS GOVERNING ACT OR AS PER TERM S OF SECTION 115JB OF THE ACT. SECONDLY, BY VIRTUE OF THIS EXPLA NATION IF AN ANOMALY WHICH WE HAVE NOTICED IS SOUGHT TO BE REMOV ED, WE DO NOT THINK THAT THE LEGISLATURE HAS ACHIEVED SUCH PU RPOSE. IN PLAIN TERMS, THIS IS NOT A CASE OF RETROSPECTIVE LE GISLATIVE AMENDMENT. IT IS STATED TO BE CLARIFICATORY AMENDME NT FOR REMOVAL OF DOUBTS. WHEN THE PLAIN LANGUAGE OF SUB-S ECTION 2 OF SECTION 115JB DID NOT PERMIT ANY AMBIGUITY, WE DO N OT THINK THE LEGISLATURE BY INTRODUCING A CLARIFICATORY OR DECLA RATORY AMENDMENT CURE A DEFECT WITHOUT RESORTING TO RETROS PECTIVE AMENDMENT, WHICH IN THE PRESENT CASE HAS ADMITTEDLY NOT BEEN DONE. 16. IT IS THUS CLEAR THAT THIS ISSUE INVOLVED IN TH E PRESENT CASE IS SQUARELY COVERED NOT ONLY BY THE DECISION OF THE CO ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2002-03 BU T ALSO BY VARIOUS OTHER DECISIONS OF THE TRIBUNAL RENDERED AND ALSO B Y THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF UNION BANK OF INDIA (SUPRA). SINCE THERE IS NOT A SINGLE DECISION OF THE JURISDI CTIONAL HIGH COURT OR EVEN OF ANY OTHER HONBLE HIGH COURT CITED BY THE L D. D.R, WHICH IS IN ITA NO. 584/KOL/2018 ASSESSMENT YEAR: 2010-2011 M/S. UCO BANK 27 FAVOUR OF THE REVENUE ON THIS ISSUE, WE RESPECTFULL Y FOLLOW THE JUDICIAL PRONOUNCEMENTS REFERRED TO AND DISCUSSED ABOVE, WHI CH ARE IN FAVOUR OF THE ASSESSEE AND UPHOLD THE IMPUGNED ORDER OF THE L D. CIT(APPEALS) HOLDING THAT THE PROVISION OF SECTION 115JB WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE BEING A BANKING COMPANY FOR THE YEA R UNDER CONSIDERATION, I.E. A.Y. 2010-11. GROUND NO. 3 OF T HE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 11, 2019. SD/- SD/- (A.T. VARKEY) (P. M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT) KOLKATA, THE 11 TH DAY OF DECEMBER, 2019 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, LTU-2, KOLKATA, AAYAKAR BHAWAN POORVA, 9 TH FLOOR, LARGE TAX PAYER UNIT-2, 110, SHANTIPALLY, KOLKATA-700107 (2) M/S. UCO BANK, 10, B.T.M. SARANI, KOLKATA-700001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-11 , KOLK ATA, (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.