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

ITA 585/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0594 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D S DAMLE
• Keywords: Capital asset; Business income; Depreciation; Double taxation relief; Earning of tax free income; Deemed to accrue or arise in india; Retrospective amendment; Cost of acquisition; Non-deduction of tax; Difference of opinion; TDS; Rule 8D
• Section: 143(3); 14A; 115JB; 40(a)(ia); 10B; 113; 13; 22; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH KOLK ATA BEFORE SHRI S. S. GODARA, JM & DR. A.L. SAINI, AM ITA NO.585/KOL/2018 (ASSESSMENT YEAR: 2011-12) ACIT, LTU-2, KOLKATA VS. M/S UCO BANK 10, BTM, SARANI, KOLKATA 700001. ./ ./PAN/GIR NO. : AAACU3561B ( /APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY : SHRI VIJAY SHANKAR, CIT RESPONDENT BY : SHRI D. S. DAMLE, FCA / DATE OF HEARING : 25/02/2020 /DATE OF PRONOUNCEMENT : 17/06/2020 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAININ G TO ASSESSMENT YEAR 2011-12 IS DIRECTED AGAINST THE ORDER PASSED BY COM MISSIONER OF INCOME TAX(APPEALS)-11, KOLKATA IN APPEAL NO.7/CIT(A)-11/K OL/15-16 DATED 09/02/2018 WHICH IN TURN ARISE OUT OF AN ASSESSMENT ORDER PASSED BY ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT), DATED 27.02.2014 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. THE LD. CIT(A)-11, KOLKATA HAS ERRED IN LAW AND ON FACTS BY DELETING OF ADDITION OF RS.56,49,715/- MADE BY ASSESSING OFFICE R U/S 40(A) (IA) OF INCOME TAX ACT 1961 ON ACCOUNT OF SHORT DEDUCTION OF TAX AT SO URCE WHICH WAS NOT REPORTED AT THE TIME OF FILING RETURN. 2. THE LD. CIT (A)-11, KOLKATA HAS ERRED IN LAW AND ON FACTS BY STATING THAT DISALLOWANCE U/S 40(A) (IA) PERMISSIBLE IF TAX WAS NOT AT ALL DEDUCTED AT THE TIME OF PAYMENT AND DEDUCTION OF TAX BUT FAILS TO DEPOSIT B EFORE FILING RETURN. HENCE, PROVISION OF SECTION 40(A)(IA) NOT APPLICABLE WHEN TAX AT SOURCE WAS SHORT DEDUCTED. NO OPPORTUNITY FOR EXPLANATION PROVIDED T O AO AT THE TIME OF APPEAL PROCEEDING. ITA NO.585/KOL/2018 M/S UCO BANK 2 3. THE LD. CIT (A)-11, KOLKATA HAS ERRED IN LAW AND ON FACTS BY DELETING ADDITION OF RS.31,35,91,170/- MADE BY ASSESSING OFFICER U/S 14A OF INCOME TAX ACT, 1961 READ WITH RULE 8D OF INCOME TAX RULES, 1962. 4. THE LD. CIT (A)-11, KOLKATA HAS ERRED IN LAW AND ON FACTS BY DELETING OF ADDITION OF RS.31,35,91,170/- MADE BY ASSESSING OFF ICER U/S 14A READ WITH RULE 8D OF INCOME TAX RULES, 1962 WHILE THE ASSESSEE HAS EARNED RS.7,41,28,290/- AS DIVIDEND INCOME AND CLAIMED TOTAL EXEMPTED INCOME O F RS.55,68,90,790/-. THE EXPENDITURE INCURRED ON EXEMPTED INCOME FROM 'INVES TMENT ON SECURITIES' AND 'TAX FREE BONDS ARE DEBITED IN THE TAXABLE BUSINESS INCOME WHICH IS LIABLE TO BE DEBITED IN THE TAXABLE BUSINESS INCOME WHICH IS LI ABLE TO BE DISALLOWED AS PER SECTION 14A OF INCOME TAX ACT, 1961 READ WITH RULE 8D OF INCOME TAX RULES, 1962. 5. THE LD. CIT (A)-11, KOLKATA HAS ERRED IN LAW AND ON FACTS BY STATING THAT THE SECURITIES ARE KEPT AS STOCK IN TRADE, HENCE EXPEND ITURE INCURRED ON EARNING OF EXEMPTED INCOME CANNOT BE DISALLOWED, WHILE TRADING IN ALL 'INVESTMENT ON SECURITIES' AND 'TAX FREE BONDS' IS NOT THE BUSINES S OF THE ASSESSEE BANK. INVESTMENT OF ASSESSEE IN ' INVESTMENT ON SECURITIE S' AND 'TAX FREE BONDS' WERE NOT TOTALLY ON TRADING STOCK AS MAJORITY OF INVESTM ENTS ARE MANDATORILY TO BE HELD 'TILL MATURITY' WHILE THERE ARE GOVERNMENT SECURITI ES, OTHER APPROVED SECURITIES, SUBSIDIARIES, JOINT VENTURES ETC.( SR NO.3 OF SCHED ULE 18 OF ANNUAL REPORT FOR F.Y. 2009-10) AND EXPENDITURE ON EXEMPTED INCOME EARNED IS LIABLE TO BE DISALLOWED U/S 14A READ WITH RULE 8D. 6. THE LD. CIT (A)-11, KOLKATA HAS ERRED IN LAW AN D ON FACTS BY HOLDING THAT THE PROVISIONS OF SECTION 115JB (MAT) ARE NOT APPLICABL E FOR THE YEAR IN THE CASE OF ASSESSEE ON THE ADJUSTED BOOK PROFITS AS IT IS NOT A COMPANY U/S 211 OF COMPANIES ACT, 1956. 7. THE LD. CIT (A)-11, KOLKATA HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE PROVISION OF SECTION 115JB (MAT) ARE NOT APPLICABLE FOR THE YEAR IN THE CASE OF ASSESSEE ON THE ADJUSTED BOOK PROFITS AS IT IS NOT A COMPANY U/S 211 OF COMPANIES ACT,1956 WHILE IN THE CASE OF ASSESSEE THE HON'BLE SUPREME COURT [(1999) 240 ITR 355(SC(1999) 156 CTR 380(SC)] HAS HELD THAT BALANCE SHEET IN ACCORDANCE WITH STATUTORY PROVISION WOULD NOT DISENTITLE ASSESSEE I N SUBMITTING INCOME TAX RETURN ON REAL TAXABLE INCOME IN ACCORDANCE WITH METHOD OF ACCOUNTING ADOPTED BY ASSESSEE CONSISTENTLY AND REGULARLY. 8. THE LD. CIT (A)-11, KOLKATA HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE RENTAL INCOME EARNED FROM HOUSE PROPERTY IN SINGAPO RE IS NOT TAXABLE IN INDIA AS PER ARTICLE 6 OF DTAA APPLICABLE BETWEEN THE GOVERN MENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF SINGAPORE. 9. THE LD. CIT (A)-11, KOLKATA HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE RENTAL INCOME EARNED FROM HOUSE PROPERTY IN SINGAPO RE IS NOT TAXABLE IN INDIA UNDER DTAA WHILE AS PER ARTICLE 25 OF DTAA, IT IS T AXABLE IN INDIA. ITA NO.585/KOL/2018 M/S UCO BANK 3 10. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DEL ETE AND/OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. GROUND NOS.1 & 2 RELATES TO ADDITION OF RS.56,49 ,715/- MADE BY ASSESSING OFFICER U/S 40(A) (IA) OF INCOME TAX ACT 1961 ON AC COUNT OF SHORT DEDUCTION OF TAX AT SOURCE. 4. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEA RNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 1 1.12.2019, PASSED BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE IN ITA NO.584/KOL/2018 FOR THE ASSESSMENT YEAR 2010-11 WHEREBY THE ISSUE R ELATING TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT HAS BEEN DISCUSSED AND ADJUDIC ATED IN FAVOUR OF ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL, A C OPY OF WHICH WAS ALSO PLACED BEFORE THE BENCH. 5. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE VIDE ORDER DATED 11.12.2019. IN THIS ORDER, THE TRIBUNAL HAS INTER ALIA OBSERVED AS FOLLOWS: 3. THE ASSESSEE IN THE PRESENT CASE IS A BANKING C OMPANY, WHICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28.09.2010 DECLARING TOTAL INCOME AT NIL. IN T HE COMPUTATION OF TOTAL INCOME FILED ALONG WITH THE SAID RETURN, D ISALLOWANCE OF RS.1,17,97,270/- WAS SUO MOTU MADE BY THE ASSESSEE UNDER SECTION 40(A)(IA). DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, IT WAS, HOWEVER, SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT IT WAS A CASE OF SHORT DEDUCTION OF TA X FROM THE RELEVANT PAYMENT AND NOT A CASE OF NON-DEDUCTION OF TAX AS ENVISAGED IN SECTION 40(A)(IA). IT WAS CONTENDED TH AT THE DISALLOWANCE THUS WAS MADE IN THE COMPUTATION OF TO TAL INCOME UNDER SECTION 40(A)(IA) INADVERTENTLY AND THE SAME SHOULD BE ALLOWED AS DEDUCTION. SINCE THIS CLAIM WAS NOT MADE BY THE ASSESSEE IN THE RETURN OF INCOME, THE ASSESSING OFF ICER RELIED ON ITA NO.585/KOL/2018 M/S UCO BANK 4 THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF GOETZE INDIA LIMITED REPORTED IN 284 ITR 323 AND DID NOT E NTERTAIN 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 T HE DECISION OF 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 T HE TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENT FALLING UNDER VAR IOUS TDS PROVISIONS, THE ASSESSEE COULD BE DECLARED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201, BUT NO DISALLOWANCE COUL D 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 KERA LA HIGH COURT IN THE CASE OF CIT VS.- PVS MEMORIAL HOSPITAL LIMI TED (380 ITR 284) IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE , IT IS OBSERVED THAT THE DECISION OF THE HONBLE CALCUTTA HIGH COUR T IN THE CASE OF S.K. TEKRIWAL (SUPRA) RELIED UPON BY THE LD. CIT(AP PEALS) IN HIS IMPUGNED ORDER TO GIVE RELIEF TO THE ASSESSEE ON TH IS ISSUE SQUARELY COVERS THIS ISSUE IN FAVOUR OF THE ASSESSEE. WE, TH EREFORE, 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 NO. 1 OF THE REVENUES APPEAL IS ACCORDINGLY DISMIS SED. 7. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH, IN ASSESSEES OWN CASE AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MA TERIAL TO CONTROVERT THE AFORESAID FINDINGS OF THE DIVISION BENCH (SUPRA). W E FIND NO REASON TO INTERFERE IN THE SAID ORDER OF THE DIVISION BENCH, THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE COORDINATE BENCH IN ASSESSEES OWN CASE WE DELETE THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THEREFORE, G ROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. GROUND NOS.3 TO 5 RELATES TO DISALLOWANCE OF RS. 31,35,91,170/- MADE BY THE ASSESSING OFFICER U/S 14A R.W.R 8D OF THE RULES . ITA NO.585/KOL/2018 M/S UCO BANK 5 9. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEA RNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 1 1.12.2019, PASSED BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE IN ITA NO.584/KOL/2018 FOR THE ASSESSMENT YEAR 2010-11 WHEREBY THE ISSUE RELATING TO DISALLOWANCE OF SECTION 14A R.W.R 8D OF THE RULES HAS BEEN DISCUSSE D AND ADJUDICATED IN FAVOUR OF ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIB UNAL, A COPY OF WHICH WAS ALSO PLACED BEFORE THE BENCH. 10. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 11. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF T HE MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASS ESSEES OWN CASE VIDE ORDER DATED 11.12.2019. IN THIS ORDER, THE TRIBUNAL HAS INTER ALIA OBSERVED AS FOLLOWS: 5. GROUNDS NO. 3 TO 5 INVOLVE A COMMON ISSUE RELAT ING TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANC E OF RS.36,60,39,331/- MADE BY THE ASSESSING OFFICER UND ER SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF TH E INCOME TAX RULES, 1962. 6. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAD EARNED INCOME OF RS.54,88,59,161/-, WHICH WAS EXEMP T FROM TAX. IN THE COMPUTATION OF TOTAL INCOME, EXPENDITURE IN REL ATION TO THE SAID EXEMPT INCOME WAS NOT DISALLOWED BY THE ASSESSEE AS REQUIRED BY SECTION 14A OF THE ACT. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 23.03.2013, THE ASSESSIN G OFFICER WORKED OUT SUCH EXPENSES BY APPLYING RULE 8D AT RS.36,60,39,331/- AND DISALLOWANCE TO THAT EXTENT W AS MADE BY HIM UNDER SECTION 14A OF THE ACT. ON APPEAL, THE LD. CI T(APPEALS) DELETED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER BY RELYING ON THE DECISION OF THIS TRIBUNAL IN THE CAS E 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 OB SERVED THAT A SIMILAR ISSUE WAS INVOLVED IN ASSESSEES OWN CASE F OR A.Y. 2012-13 AND THE TRIBUNAL VIDE ITS ORDER DATED 21.08.2018 PA SSED IN ITA NO. 1615/KOL/2016 DECIDED THE SAME IN FAVOUR OF THE ASS ESSEE ITA NO.585/KOL/2018 M/S UCO BANK 6 UPHOLDING THE DECISION OF THE LD. CIT(APPEALS) DELE TING THE SIMILAR DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 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] T O CONTEND THAT THE RELEVANT SHARES HAVING BEEN HELD BY THE AS SESSEE AS STOCK- IN-TRADE, DISALLOWANCE UNDER SECTION 14A IS LIABLE TO BE MADE AS RIGHTLY HELD BY THE ASSESSING OFFICER. IT IS, HOWEV ER, OBSERVED THAT THIS ASPECT HAS ALREADY BEEN CONSIDERED BY THE TRIB UNAL WHILE DECIDING A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE FOR A.Y. 2012-13, AS IS EVIDENT FROM PARAS 11 TO 13 OF THE ORDER OF T HE TRIBUNAL DATED 21.08.2018, WHICH ARE EXTRACTED BELOW:- 11. HAVING CONSIDERED THE SUBMISSIONS OF THE PARTI ES, WE FIND THAT THE ISSUE INVOLVED IN THE REVENUE'S APPEA L IS SQUARELY COVERED IN ASSESSEE'S FAVOUR BY THE JUDGME NT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HD FC BANK LTD (383 ITR 529). IN THAT CASE ALSO THE ISSUE BEFORE THE HON'BLE BOMBAY HIGH COURT WAS WHETHER ANY PART OF THE INTEREST PAID BY THE BANK COULD BE DISALLOWED U/S 1 4A READ WITH RULE 80(2)(II). ON APPEAL THIS TRIBUNAL AND TH EREAFTER THE HON'BLE BOMBAY HIGH COURT HELD THAT SINCE THE B ANK'S OWN FUNDS WERE SUBSTANTIALLY MORE THAN THE COST OF INVESTMENTS YIELDING TAX FREE INCOME, NO PART OF TH E INTEREST PAID WAS LIABLE FOR DISALLOWANCE. THE VIEW OF THE H ON'BLE BOMBAY HIGH COURT WAS FOLLOWED WITH APPROVAL BY THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF C IT VS RASOI 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 I N ITS RECENT JUDGMENT IN THE CASE OF PR. CIT VS. NIRMA CR EDIT & CAPITAL PVT. LTD (SUPRA) HAS HELD THAT THE EXPRESSI ON USED IN RULE 8D(2)(II) IS 'INTEREST EXPENDITURE' AND NOT 'I NTEREST PAID' AND ACCORDINGLY THE EXPENDITURE IN THIS CONTE XT MUST MEAN INTEREST PAID MINUS TAXABLE INTEREST EARNED. A PPLYING THE RATIO LAID DOWN IN THIS JUDGMENT TO THE FACTS O F THE PRESENT CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(APPEALS) DELETING THE INTEREST DISALLOWANCE MAD E UNDER RULE 8D(2)(II). 13. IN SO FAR AS DISALLOWANCE OF RS.2,90,37,490/- U NDER RULE 8D(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 ITA NO.585/KOL/2018 M/S UCO BANK 7 A DEALER IN SHARES ALTHOUGH IN ITS BALANCE SHEET, S HARES WERE DISCLOSED UNDER THE HEAD 'INVESTMENTS'. WE FIN D THAT THE HON'BLE SUPREME COURT IN ITS RECENT JUDGMENT DA TED 12.02.2018 IN THE CASE OF MAXOPP INVESTMENT LTD VS CIT (SUPRA) DID NOT UPHOLD THIS LINE OF ARGUMENT AND HE LD THAT EVEN IN THE CASE OF A DEALER IN SHARES, EARNING DIV IDEND INCOME FROM ITS STOCK-IN-TRADE, MAY EXPOSE HIS TO T HE RIGORS OF SECTION 14A OF THE ACT. WE HOWEVER FIND MERIT IN THE LD. AR'S SUBMISSIONS THAT IN THE SAID JUDGMENT, THE HON 'BLE SUPREME COURT ALSO EXTENSIVELY DEALT WITH THE REVEN UE'S APPEAL IN THE CASE OF STATE BANK OF PATIALA ARISING FROM THE DECISION OF THE HORI'BLE PUNJAB & HARYANA HIGH COUR T REPORTED IN 391 ITR 218. IN THE SAID JUDGMENT THE H ON'BLE PUNJAB & HARYANA HIGH COURT HAD TAKEN NOTE OF THE F ACT THAT THE BANKING COMPANIES IN THE COURSE OF CARRYIN G ON THEIR BANKING BUSINESS WERE REQUIRED TO HOLD SHARES & SECURITIES AND THE EXPENSES WERE INCURRED IN CONNEC TION WITH SUCH BANKING BUSINESS AND THE INCOME THEREFROM WAS ASSESSABLE UNDER THE HEAD 'PROFITS & GAINS OF BUSIN ESS'. THE HON'BLE HIGH COURT HAD TAKEN NOTE OF THE BOARD' S CIRCULAR NO. 18 DATED 02.11.2015 WHEREIN THE BOARD HAD DIRECTED THE AOS TO ASSESS THE INCOME DERIVED FROM SECURITIES HELD IN THE COURSE OF CARRYING ON BANKIN G BUSINESS UNDER THE HEAD 'PROFITS & GAINS OF BUSINES S' AND NOT UNDER THE HEAD 'OTHER SOURCES'. THE HIGH COURT HAD ALSO TAKEN NOTE OF THE JUDGMENT OF THE HON'BLE SUPR EME COURT IN THE CASE 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 COU RT HELD THAT THE INVESTMENTS HELD BY THE ASSESSEE BANK WAS PART OF ITS BANKING BUSINESS AND INCOME ARISING FROM TRA DING IN SECURITIES WAS ATTRIBUTABLE TO BANKING BUSINESS OF THE ASSESSEE. THE HON'BLE PUNJAB & HARYANA HIGH COURT THEREFORE HELD THAT IN ASSESSING THE INCOME OF THE ASSESSEES ENGAGED IN BANKING BUSINESS, NO DISALLOWANCE U/S 14 A WAS WARRANTED BECAUSE IN SUCH CASES THE EXPENDITURE WAS INCURRED IN RELATION TO ITS BANKING BUSINESS AND NO T IN RELATION TO EARNING ANY TAX FREE INCOME. THE REVENU E'S APPEAL AGAINST THE JUDGMENT OF HON'BLE PUNJAB & HAR YANA HIGH COURT WAS DISMISSED BY THE HON'BLE SUPREME COU RT. WE THEREFORE FIND THAT QUA THE ASSESSEES ENGAGED IN THE BANKING BUSINESS, THE HON'BLE SUPREME COURT UPHELD THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PR. CIT VS STATE BANK OF PATIALA (SUPRA ) AS PER WHICH NO DISALLOWANCE U/S 14A IS PERMISSIBLE IN TER MS OF RULE 8D IN CASE OF ASSESSEES ENGAGED IN BANKING BUS INESS. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE SUPREME COURT IN CASE OF STATE BANK OF PATIALA (SUPRA), WE DIRECT TH E LD. AO ITA NO.585/KOL/2018 M/S UCO BANK 8 TO DELETE THE DISALLOWANCE OF RS.2,90,37,490/- MADE UNDER RULE 8D(2)(III). GROUND NO. 2 OF THE REVENUE'S APPE AL IS THEREFORE DISMISSED AND THE GROUNDS OF ASSESSEE'S C O ARE ALLOWED. 8. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDER ATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMI LAR TO A.Y. 2012- 13, WE RESPECTFULLY FOLLOW THE DECISION OF THE TRIB UNAL FOR A.Y. 2012-13 AND UPHOLD THE IMPUGNED ORDER OF THE LD. CI T(APPEALS) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER UNDER SECTION 14A READ WITH RULE 8D. GROUNDS NO. 3 TO 5 O F THE REVENUES APPEAL ARE ACCORDINGLY DISMISSED. 12. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH, IN ASSESSEES OWN CASE(SUP RA) AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS OF THE DIVISION BENCH (SUPRA). W E FIND NO REASON TO INTERFERE IN THE SAID ORDER OF THE DIVISION BENCH, THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE COORDINATE BENCH IN ASSESSEES OWN CASE WE DELETE THE DISALLOWANCE OF RS.31,35,91,170/- MADE BY THE ASSES SING OFFICER U/S 14A R.W.R 8D OF THE RULES. THEREFORE, GROUNDS RAISED BY THE R EVENUE ARE DISMISSED. 13. GROUND NOS.6 & 7 RELATES TO BOOK PROFIT ADJUSTM ENT U/S 115JB OF THE ACT. THE LD. CIT (A)-11, ERRED IN LAW AND ON FACTS BY HO LDING THAT THE PROVISION OF SECTION 115JB (MAT) ARE NOT APPLICABLE FOR THE YEAR IN THE CASE OF ASSESSEE ON THE ADJUSTED BOOK PROFITS AS IT IS NOT A COMPANY U/S 21 1 OF COMPANIES ACT,1956 WHILE IN THE CASE OF ASSESSEE THE HON'BLE SUPREME C OURT [(1999) 240 ITR 355(SC) (1999) 156 CTR 380(SC)] HAS HELD THAT BALAN CE SHEET IN ACCORDANCE WITH STATUTORY PROVISION WOULD NOT DISENTITLE ASSES SEE IN SUBMITTING INCOME TAX RETURN ON REAL TAXABLE INCOME IN ACCORDANCE WITH ME THOD OF ACCOUNTING ADOPTED BY ASSESSEE CONSISTENTLY AND REGULARLY 14. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LE ARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 1 1.12.2019, PASSED BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE IN ITA NO.584/KOL/2018 ITA NO.585/KOL/2018 M/S UCO BANK 9 FOR THE ASSESSMENT YEAR 2010-11 WHEREBY THE ISSUE R ELATING BOOK PROFIT ADJUSTMENT U/S 115JB OF THE ACT OF THE ACT HAS BEEN DISCUSSED AND ADJUDICATED IN FAVOUR OF ASSESSEE. LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL, A COPY OF WHICH WAS ALSO PLACED BEFORE THE BENCH. 15. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 16. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF TH E MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASS ESSEES OWN CASE VIDE ORDER DATED 11.12.2019. IN THIS ORDER, THE TRIBUNAL HAS INTER ALIA OBSERVED AS FOLLOWS: 10. IN THE ASSESSMENT COMPLETED UNDER SECTION 143( 3) VIDE AN ORDER DATED 23.03.2013, THE BOOK PROFIT OF THE ASSE SSEE-COMPANY UNDER SECTION 115JB WAS COMPUTED BY THE ASSESSING O FFICER AT RS.9,58,79,63,443/- AND TAX PAYABLE THEREON AT THE RATE OF 15% WAS WORKED OUT AT RS.1,43,81,94,516/-. IN THE APPEAL FI LED BEFORE THE LD. CIT(APPEALS), THE ASSESSEE-COMPANY CHALLENGED T HIS ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT IT BEING A BANKING COMPANY GOVERNED BY THE BANKING REGULATION ACT, THE PROVISIONS OF SECTION 115JB COULD NOT BE APPLIED TO IT AS THE SAME WERE APPLICABLE TO THE ENTITIES, WHICH ARE GOVERNED BY T HE COMPANIES ACT. SINCE THIS STAND TAKEN BY THE ASSESESE-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 DA TED 27.11.2015 PASSED IN ITA NO. 1768/KOL/2009, THE LD. CIT(APPEALS) ACCEPTED THE SAME AND HELD THAT THE PR OVISIONS OF SECTION 115JB ARE NOT APPLICABLE 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 RECONSIDERATION. THE REASONS ARE THAT THE TRIBUNAL HAS PRESUMED THAT IF A COMPANY DOES NOT MAINTAIN ACCOUN TS AS PER SCHEDULE VI EITHER BECAUSE OF EXEMPTION PROV IDED IN THAT ACT OR IF SOME OTHER STATUTE PROVIDES A DIF FERENT SYSTEM OF MAINTENANCE OF ACCOUNTS, THEN PROVISIONS OF SECTION 115JB WILL NOT BE APPLICABLE TO SUCH COMPAN Y. THERE IS NO SUCH EXEMPTION PROVIDED UNDER THE INCOM E- TAX ACT. SECONDLY, THE TRIBUNAL HAS IGNORED THE ITA NO.585/KOL/2018 M/S UCO BANK 10 PROVISIONS OF SUB-SECTION (2) OF SECTION 115JB WHIC H PROVIDES THE MECHANISM FOR MAINTENANCE OF ACCOUNTS BY A COMPANY. IT MAY BE NOTED THAT THIS SUB-SECTION USES THE WORD 'SHALL' WHICH MAKES IT MANDATORY FOR THE ASSES SEE- COMPANY, TO PREPARE THE ACCOUNTS IN ACCORDANCE WITH SCHEDULE VI. SUB-SECTION (1) OF SECTION 115JB PROVIDES THAT THE PROVISIONS OF THIS SECTION ARE APPLICABLE IN CASE O F EVERY COMPANY. IT DOES NOT CARVE OUT ANY EXCEPTION. THE MOMENT IT IS PROVED THAT THE ASSESSEE IS A COMPANY IT HAS TO CONSIDER TO APPLY THE PROVISIONS OF SECTION 115J B, WORK OUT BOOK PROFIT AND COMPARE IT WITH TOTAL INCO ME AS COMPUTED UNDER NORMAL PROVISIONS OF THE ACT. SUB-SE CTION (1) ALSO USES THE WORD 'SHALL'. THE MEANING OF THIS WORD CANNOT BE 'MAY' PROVIDING ANY DISCRETION TO EITHER 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 PROVISION OF THIS ACT'. IN OTHER WORDS, IF THE COND ITION LAID DOWN UNDER THIS SUB-SECTION THAT TOTAL INCOME COMPUTED UNDER NORMAL PROVISIONS OF THE ACT IS LESS THAN A PARTICULAR PERCENTAGE OF BOOK PROFIT IS SATISFIED , THEN CONSEQUENCE AS LAID DOWN UNDER SUBSEQUENT PART OF T HAT SUB-SECTION WOULD FOLLOW, THAT 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' OTHERWI SE ENTIRE PROVISION WILL BECOME OTIOSE. SUB-SECTION (2 ) BEGINS WITH 'EVERY ASSESSEE, BEING A COMPANY, SHALL , FOR THE PURPOSES OF THIS SECTION'. IT MANDATES THAT 'EV ERY COMPANY'. NO EXCEPTION IS PROVIDED TO SOME OR ANY C LASS OF COMPANIES ON WHATSOEVER BASIS IRRESPECTIVE OF TH E FACT THAT SUCH COMPANY IS REGULATED UNDER OTHER STATUTE SAY, BANKING REGULATION ACT OR UNDER ELECTRICITY ACT. IT FURTHER SAYS 'SHALL'. IT IS CLEARLY MANDATORY FOR E VERY ASSESSEE-COMPANY TO DO WHAT FOLLOWS IN THAT SUB-SEC TION. A DIFFERENT MEANING TO THIS WORD CANNOT BE ASSIGNED WHILE ALSO INTERPRETING SUB-SECTION (2). THE USE OF THE EXPRESSION 'FOR THE PURPOSES OF THIS SECTION' IN SU B-SECTION (2) CAN ONLY MEAN THAT THE PURPOSE OF THIS SECTION CANNOT BE ACHIEVED UNLESS EVERY ASSESSEE-COMPANY DOES WHAT FOLLOWS THEREAFTER. THAT IS FOR ACHIEVING THE PURPO SE OF SECTION 115JB, THE LEGISLATURE MANDATES, BY USING W ORD 'SHALL', THAT EVERY COMPANY SHALL 'PREPARE ITS PROF IT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCO RDANCE WITH THE SCHEDULE VI TO THE COMPANIES ACT, 1956'. F ROM THIS, IT FOLLOWS THAT EVEN IF AN ASSESSEE-COMPANY H AS NOT MAINTAINED ACCOUNTS IN ACCORDANCE WITH SCHEDULE VI, STILL ITA NO.585/KOL/2018 M/S UCO BANK 11 THEN IT HAS TO PREPARE PROFIT 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 ST ANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFI T AND LOSS ACCOUNT AND (III) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION' WOULD BE THE SAME FOR PREPARING THE ANNUAL ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT AS HAS BEEN ADOPTED 'FOR THE PURPOSE OF PREPARING SUCH ACCOUNTS INCLUDING 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 HAVE TWO SETS OF PROFIT AND LOSS ACCOU NTS ONE THAT IS PREPARED FOR BEING LAID AT ITS ANNUAL G ENERAL MEETING AND OTHER FOR THE PURPOSES OF SECTION 115JB BEING THE ACCOUNTS PREPARED AS PER SCHEDULE VI OF COMPANIES ACT. COMMON FACTORS BETWEEN THE TWO WOULD BE '(I) THE ACCOUNTING POLICIES (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUCH ACCOUNTS INCLU DING PROFIT AND LOSS ACCOUNT AND (III) THE METHOD AND RA TES ADOPTED FOR CALCULATING THE DEPRECIATION.' IT IS PO SSIBLE THAT ACCOUNTS FOR BEING LAID BEFORE AGM AND PREPARE D AS PER SCHEDULE VI OF THE COMPANIES ACT ARE THE SAME. BUT IT DOES NOT NECESSARILY FOLLOW THAT WHERE ACCOUNTS DIF FERENT FROM SCHEDULE VI OF THE COMPANIES ACT ARE PREPARED TO COMPLY WITH THE PROVISIONS OF THE REGULATING ACT, T HEN SUCH COMPANIES ARE EXEMPTED FROM PREPARING ACCOUNTS AS PER SCHEDULE VI OF THE COMPANIES ACT. KEEPING ACCOU NT BY TWO METHODS IS NOT UNCOMMON. ACCOUNTS ARE REQUIR ED TO BE KEPT FOR MEETING OBLIGATION UNDER OTHER STATU TE WHEREAS DIFFERENT METHODS FOR KEEPING ACCOUNTS ARE ADOPTED FOR COMPUTING INCOME UNDER THE INCOME-TAX A CT. MANDATE UNDER OTHER STATUTE TO KEEP ACCOUNTS IN A PARTICULAR MANNER CANNOT MAKE THE PROVISIONS TO PRE PARE ACCOUNTS IN DIFFERENT MANNER UNDER INCOME-TAX ACT O TIOSE. ON THE OTHER HAND, THE INCOME-TAX ACT IS SPECIAL ST ATUTE; ITS PROVISIONS WILL HAVE PRECEDENCE OVER PROVISIONS OF OTHER STATUTE IF THEY ARE IN CONFLICT WITH EACH OTH ER IN THE FIELD OF COMPUTATION OF INCOME AND TAX THEREFROM. PREPARATION OF ACCOUNTS UNDER THE BANKING REGULATIO N ACT SERVES THE PURPOSE UNDER THAT ACT WHICH COULD H AVE BEEN FOLLOWED UNDER THE INCOME-TAX ACT IF THERE WOU LD 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 PRO VISIONS OF THE ACT CANNOT OVERRIDE THESE PROVISIONS. THE QU ESTION ITA NO.585/KOL/2018 M/S UCO BANK 12 OF THE PROVISIONS OF BANKING REGULATION ACT OVERRID ING THE PROVISIONS OF SECTION 115JB SHOULD NOT ARISE. FURTHER, AS PER THE BANKING COMPANIES(ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970, SEC 4 THE BANK IS A 'BODY CORPORATE' AND THEREFORE, GOVERNED BY COMPANIES 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 MANDATORY REQUIREMENT THAT THE BODY CORPORATE NEED BE REGISTERED UNDER COMPANIES ACT. WHAT IS REQUIRED IS WHETHER PROVISIONS OF THE ACT ARE APPLICABLE TO THE ENTITY OR NOT WHICH IS DEFINITELY APPLICABLE IN THE CASE A S BODY CORPORATE IS DEFINED IN SEC 2(7) OF THE COMPANIES ACT,1956. THEREFORE, LD TRIBUNAL'S RELIANCE ON DEFI NITION OF COMPANY AND CONSEQUENTLY TREATING THE BANK AS NO T REGISTERED UNDER COMPANIES ACT, 1956 ARE OF THE MAR K. IN THE INSTANT CASE, THE BANK IS A BODY CORPORATE AND COMPANIES ACT ARE APPLICABLE. THE HON'BLE BOMBAY HIGH COURT DECIDED THE CASE OF UNION BANK OF INDIA AGAINST REVENUE ON THE GROUND T HAT THE PROVISIO TO SUBSECTION 2 OF SEC 115JB READ WITH SCH VI LEADS TO AN UNWORKABLE MACHINERY SECTION AND THEREFORE, CHARGING SECTION ALSO CAN NOT BE INVOKED . I HUMBLY SUBMIT WITH GREATEST RESPECT TO THE COURT TH AT THIS JUDGEMENT IS PER-INCURIAM FOR THE SIMPLE REASO N THAT BOTH THE ACCOUNTS, PREPARED UNDER DIFFERENT METHODS CAN BE SAME ALSO. FURTHER, THE LD. HIGH COURT TREATED T HE EXPLANATION 3 AS MEANINGLESS AND OTIOSE. IN MY HUMB LE 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 WILL NOT GET REDUNDANT. CONCLUSION 3. THE DECISION OF THE TRIBUNAL, IN THE ABOVE CASE, THEREFORE, REQUIRES RECONSIDERATION AS IT HAS IGNOR ED VITAL PROVISION IN SUB-SECTION (2) OF SECTION 115JB AND INTERPRETATED THE PROVISION IN SUCH A MANNER THAT I T HAS PRACTICALLY CARVED OUT AN EXCEPTION FROM THE APPLIC ABILITY OF THESE SPECIAL PROVISIONS WHEN NO SUCH EXCEPTION REALLY EXISTS. IT HAS MADE THE APPLICATION OF SECTION 115J B ITA NO.585/KOL/2018 M/S UCO BANK 13 INEFFECTIVE IN THOSE CASES WHERE ACCOUNTS ARE REQUI RED TO BE KEPT UNDER OTHER STATUTES ALSO IGNORING THE MAND ATORY NATURE OF PROVISIONS OF SUB-SECTION (2) WHICH OVERR IDES NOT ONLY OTHER PROVISIONS OF INCOME-TAX ACT BUT ALS O OTHER STATUTES. 12. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STRONGLY RELIED ON THE ORDER OF THE TRIBUNAL DATED 27.11.201 5 (SUPRA) PASSED IN ASSESSEES OWN CASE FOR A.Y. 2002-03 IN S UPPORT OF THE ASSESSEES CASE ON THIS ISSUE AND SUBMITTED THAT AL L THE RELEVANT ASPECTS HAVE BEEN DULY CONSIDERED BY THE TRIBUNAL A ND THE ISSUE IS DECIDED BY PASSING A WELL DISCUSSED AND WELL REASON ED ORDER. HE ALSO SUBMITTED THAT A SIMILAR ISSUE HAS BEEN DECIDE D BY THE TRIBUNAL IN VARIOUS CASES AND THE SAME HAVE BEEN RE FERRED TO AND DISCUSSED IN THE ORDER OF THE TRIBUNAL PASSED IN AS SESSEES OWN CASE FOR A.Y. 2002-03. HE FURTHER SUBMITTED THAT TH IS ISSUE IS ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF UNION BANK OF INDIA (263 TAXMAN 686). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OB SERVED THAT A SIMILAR ISSUE RELATING TO THE APPLICABILITY OF SECT ION 115JB OF THE ACT IN THE CASE OF THE ASSESSEE BEING A BANKING COM PANY WAS ALSO INVOLVED IN ASSESSEES OWN CASE FOR A.Y. 2002-03 AN D THE COORDINATE BENCH OF THIS TRIBUNAL DECIDED THE SAME IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPH NO. 7 (INCLUDING PARA N O. 7.1 TO 7.7) OF ITS ORDER DATED 27.11.2015 PASSED IN ITA NO. 1768/K OL/2009 AS UNDER:- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE VARIOUS CASE LAWS RELIED UPON BY THE COUNSELS F OR BOTH THE SIDES. AT THE OUTSET, WE FIND IT APPROPRIATE TO REPRODUCE THE FOLLOWING PROVISIONS OF INCOME TAX AC T, 1961 , COMPANIES ACT, 1956, BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 197 0 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 COMPANIES (2) [EVERY ASSESSEE,- (A) BEING A COMPANY, OTHER THAN ACOMPANY REFERRED T O IN CLAUSE (B), SHALL, FOR THE PURPOSES OF THIS SECTION , PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIO US YEAR IN ITA NO.585/KOL/2018 M/S UCO BANK 14 ACCORDANCE WITH THE PROVISIONS OF PART II OF SCHEDU LE VI TO THE COMPANIES 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 IS APPLICABLE, SHALL, FOR THE PURPOSES OF THIS SECTION , PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIO US YEAR IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANY:] PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS INCLUDING 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 A CCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETI NG IN ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF TH E COMPANIES ACT, 1956 (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 U NDER THIS ACT,- (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 CORRESPOND TO THE ACCOUNTING POLICIES, ACCOUN TING STANDARDS AND THE METHOD AND RATES FOR CALCULATING THE DEPRECIATION WHICH HAVE BEEN ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT FOR SUCH FINANCIAL YEAR OR PART OF SUCH FINANCIAL YEAR FALLI NG 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 ITA NO.585/KOL/2018 M/S UCO BANK 15 (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 THE END OF THE FINANCIAL YEAR AND SHALL, SUBJECT TO THE PRO VISIONS OF THIS SECTION, BE IN THE FORM SET OUT IN PART I OF S CHEDULE VI, OR AS NEAR THERETO AS CIRCUMSTANCES ADMIT OR IN SUC H OTHER FORM AS MAY BE APPROVED BY THE CENTRAL GOVERNMENT E ITHER GENERALLY OR IN ANY PARTICULAR CASE; AND IN PREPARI NG THE BALANCE SHEET DUE REGARD SHALL BE HAD, AS FAR AS MA Y BE, TO THE GENERAL INSTRUCTIONS FOR PREPARATION 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 ENGAGED IN THE GENERATION OR SUPPLY OF ELEC TRICITY, OR TO ANY OTHER CLASS OF COMPANY FOR WHICH A FORM O F BALANCE SHEET HAS BEEN SPECIFIED IN OR UNDER THE AC T 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 COM PANY FOR THE FINANCIAL YEAR AND SHALL, SUBJECT AS AFORESAID, COMPLY WITH THE REQUIREMENTS OF PART II OF SCHEDULE VI, SO FAR AS THEY ARE APPLICABLE THERETO: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-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 PROFIT A ND LOSS ACCOUNT HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVE RNING SUCH CLASS OF COMPANY. (3) THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, EXEMPT ANY CLASS OF COMPANIES FRO M COMPLIANCE WITH ANY OF THE REQUIREMENTS IN SCHEDULE VI IF, IN ITS OPINION, IT IS NECESSARY TO GRANT THE EXEMPT ION IN THE PUBLIC INTEREST. ANY SUCH EXEMPTION MAY BE GRANTED EITHER UNCONDITIO NALLY OR SUBJECT TO SUCH CONDITIONS AS MAY BE SPECIFIED I N THE 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 ACCOUNT ING STANDARDS, SUCH COMPANIES SHALL DISCLOSE IN ITS PRO FIT AND LOSS ACCOUNT AND BALANCE SHEET, THE FOLLOWING, NAME LY;- (A) THE DEVIATION FROM THE ACCOUNTING STANDARDS; ITA NO.585/KOL/2018 M/S UCO BANK 16 (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 ACCOU NTING RECOMMENDED BY THE INSTITUTE OF CHARTERED ACCOUNTAN TS OF INDIA CONSTITUTED UNDER THE CHARTERED ACCOUNTANTS A CT, 1949 (38 OF 1949), AS MAY BE PRESCRIBED BY THE CENT RAL GOVERNMENT IN CONSULTATION WITH THE NATIONAL ADVISO RY 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 STANDARDS 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 COMPANY TO WHICH THE PROVISO TO SUB-SECTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 (L OF 1956) IS APPLICABLE, HAS, FOR AN ASSESSMENT YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2012, AN OPTION TO PREPARE ITS PROFIT AND LO SS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR EITHER IN ACCORDANCE WITH THE PROVISIONS OF PART II AND PART III OF SCHEDULE VI7 TO THE COMPANIES ACT, 1956 OR IN ACCORDANCE WITH THE PROVI SIONS 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 TH AT ONLY ASSESSES BEING COMPANIES AND TO WHOM PROVISIONS OF THE COMPANIES ACT, 1956 ARE APPLICABLE CAME WITHIN THE AMBIT OF SECTION 115JB OF THE ACT. IN OTHER WORDS, UNLESS AN ASSESSEE COMES WITHIN THE AMBIT OF SECTION 211 OF T HE COMPANIES ACT, 1956, IT WAS NOT COVERED BY THE EXPL ANATION 3 TO SECTION 115JB AND AS A NECESSARY COROLLARY SEC TION 115JB WAS NOT APPLICABLE TO IT. IN THIS REGARD, IT IS THEREFORE NECESSARY TO ASCERTAIN WHETHER THE ASSESS EE BANK CAN LEGALLY BE CONSIDERED AS A 'COMPANY' FOR THE PU RPOSE OF APPLYING THE PROVISO TO SECTION 211(2) OF THE COMPA NIES 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 TH EREBY COME TO A CONCLUSION WHETHER IN TERMS OF EXPLANATIO N 3, ITA NO.585/KOL/2018 M/S UCO BANK 17 SECTION 115JB IS APPLICABLE TO THE ASSESSEE WHO CAR RIED 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)'. 7.3.3. THE TERM 'BANKING COMPANY' HAS BEEN DEFINED IN SECTION 5(C) OF BANKING REGULATION ACT, 1949, AS AN Y COMPANY 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 INC LUDES A FOREIGN COMPANY WITHIN THE MEANING OF SECTION 591 O F 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' AND 'PUBLIC COMPANY' , SHALL, SUBJECT TO T HE PROVISIONS OF SUB SECTION (2) , HAVE THE MEANINGS S PECIFIED BELOW:- (I) 'COMPANY' MEANS A COMPANY FORMED AND REGISTERED UNDER THIS ACT OR AN EXISTING COMPANY AS DEFINED IN CLAUS E (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 TERR ITORIES OR IN A PART B STATE, OR ANY PART THEREOF, BEFORE T HE EXTENSION THERETO OF THE INDIAN COMPANIES ACT, 1913 (7 OF 1913)'. ITA NO.585/KOL/2018 M/S UCO BANK 18 7.3.6. AS DEMONSTRATED IN EARLIER PARAGRAPHS, THE A SSESSEE WAS ESTABLISHED UNDER THE BANKING COMPANIES (ACQUIS ITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970. THE ASSESS EE IS NEITHER A 'COMPANY' REGISTERED UNDER COMPANIES ACT, 1956 NOR IS IT AN EXISTING COMPANY REGISTERED UNDER THE ACTS SPECIFIED IN CLAUSE (II) OF SECTION 3(1) OF THE COM PANIES ACT, 1956. IN THE CIRCUMSTANCES, EVEN THOUGH 'THE ASSESS EE IS ASSESSED IN THE STATUS OF A 'COMPANY' FOR TAX PURPO SES, IT IS NOT A 'COMPANY' WITHIN THE MEANING ASSIGNED TO THAT EXPRESSION BY SECTION 3 OF THE COMPANIES ACT, 1956. WE FIND THAT THE NEWLY INSERTED EXPLANATION 3 TO SECTION 11 5JB OF THE ACT AMPLIFIES THE INTENTION OF THE LEGISLATURE AND CATEGORICALLY CLARIFIES THAT THE ASSESSES TO WHICH SECTION 115JB IS APPLICABLE ARE ONLY THOSE WHO ARE 'COMPANI ES' TO WHICH PROVISO TO SUBSECTION (2) OF SECTION 211 OF T HE COMPANIES ACT, 1956 IS APPLICABLE AND NOT TO ASSESS ES WHICH ARE ASSESSED IN THE STATUS OF 'COMPANY' FOR T AX PURPOSES. TO ILLUSTRATE THIS POINT, IT MAY BE STATE D THAT HDFC BANK LTD, KOTAK MAHINDRA BANK LTD ETC ARE 'BAN KING COMPANIES' AS DEFINED IN SECTION 5(C) & (D) OF BANK ING REGULATION ACT, 1949. THESE BANKING COMPANIES ARE INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. THESE ASSESSEES CARRY ON BUSINESS OF BANKING. AS SU CH PROVISO TO SECTION 211(2) IS APPLICABLE TO THESE BA NKING COMPANIES AND THEREFORE THESE BANKING COMPANIES PRE PARE THEIR ACCOUNTS IN CONFORMITY WITH SCHEDULE II OF BA NKING REGULATION ACT, 1949. BY VIRTUE OF EXPLANATION 3 TO SECTION 115JB , SUCH BANKING COMPANIES ARE RETROACTIVELY MA DE LIABLE TO PAY TAX ON THE DEEMED INCOME COMPUTABLE W ITH RESPECT TO NET PROFIT AS DISCLOSED BV PROFIT AND LO SS ACCOUNT PREPARED BY SUCH BANKING COMPANIES IN CONFORMITY WI TH THE PROVISIONS OF BANKING REGULATION ACT, 1949. THIS LE GAL POSITION HAS BEEN VERY ABLY ILLUSTRATED BY THE MUMB AI BENCH OF THE TRIBUNAL IN THE CASE OF MAHARASHTRA STATE EL ECTRICITY BOARD VS JCIT REPORTED IN (2002) 82 ITD 422 (MUM TR IB) 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 REPRODUCE D BELOW:- (I). UNDER THE EXISTING PROVISIONS OF SECTION 115LB OF THE ACT, A COMPANY IS LIABLE TO PAY MAT OF EIGHTEEN AND ONE HALF 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 LIABILITY. BOOK PROFIT FOR THIS PURPOSE IS COMP UTED BY MAKING CERTAIN ADJUSTMENTS TO THE PROFIT DISCLOSED IN THE PROFIT AND LOSS ACCOUNT PREPARED BY THE COMPANY IN ITA NO.585/KOL/2018 M/S UCO BANK 19 ACCORDANCE WITH THE SCHEDULE VI OF THE COMPANIES AC T, 1956. AS PER SECTION 115LB, EVERY COMPANY IS REQUIRED TO PREPARE ITS ACCOUNTS AS PER SCHEDULE VI OF THE COMPANIES AC T, 1956. HOWEVER, AS PER THE PROVISIONS OF THE COMPANIES ACT , 1956, CERTAIN COMPANIES E.G. INSURANCE, BANKING OR ELECTR ICITY COMPANY ARE ALLOWED TO PREPARE THEIR PROFIT AND LOS S ACCOUNT IN ACCORDANCE WITH THE PROVISIONS SPECIFIED IN THEIR REGULATORY ACTS. IN ORDER TO ALIGN THE PROVISIONS O F INCOME- TAX ACT WITH THE COMPANIES ACT, 1956, IT IS PROPOSE D TO AMEND SECTION 115JB TO PROVIDE THAT THE COMPANIES W HICH ARE NOT REQUIRED UNDER SECTION 211 OF THE COMPANIES ACT TO PREPARE THEIR PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE SCHEDULE VI OF THE COMPANIES ACT, 1956, PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THEIR REGULATORY ACTS SHALL BE TAKEN AS A BASIS FOR COMPU TING 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 GENERA L RESERVE ON DISPOSAL OF A REVALUED ASSET. THUS, THE GAINS AT TRIBUTABLE TO REVALUATION OF THE ASSET IS NOT SUBJECT TO MAT L IABILITY. IT IS, THEREFORE, PROPOSED TO AMEND SECTION 115JB T O PROVIDE THAT THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115 JB SHALL BE INCREASED BY THE AMOUNT STANDING IN THE REVALUAT ION RESERVE RELATING TO THE REVALUED ASSET WHICH HAS BE EN 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 SEC TION 115JB IN VIEW OF OMISSION OF PART III IN THE REVISE D 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 ASSESSM ENT YEAR 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 INTRODUCTIO N OF EXPLANATION 3 IN SECTION 115JB OF THE ACT BY THE FI NANCE ACT, 2012 , THE ASSESSEE'S CONTENTION IN FACT STAND S MORE FORTIFIED. THE EXPLANATION 3 TO SECTION 115JB MAKES IT EVIDENTLY CLEAR THAT SECTION 115JB IS APPLICABLE ON LY TO ENTITIES REGISTERED AND RECOGNIZED TO BE COMPANIES UNDER THE COMPANIES ACT, 1956. SINCE THE ASSESSEE IS NOT A ITA NO.585/KOL/2018 M/S UCO BANK 20 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 INCOME DUE TO VARIOUS EXEMPTIONS I DEDUCTIONS LIKE SECTIONS 10A/10B/80IA/80IB ETC. THE INTENTION OF MAT IS THAT THE COMPANIES WERE DECLARING HUGE PROFITS AS PER THEIR COMPANIES ACT AND DECLARING DIVIDENDS TO ITS SHAREH OLDERS BUT PAYING NIL TAX OR LESSER TAX UNDER THE IT ACT D UE 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 COMPAN IES CANNOT BE ALLOWED TO HAVE TWO FACES, ONE FOR SHAREH OLDER AND ANOTHER FOR TAXMAN. SECTION 115JA WAS ENACTED B Y RESTRUCTURING THE PROVISIONS OF SECTION 115J WITH C ERTAIN MINOR CHANGES AND THEREAFTER SECTION 115JB WAS ENAC TED BY BRINGING MINOR CHANGES IN SECTION 115JA. THE PROVIS IONS OF SECTION 115J, 115JA AND 115JB ARE BY AND LARGE SIMI LAR 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 RELEVANT 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 ENTER ED SUBSTANTIAL BOOK PROFITS AND HAVE PAID HANDSOME DIVIDENDS, NO TAX HAS BEEN PAID BY THEM TO THE EXCH EQUER. 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 MINIMUM TAX ON COMPANIES WHO ARE HAVING BOOK PROFIT S AND PAYING DIVIDENDS BUT ARE NOT PAYING ANY TAXES. THE SCHEME ENVISAGES THE PAYMENT OF A MINIMUM TAX BY DEEMING 3 0 PER CENT OF THE BOOK PROFITS COMPUTED UNDER THE COMPANI ES ACT, AS TAXABLE INCOME, IN A CASE WHERE THE TOTAL INCOME AS COMPUTED UNDER THE PROVISIONS OF THE INCOME-TAX ACT , IS LESS THAN 30 PER CENT OF THE BOOK PROFIT. WHERE THE TOTA L INCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE INCO ME-TAX ART, IS MORE THAN 30 PER CENT OF THE BOOK PROFIT, T AX 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 ITA NO.585/KOL/2018 M/S UCO BANK 21 THE CAPTION 'RATIONALISATION AND SIMPLIFICATION'. T HE 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 HA VE SHOWN THAT INSPITE OF THE FACT THAT COMPANIES HAVE EARNED SUBSTANTIAL BOOK PROFITS AND HAVE PAID HANDSOME DIV IDENDS, NO TAX HAS BEEN PAID 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 C OMPUTED UNDER THE INCOME-TAX ACT IS LESS THAN 30% OF THE BO OK PROFITS AS PER THE BOOKS OF ACCOUNT PREPARED IN ACC ORDANCE WITH PARTS IL AND III OF SCHEDULE VI OF THE COMPANI ES ACT, 1956. 'BOOK PROFITS' IS DEFINED AND CERTAIN ADJUSTM ENTS ARE PROVIDED IN THE PROPOSED SECTION. THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1-4-19 97, AND WILL ACCORDINGLY, APPLY IN RELATION TO ASSESSME NT YEAR 1997-98 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 PAG E 783 CONSIDERED THE LEGISLATIVE INTENT FOR THE INTRODUCT ION OF SECTION 1151. IT WAS FOUND THAT THE SECTION WAS INT RODUCED TO TAKE CARE OF THE PHENOMENON OF PROSPEROUS ZERO-T AX COMPANIES WHICH HAD CONTINUED INSPITE OF THE ENACTM ENT OF SECTION 80VV A. THESE WERE COMPANIES WHICH WERE PAY ING NO INCOME TAX THOUGH THEY HAD PROFITS AND WERE DECL ARING DIVIDENDS. A MINIMUM CORPORATE 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 PRO FITS U/S 1151B. BUT LATER TO BE IN LINE WITH THE UNDERLYING INTENTION BEHIND INTRODUCTION OF MAT PROVISIONS TO TAX THE CO MPANIES DECLARING HUGE DIVIDENDS TO SHAREHOLDERS BY REPORTI NG HIGHER PROFITS AS PER COMPANIES ACT BUT PAYING LESS ER TAX UNDER I.T. ACT, THE AMENDMENT WAS BROUGHT OUT IN TH E STATUTE BOOK WHEREIN THE COMPANIES ELIGIBLE TO CLAI M EXEMPTIONS AND DEDUCTIONS U/S 10A/10B/80IA/80IB ALS O WOULD COME UNDER THE AMBIT OF MAT. FROM THIS, IT CO ULD BE SAFELY CONCLUDED THAT THE LEGISLATURE IN ITS WISDOM HAD TIME AND AGAIN APPLIED THE HEYDEN'S RULE TO PREVENT POSS IBLE ITA NO.585/KOL/2018 M/S UCO BANK 22 MISCHIEF IN THE TAXING PROVISION. IN THIS REGARD, I T 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 THE 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 AVOIDE D. THE TASK OF A JUDGE IS TO GO BY THE INTENT OF THE STATU TE AND FILL THE GAPS. THE TWO RULES OF MOST GENERAL APPLICATION IN CONSTRUING A STATUTE ARE THAT - FIRST THAT IT SHALL , IF POSSIBLE, BE SO INTERPRETED UT RES MAGIS VALEAT QUAM PEREAT (THAT THE THING MAY RATHER HAVE EFFECT THAN BE DEST ROYED) AND SECONDLY, THAT SUCH A MEANING SHALL BE GIVEN TO IT AS MAY CARRY OUT AND EFFECTUATE TO THE FULLEST EXTENT THE INTENTION OF THE LEGISLATURE. EACH LAW CONSISTS OF TWO PARTS VIZ., OF BODY, AND SOUL. THE LETTER OF THE LAW IS T HE 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 E VEN IF IT EXPANDS WITH THE SPIRIT OF THE STATUTE. 7.6.6. ADMITTEDLY, THE ASSESSEE BANK IS DECLARING D IVIDENDS TO SHAREHOLDERS AND ALSO PAYING HUGE INCOME TAX UND ER IT ACT. APPLYING THE BACKGROUND ON WHICH THE AFORESAID AMENDMENT IS BROUGHT IN STATUTE AND THE UNDERLYING INTENTION OF MAT PROVISIONS, IT CAN SAFELY BE CONCL UDED THAT IT WAS NEVER THE INTENTION OF THE LEGISLATURE TO IM POSE MAT ON BANKING 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 I N (1998) 234 ITR 828 (AAR) IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE AS THE AAR ONLY DEALT WITH THE APPL ICABILITY OF SECTION 115JA OF THE ACT ON FOREIGN COMPANIES. T HE TERM 'COMPANY' HAS BEEN DEFINED IN SECTION 5(D) OF BANKI NG 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 A CT. HENCE THERE IS LOGIC IN INCLUDING THE FOREIGN COMPA NIES UNDER THE AMBIT OF MAT PROVISIONS. HOWEVER, THE SAM E IS NOT APPLICABLE FOR ASSESSEE WHICH IS A BANK. ITA NO.585/KOL/2018 M/S UCO BANK 23 14. A SIMILAR ISSUE AS INVOLVED IN THE YEAR UNDER C ONSIDERATION THUS WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE A SSESSEE FOR A.Y. 2002-03 AFTER TAKING INTO CONSIDERATION NOT ONLY TH E PROVISIONS OF SECTION 115JB BUT ALSO THE RELEVANT PROVISIONS OF T HE COMPANIES ACT, 1956. THE TRIBUNAL ALSO CONSIDERED THE CIRCULA RS ISSUED BY THE BOARD FROM TIME TO TIME IN THIS REGARD AND TOOK NOTE OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SURANA STEELS PVT. LIMITED (SUPRA), WHEREIN THE LEGISLATIVE INTEN T OF SECTION 115J WAS CONSIDERED. AS RIGHTLY CONTENDED BY THE LD. COU NSEL 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 FIND ANY JUST IFIABLE 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/MUM./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 H ELD THAT THE PROVISIONS OF SECTION 115JB OF THE ACT WERE NOT APP LICABLE IN THE CASE OF THE ASSESSEE FOR A.Y. 2002-03 AS THE AMENDM ENT BROUGHT IN SECTION 115JB OF THE ACT READ WITH EXPLANATION 3 TH ERETO BY THE FINANCE ACT, 2012 WAS APPLICABLE ONLY WITH EFFECT F ROM ASSESSMENT YEAR 2013-14. 15. IT IS ALSO OBSERVED THAT EVEN THE HONBLE BOMBA Y HIGH COURT IN THE CASE OF CIT VS.- UNION BANK OF INDIA [263 T AXMAN 685] HAD AN OCCASION TO CONSIDER A SIMILAR ISSUE AND THE SAM E WAS DECIDED BY THEIR LORDSHIPS IN FAVOUR OF THE ASSESSEE BY HOL DING THAT THE PROVISIONS OF SECTION 115JB AS MADE PRIOR TO ITS AM ENDMENT BY VIRTUE OF THE FINANCE ACT, 2012 WOULD NOT BE APPLIC ABLE TO A ITA NO.585/KOL/2018 M/S UCO BANK 24 BANKING COMPANY GOVERNED BY THE PROVISIONS OF BANKI NG REGULATION ACT, 1949. WHILE ARRIVING AT THE SAID CO NCLUSION, HONBLE BOMBAY HIGH COURT TOOK NOTE OF THE RELEVANT STATUTORY PROVISIONS AND THE LEGISLATIVE HISTORY AS ALSO THE AMENDMENT MADE 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 OBSERVATIONS RECORDED BY THEM IN THIS CONTE XT AS CONTAINED IN PARAGRAPH NO. 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 HIS TORY. AS IS WELL KNOWN, SECTION 115JB OF THE ACT, PERTAINS T O SPECIAL PROVISIONS FOR PAYMENT OF TAX BY CERTAIN COMPANIES AND PROVIDES A FORMULA FOR PAYMENT OF MINIMUM TAX IN CASE OF COMPANIES, WHOSE TAX PAYABLE ON THE TOTAL INCOME WORKS OUT TO BE BELOW A CERTAIN MI NIMUM THRESHOLD PERCENTAGE OF ITS BOOK PROFIT. THIS PROVI SION IS A SUCCESSOR TO SECTION L15JA OF THE ACT, 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 ALTERNATIVE TAX) WAS SECTION L15J. THE CIRCULAR NO.762 DATED 18TH FEBRUARY, 1998 ISSUED BY THE CENTRAL BOARD OF DIRECT TAX ('CBDT' FOR SHORT) EXPL AINS THE OBJECTS FOR INTRODUCTION OF SUCH MAT PROVISIONS . THE CIRCULAR CLARIFIES THAT NEW SECTION 115JA HAS BEEN INSERTED BY THE FINANCE ACT, SO AS TO LEVY A MINIMU M TAX ON COMPANIES, WHO ARE HAVING BOOK PROFITS AND PAYIN G DIVIDENDS, BUT NOT PAYING ANY TAXES. RELEVANT PORTI ON OF SECTION 115JB AS IS STOOD AT THE RELEVANT TIME READ S AS UNDER:- 'SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COMPANIES: 115JB. (1) NOTWITHSTANDING ANYTHING CONTAINED IN AN Y OTHER PROVISION OF THIS ACT, WHERE IN THE CASE OF A N ASSESSEE, BEING A COMPANY, THE INCOME-TAX, PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THIS ACT IN RESP ECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1 ST DAY OF APRIL, (2007 ) IS LESS THAN (TEN PERCENT) OF ITS BOOK PROFIT, (SUCH) BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF TH E ASSESSEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUC H TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RAT E OF (TEN PERCENT). (2) EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR THE PURPOSES OF THIS SECTION, PREPARE ITS PROFIT AND LO SS ITA NO.585/KOL/2018 M/S UCO BANK 25 ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANC E WITH THE PROVISIONS OF PARTS 11 AND III OF SCHEDULE VI T O THE COMPANIES ACT, 1956 (1 OF 1956). PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS INCLUDING 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 A CCOUNT AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETI NG IN ACCORDANCE WITH THE PROVISIONS OF SECTION 210 OF TH E COMPANIES ACT, 1956(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 UN DER 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 PO LICIES, ACCOUNTING STANDARDS AND THE METHOD AND RATES FOR CALCULATING THE DEPRECIATION WHICH HAVE BEEN ADOPTE D FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS A CCOUNT FOR FINANCIAL YEAR OR PART OF SUCH FINANCIAL YEAR FALLI NG 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 WHER E THE INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE ACT, IS LESS THAN PRESCRIBED PERCENTAGE OF ITS BOOK PROFIT, SUCH BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE. IN SO FAR AS THE LANGUAGE USED UNDER SUB- SECTION (I) OF SECTION 115JB IS CONCERNED, THE SAME PAUSES NO C HALLENGE. SUB-SECTION (1) OF SECTION 115JB TAKES WITHIN ITS S WIP ALL COMPANIES WITH NO FURTHER BIFURCATION OR DISTINCTIO N BETWEEN COMPANIES. HOWEVER, THE QUESTION THAT CALLS FOR OUR CONSIDERATION IS WHETHER THE MACHINERY PROVISION PR OVIDED UNDER SUB-SECTION (2) OF SECTION 115 JB OF THE ACT IS WORKABLE WHEN IT COMES TO THE BANKING COMPANIES AND SUCH OTH ER ITA NO.585/KOL/2018 M/S UCO BANK 26 SPECIAL COMPANIES GOVERNED BY THE RESPECTIVE ACTS. IN THE CONTEXT, THE QUESTION WOULD ALSO BE OF THE LEGISLAT IVE INTENT TO COVER SUCH COMPANIES WITHIN THE SWIP OF SECTION I 1 5JB OF THE ACT. THESE QUESTIONS ARISE BECAUSE OF THE LANGUAGE USED IN SUB-SECTION (2) OF SECTION 1151B. THESE PROVISIONS WE MAY PERUSE MORE MINUTELY. AS PER SUB-SECTION (2) OF SEC TION 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 ACCORDANC E WITH THE PROVISIONS OF PARTS 11 AND III OF SCHEDULE VI OF TH E COMPANIES ACT, 1956. IT IS UNDISPUTED THAT THE RESP ONDENT-A BANKING COMPANY IS NOT REQUIRED TO PREPARE ITS ACCO UNTS IN ACCORDANCE WITH THE PROVISIONS OF PARTS II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956. THE ACCOUNTS OF THE BANKING COMPANY ARE PREPARED AS PER THE PROVISIONS CONTAINE D IN BANKING REGULATION ACT. 1949. THE COUNSEL FOR THE R EVENUE MAY STILL ARGUE THAT IRRESPECTIVE OF SUCH REQUIREME NTS, FOR THE PURPOSES OF THE SAID ACT AND SPECIAL REQUIREMENTS O F SECTION 115JB OF THE ACT, A BANKING COMPANY IS OBLIGED TO P REPARE ITS PROFIT AND LOSS ACCOUNT AS PER THE PROVISIONS OF TH E COMPANIES ACT, AS MANDATED BY SUB-SECTION (2) OF SECTION 115J B OF THE ACT. HIS CONTENTION 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, CERT AIN COMPLICATIONS ARISE IN THIS LINE OF ARGUMENT. THE F IRST PROVISO TO SUB-SECTION (2) OF SECTION 115JB PROVIDES THAT W HILE PREPARING ANNUAL ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT THE ACCOUNTING POLICIES AND ACCOUNTING STANDARDS AD OPTED FOR PREPARING THE ACCOUNT AND THE METHOD AND RULES ADOP TED IN CALCULATING THE DEPRECIATION SHALL BE THE SAME AS H AVE BEEN ADOPTED FOR THE PURPOSE OF PREPARING SUCH ACCOUNTS AND LAID BEFORE THE COMPANY AT ITS ANNUAL GENERAL MEETING 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 REQUIRED TO LAY ITS ACCOUNTS BEFORE THE ANNUAL GENE RAL MEETING. HOWEVER, SUCH ACCOUNTS WOULD NECESSARILY B E PREPARED IN ACCORDANCE WITH THE PROVISIONS OF BANKI NG REGULATION ACT, 1949 AND NEVER BE THOSE WHICH EVEN HAD IT BEEN POSSIBLE TO BE PREPARED, IN ACCORDANCE WITH PA RTS II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 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 WOULD BE UNDER AN OBLIGATION TO LAY BEFORE ANN UAL GENERAL MEETING ITS ANNUAL ACCOUNTS INCLUDING THE P ROFIT AND ITA NO.585/KOL/2018 M/S UCO BANK 27 LOSS ACCOUNT. THESE ACCOUNTS WOULD BE PREPARED IN T ERMS PROVISIONS CONTAINED IN BANKING REGULATION ACT, 194 9. SUB- SECTION (2) REQUIRES PREPARATION OF THE ACCOUNTS IN TERMS OF THE COMPANIES ACT. PROVISO TO SUB-SECTION (2) WOULD 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 PREPARIN G THE ACCOUNTS, WHICH WOULD ULTIMATELY BE LAID BEFORE THE ANNUAL GENERAL MEETING. A BANKING COMPANY IN TERMS OF SUB- SECTION (2) OF SECTION 115JB CAN PREPARE ADDITIONAL ACCOUNT S AS PER PROVISIONS OF PARTS II AND III OF SCHEDULE VI OF TH E COMPANIES ACT OR FULFIL THE REQUIREMENTS OF THE PROVISO TO SU B-SECTION (2) BUT CANNOT FULFIL BOTH THE CONDITIONS. 11. THIS LEGAL DICHOTOMY EMERGING FROM THE PROVISIO NS OF SUB- SECTION (2) OF SECTION 115JB PARTICULARLY HAVING RE GARD TO THE FIRST PROVISO CONTAINED THEREIN IN CASE OF A BANKIN G COMPANY, WOULD CONVINCE US THAT MACHINERY PROVISION PROVIDED IN SUB- SECTION (2) OF SECTION L15JB OF THE ACT, WOULD BE R ENDERED WHOLLY UNWORKABLE IN SUCH A SITUATION. IN A WELL KN OWN JUDGMENT THE SUPREME COURT IN CASE OF CIT V. B.C. S RINIVASA SETTY [1981] 128 ITR 294/5 TAXMAN 1 HAD OBSERVED TH AT IN THE INCOME TAX ACT, A CHARING SECTION AND THE COMPUTING PROVISIONS TOGETHER CONSTITUTE AN INTEGRATED CODE. IN A CASE WHERE THE COMPUTATION PROVISION CAN NOT APPLY, IT W OULD 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 GO ODWILL. THE SUPREME COURT WAS OF THE OPINION THAT IT WOULD NOT BE POSSIBLE TO ENVISAGE A COST OF ACQUISITION OF GOODW ILL. SINCE COMPUTATION OF CAPITAL GAIN CANNOT BE DONE WITHOUT ASCERTAINING THE COST OF ACQUISITION, IT WAS HELD T HAT 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 ACCOU NT, SUB- SECTION (1) OF SECTION 211 PROVIDED THAT EVERY BALA NCE SHEET OF A COMPANY SHALL GIVE TRUE AND FAIR VIEW ON THE STAT E OF AFFAIRS OF THE COMPANY AT THE END OF THE FINANCIAL YEAR AND WOULD BE SUBJECT TO THE PROVISIONS OF THE SAID SECTION AND B E IN THE FORM SET OUT IN THE FORMS 1 AND 2 OF SCHEDULE VI. THIS S UB-SECTION CONTAINED A PROVISO PROVIDING THAT NOTHING CONTAINE D IN SAID SUB-SECTION WOULD APPLY TO A BANKING COMPANY OR ANY COMPANY ENGAGED IN GENERATION OR SUPPLY OF ELECTRIC ITY OR TO ANY OTHER CLASS OF COMPANY FOR WHICH A FORM OF BALA NCE SHEET SHALL BE SPECIFIED IN OR UNDER THE ACT GOVERNING SU CH COMPANY. THUS, COMPANIES ACT, 1956 EXCLUDED THE INS URANCE ITA NO.585/KOL/2018 M/S UCO BANK 28 OR BANKING COMPANIES, COMPANIES ENGAGED IN GENERATI ON OR SUPPLY OF ELECTRICITY OR COMPANIES FOR WHICH BALANC E-SHEET WAS SPECIFIED IN THE GOVERNING ACT, FROM THE PURVIE W OF SUB- SECTION (1) OF SECTION 211 OF THE COMPANIES ACT, 19 56 AND AS A CONSEQUENCE FROM THE PURVIEW 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 WHICH THE ASSESSEE BEFORE THE COURT WAS KERALA STATE ELEC TRICITY BOARD, A STATUTORY CORPORATION CONSTITUTED UNDER SE CTION 5 OF THE ELECTRICITY (SUPPLY) ACT, 1948. THE REVENUE SOU GHT TO COVER THE SAID ELECTRICITY BOARD UNDER THE PROVISIO NS OF SECTION 115JB WHICH THE ASSESSEE OPPOSED. THE ISSUE REACHED THE KERALA HIGH COURT. THE COURT REFERRED TO AND RE LIED UPON THE DECISION OF THE SUPREME COURT IN CASE OF B.C. S HRINIVASA SETTY (SUPRA). IT WAS NOTICED THAT THE BOARD WAS RE QUIRED TO KEEP AND MAINTAIN ITS ACCOUNT IN THE MANNER SPECIFI ED 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 BO ARD. LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO BROUGHT T O OUR NOTICE DECISIONS OF DELHI HIGH COURT HOLDING THAT S UCH MAT PROVISIONS WOULD NOT APPLY TO THE INSURANCE COMPANI ES AND TO THE BANKING COMPANIES. 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 COMPANIES. 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 RELE VANT 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 ASSESSEE AND THE TAX PAYABLE BY THE A SSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF (EIGHTEEN AND ONE-HALF PERCENT). (2) EVERY ASSESSEE,- (A) BEING A COMPANY, OTHER THAN A COMPANY REFERRED TO IN CLAUSE (B), SHALL, FOR THE PURPOSES OF THIS SECTION , PREPARE ITS (STATEMENT OF PROFIT AND LOSS) FOR THE RELEVANT PRE VIOUS YEAR IN ITA NO.585/KOL/2018 M/S UCO BANK 29 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 THI S SECTION, PREPARE ITS (STATEMENT OF PROFIT AND LOSS) FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANY:) PROVIDED THAT WHILE PREPAR ING THE ANNUAL ACCOUNTS INCLUDING (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 PRO FIT AND LOSS) AND LAID BEFORE THE COMPANY AT ITS ANNUAL GEN ERAL MEETING IN ACCORDANCE WITH THE PROVISIONS OF (SECTI ON 129) OF THE (COMPANIES ACT, 2013(18 OF2013)' 15. THE MEMORANDUM EXPLAINING THE PROVISIONS MADE I N THE FINANCE BILL, 2012, IN RELATION TO MINIMUM ALTERNAT IVE 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 COMPUTED UNDER THE PROVISIONS OF THE ACT IS LESS THAN THE MA T LIABILITY. BOOK PROFIT FOR THIS PURPOSE IS COMPUTED BY MAKING CERTAIN ADJUSTMENTS TO THE PROFIT DISCLOSED IN THE PROFIT A ND LOSS ACCOUNT PREPARED BY THE COMPANY IN ACCORDANCE WITH THE SCHEDULE VI OF THE COMPANIES ACT, 1956. AS PER SECTION 115JB, EVERY COMPANY IS REQUIRED TO PREPARE ITS ACCOUNTS AS PER SCHEDULE VI OF THE COMPANIES AC T, 1956. HOWEVER, AS PER THE PROVISIONS OF THE COMPANIES ACT , 1956, CERTAIN COMPANIES, E.G. INSURANCE, BANKING OR ELECT RICITY COMPANY, ARE ALLOWED TO PREPARE THEIR PROFIT AND LO SS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS SPECIFIED IN THEI R REGULATORY ACTS. IN ORDER TO ALIGN THE PROVISIONS OF INCOME-TA X ACT WITH THE COMPANIES ACT, 1956, IT IS PROPOSED TO AMEND SE CTION 115JB TO PROVIDE THAT THE COMPANIES WHICH ARE NOT R EQUIRED ITA NO.585/KOL/2018 M/S UCO BANK 30 UNDER SECTION 211 OF THE COMPANIES ACT TO PREPARE T HEIR PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH SCHEDULE VI OF THE COMPANIES ACT, 1956, PROFIT AND LOSS ACCOUNT PREPAR ED IN ACCORDANCE WITH THE PROVISIONS OF THEIR REGULATORY ACTS SHALL BE TAKEN AS A BASIS FOR COMPUTING THE BOOK PROFIT U NDER 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 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 115 JB SHALL BE INCREASED BY THE AMOUNT STANDING IN THE REVALUATION RESERVE RELATING TO THE REVALUED ASSET WHICH HAS BEEN RETIR ED 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 SCHEDUL E VI UNDER THE COMPANIES ACT, 1956. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL, 2 013 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSM ENT YEAR 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 CLAUSES (A) AND (B). CLAUSE (A) WOULD COVER ALL COM PANIES OTHER THAN THOSE REFERRED TO IN CLAUSE (B). SUCH CO MPANIES WOULD PREPARE THE STATEMENT OF PROFIT AND LOSS IN A CCORDANCE TO THE PROVISIONS OF SCHEDULE III OF THE COMPANIES ACT, 2013 (WHICH HAS NOW REPLACED THE OLD COMPANIES ACT, 1956 ). CLAUSE (B) REFERS TO A COMPANY TO WHICH SECOND PROV ISO 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 A CCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING THE COMPAN Y. SECTION 129 OF THE COMPANIES ACT, 2013 PERTAINS TO FINANCIA L 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 AFFAIRS OF THE COMPANY, COMPLY WITH TH E ACCOUNTING STANDARD NOTIFIED UNDER SECTION 113 AND SHALL BE IN THE FORM AS MAY BE PROVIDED FOR DIFFERENT CLASSE S OF COMPANIES. SECOND PROVISO TO SUB-SECTION (I) OF SEC TION 129 READS AS UNDER:- ITA NO.585/KOL/2018 M/S UCO BANK 31 'PROVIDED FURTHER THAT NOTHING CONTAINED IN THIS SU B-SECTION SHALL APPLY TO ANY INSURANCE OR BANKING COMPANY OR ANY COMPANY ENGAGED IN THE GENERATION OR SUPPLY OF ELEC TRICITY, OR TO ANY OTHER CLASS OF COMPANY FOR WHICH A FORM OF F INANCIAL STATEMENT HAS BEEN SPECIFIED IN OR UNDER THE ACT GO VERNING SUCH CLASS OF COMPANY: 17. THIS PROVISO THUS REFERS ANY INSURANCE OR BANKI NG COMPANIES OR COMPANIES ENGAGED IN THE GENERATION OR SUPPLY OF ELECTRICITY OR TO ANY OTHER CLASS OF COMPANY IN WHICH FORM OF FINANCIAL STATEMENT HAS BEEN SPECIFIED IN OR UND ER THE ACT GOVERNING SUCH CLASS OF COMPANY. COMBINED READING O F THIS PROVISO TO SUB-SECTION (1) OF SECTION 129 OF THE AC T, 2013 AND CLAUSE (B) OF SUB-SECTION (2) OF SECTION 115JB OF T HE ACT WOULD SHOW THAT IN CASE OF INSURANCE OR BANKING COM PANIES OR COMPANIES ENGAGED IN GENERATION OR SUPPLY OF ELECTR ICITY 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. CLAUS E (B) OF SUB-SECTION (2) PROVIDES THAT IN CASE OF SUCH COMPA NIES FOR THE PURPOSE OF SECTION 115JB THE PREPARATION OF STA TEMENT OF PROFIT AND LOSS ACCOUNT WOULD BE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANIES. THI S LEGISLATIVE CHANGE THUS ALIENS CLASS OF COMPANIES W HO UNDER THE GOVERNING ACTS WERE REQUIRED TO PREPARE PROFIT AND LOSS ACCOUNTS NOT IN ACCORDANCE WITH THE COMPANIES ACT, BUT IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SUCH GO VERNING ACT. THE EARLIER DICHOTOMY OF SUCH COMPANIES ALSO, IF WE ACCEPT THE REVENUE'S CONTENTION, HAVING THE OBLIGAT ION OF PREPARING ACCOUNTS AS PER THE PROVISIONS OF THE COM PANIES ACT HAS BEEN REMOVED. 18. THESE AMENDMENTS IN SECTION 115JB ARE NEITHER DECLARATORY NOR CLASSIFICATORY BUT MAKE SUBSTANTIVE AND SIGNIFICANT LEGISLATIVE CHANGES WHICH ARE ADMITTEDL Y APPLIED PROSPECTIVELY. THE MEMORANDUM EXPLAINING THE PROVIS ION OF THE FINANCE BILL, 2012 WHILE EXPLAINING THE AMENDME NTS UNDER SECTION 115JB OF THE ACT NOTES THAT IN CASE OF CERT AIN COMPANIES SUCH AS INSURANCE, BANKING AND ELECTRICIT Y COMPANIES, THEY ARE ALLOWED TO PREPARE THE PROFIT A ND LOSS ACCOUNT IN ACCORDANCE WITH THE SECTIONS SPECIFIED I N 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 REQUIRE D UNDER SECTION 211 OF THE COMPANIES ACT, TO PREPARE PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH SCHEDULE VI OF THE COMPA NIES ACT, ITA NO.585/KOL/2018 M/S UCO BANK 32 PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THEIR REGULATORY ACT SHALL BE TAKEN A S BASIS FOR COMPUTING BOOK PROFIT UNDER SECTION 115 JB OF THE A CT. 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, TH E ASSESSEE, BEING A COMPANY TO WHICH THE PROVISO TO SUB-SECTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 (1 OF 1956) IS APPLICABLE, HAS, FOR AN ASSESSMENT EAR COMMENCING O N OR BEFORE THE 1 ST DAY OF APRIL, 2012, AN OPTION TO PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS Y EAR EITHER IN ACCORDANCE WITH THE PROVISIONS OF PART II AND PART III OF SCHEDULE VI TO THE COMPANIES ACT, 1956 OR IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING 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, 2013 IS APPLICABLE, WOULD HAVE AN OP TION FOR THE ASSESSMENT YEAR COMMENCING ON OR BEFORE 1 ST APRIL, 2012 TO PREPARE ITS STATEMENT OF PROFIT AND LOSS EI THER IN ACCORDANCE WITH THE PROVISIONS OF SCHEDULE III TO T HE COMPANIES ACT, 2013 OR IN ACCORDANCE WITH THE PROVI SIONS OF THE ACT GOVERNING SUCH COMPANY. TO OUR MIND, THI S IS SOME WHAT CURIOUS PROVISION. IN THE ORIGINAL FORM, SUB- SECTION (2) OF SECTION 115JB OF THE ACT DID NOT OFF ER ANY SUCH OPTION TO A BANKING COMPANY, INSURANCE COMPANY OR ELECTRICITY COMPANY TO PREPARE ITS PROFIT AND LOSS ACCOUNT AT ITS CHOICE EITHER IN TERMS OF ITS GOVERNING ACT OR AS PER TERMS OF SECTION 115JB OF THE ACT. SECONDLY, BY VIR TUE OF THIS EXPLANATION IF AN ANOMALY WHICH WE HAVE NOTICE D IS SOUGHT TO BE REMOVED, WE DO NOT THINK THAT THE LEGI SLATURE HAS ACHIEVED SUCH PURPOSE. IN PLAIN TERMS, THIS IS NOT A CASE OF RETROSPECTIVE LEGISLATIVE AMENDMENT. IT IS STATED TO BE CLARIFICATORY AMENDMENT FOR REMOVAL OF DOUBTS. W HEN THE PLAIN LANGUAGE OF SUB-SECTION 2 OF SECTION 115J B DID NOT PERMIT ANY AMBIGUITY, WE DO NOT THINK THE LEGIS LATURE BY INTRODUCING A CLARIFICATORY OR DECLARATORY AMEND MENT CURE A DEFECT WITHOUT RESORTING TO RETROSPECTIVE AMENDMENT, WHICH IN THE PRESENT CASE HAS ADMITTEDLY NOT BEEN DONE. ITA NO.585/KOL/2018 M/S UCO BANK 33 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. 20 02-03 BUT ALSO BY VARIOUS OTHER DECISIONS OF THE TRIBUNAL RENDERED AND ALSO BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF UNION BANK OF INDIA (SUPRA). SINCE THERE IS NOT A SINGLE DECISION OF THE JURISDICTIONAL HIGH COURT OR EVEN OF ANY OTHER HON BLE HIGH COURT CITED BY THE LD. D.R, WHICH IS IN FAVOUR OF THE REV ENUE ON THIS ISSUE, WE RESPECTFULLY FOLLOW THE JUDICIAL PRONOUNC EMENTS REFERRED TO AND DISCUSSED ABOVE, WHICH ARE IN FAVOUR OF THE ASSESSEE AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) H OLDING THAT THE PROVISION OF SECTION 115JB WAS NOT APPLICABLE IN TH E CASE OF THE ASSESSEE BEING A BANKING COMPANY FOR THE YEAR UNDER CONSIDERATION, I.E. A.Y. 2010-11. GROUND NO. 3 OF T HE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 17. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH, IN ASSESSEES OWN CASE (SU PRA) AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS OF THE DIVISION BENCH (SUPRA). W E FIND NO REASON TO INTERFERE IN THE SAID ORDER OF THE DIVISION BENCH, THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE COORDINATE BENCH IN ASSESSEES OWN CASE WE NOTE THAT PROVISION OF SECTION 115JB IS NOT APPLICABLE IN THE CASE OF T HE ASSESSEE BEING A BANKING COMPANY FOR THE YEAR UNDER CONSIDERATION. T HEREFORE, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 18. GROUND NOS.8 & 9 RELATES TO RENTAL INCOME EARNE D FROM HOUSE PROPERTY IN SINGAPORE WHICH IS NOT TAXABLE IN INDIA AS PER ARTI CLE 6 OF DTAA APPLICABLE BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF SINGAPORE. 19. FACTS OF THE CASE WHICH CAN BE STATED QUITE SHO RTLY ARE AS FOLLOWS: WHILE COMPUTING THE TAX PAYABLE, THE AO IN HIS IMPUGNED O RDER DID NOT ALLOW RELIEF UNDER SECTION 91 OF THE I.T. ACT IN RESPECT OF THE TAXES PAID IN HONGKONG. IN THE ITA NO.585/KOL/2018 M/S UCO BANK 34 COURSE OF ASSESSMENT, THE APPELLANT HAD FILED COMPL ETE DETAILS OF THE CHALLANS EVIDENCING TAX PAYMENTS MADE BY ITS HONGKONG BRANCH . THE AO, HOWEVER IGNORED THE CLAIM FOR RELIEF U/S 91 IN RESPECT OF F OREIGN TAXES PAID BY THE APPELLANT. 20. ON APPEAL, LD CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE. THE LD CIT(A) NOTICED THAT DURING THE YEAR THE APPELLANT HAD PAID FOREIGN TAXES ON THE PROFITS DERIVED BY THE HONGKONG BRANCH. SINCE THERE WAS NO DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND HONGKONG, IN TERMS OF SECTION 91, THE APPELLANT IS ENTITLED TO CLAIM CREDIT OF FOREIGN TA XES PAID SUBJECT TO THE LIMITS PRESCRIBED THEREIN. THE EXTENT OF RELIEF U/S.91 IS COMPUTED AS A PERCENTAGE OF SUCH 'DOUBLY TAXED INCOME'. THE PERCENTAGE TO BE APPLIED IS THE LOWER OF THE 'INDIAN RATE OF TAX' AND THE 'RATE OF TAX OF THE SAID COUNT RY'. THE RATE SO DETERMINED IS APPLIED TO THE 'DOUBLY TAXED INCOME' ARRIVED UNDER THE NORMAL PROVISIONS OR U/S.115JB. THE APPELLANT HAS PAID HK$ 12,03,724/- T OWARDS THE PROVISIONAL PROFIT TAX FOR THE CAPTIONED FINANCIAL YEAR. THE LD CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING THE FOLLOWING: 14.3 THE ASSESSMENT ORDER REVEALS THAT THE AO HAS NOT ASSIGNED ANY REASON AS TO WHY HE WAS NOT IN AGREEMENT WITH THE CLAIMS OF T HE APPELLANT AND WHAT WAS THE REASON OR RATIONALE BEHIND NOT ALLOWING IT A RE LIEF U/S 91 OF THE ACT. AS A RESULT, THIS ISSUE IS DECIDED ON THE BASIS OF THE M ATERIAL AVAILABLE ON RECORD. I FIND THAT THIS ISSUE WAS ALSO INVOLVED IN THE APPEL LANT'S CASE FOR AY 2007-08 AND 2008-09. MY PREDECESSORS HAVE ALLOWED THE CLAIM OF THE APPELLANT. FOR THE AY 2007-08 MY PREDECESSOR HAS AVERRED AS UNDER: 'I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE ASSE SSEE. I FEEL THAT RELIEF U/S 91 IS ALLOWED WITH A VIEW THAT THE TAX PAID BY THE ASSESSEE IN FOREIGN COUNTRY IS TREATED AS TAX PAID IN INDIA UNDER THE I T ACT. SO BASICALLY U/S 91 TAX PAID IN FOREIGN COUNTRY IS TREATED AT PAR WITH TAX PAID IN INDIA IN THE FORM OF TDS, OR ADVANCE TAX OR SELF-ASSESSMENT TAX OR TCS, ETC. WHEN CREDIT FOR TAX PAYMENTS IS TO BE GIVEN THERE, IS NO DISTINCTION IN THE TAX LIABILITY WHICH IS CREDITED THROUGH NORMAL COMPUTAT ION OF INCOME OR THROUGH SECTION 115 JB. THEREFORE, CREDIT FOR TAX P AID IN FOREIGN COUNTRY SHOULD BE ALLOWED EVEN WHEN THE TAX LIABILITY IS RA ISED U/S 115JB. THEREFORE, THE AO IS DIRECTED TO ALLOW THIS CREDIT U/S 91.' ITA NO.585/KOL/2018 M/S UCO BANK 35 14.4 A POINT NEEDS TO BE MENTIONED HERE. SINCE, IT HAS ALREADY BEEN HELD THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT, THE DEBATE OVER WHETHER THE CREDITS FOR TAXES PAID IN A FOREIGN COUNTRY CAN BE ALLOWED U/S 155JB OR NOT, HAS LOST RELEVANCE IN THE INSTANT CASE. THEREFORE, RESPECTFULLY FOLLOWING THE REASONS GIVEN BY MY PRED ECESSOR AND HIS JUDGMENT ON THIS ISSUE THE APPELLANT IS ALLOWED THE CREDIT U/S 91 OF THE IT ACT, 1961 FOR TAX PAID IN FOREIGN COUNTRY. THE APPEAL ON THIS GROUND IS ALLOWED. 21. THE LD COUNSEL ALSO BROUGHT TO THE NOTICE OF TH E BENCH THAT THIS ISSUE IS COVERED BY ARTICLE 6 OF THE INDIA-SINGAPORE TREATY WHICH IS REPRODUCED AS UNDER: INDIA- SINGAPORE ARTICLE 6- INCOME FROM IMMOVABLE PROPERTY OF COMPREHENSIVE AGREEMENTS SINGAPORE ARTICLE 6 INCOME FROM IMMOVABLE PROPERTY 1. INCOME DERIVED BY A RESIDENT OF A CONTRACTING ST ATE FROM IMMOVABLE PROPERTY SITUATED IN THE OTHER CONTRACTING STATE MAY BE TAXE D IN THAT OTHER STATE. 2. THE TERM 'IMMOVABLE PROPERTY' SHALL HAVE THE MEA NING WHICH IT HAS UNDER THE LAW OF THE CONTRACTING STATE IN WHICH THE PROPERTY IN Q UESTION IS SITUATED. THE TERM SHALL IN ANY CASE INCLUDE PROPERTY ACCESSORY TO IMMOVABLE PR OPERTY, LIVESTOCK AND EQUIPMENT USED IN AGRICULTURE AND FORESTRY, RIGHTS TO WHICH T HE PROVISIONS OF GENERAL LAW RESPECTING LANDED PROPERTY APPLY USUFRUCT OF IMMOVA BLE PROPERTY AND RIGHTS TO VARIABLE OR FIXED PAYMENTS AS CONSIDERATION FOR THE WORKING OF, OR THE RIGHT TO WORK, MINERAL DEPOSITS, SOURCES AND OTHER NATURAL RESOURC ES. SHIPS AND AIRCRAFT SHALL NOT BE REGARDED AS IMMOVABLE PROPERTY. 3. THE PROVISIONS OF PARAGRAPH 1 SHALL ALSO APPLY T O INCOME DERIVED FROM THE DIRECT USE, LETTING OR USE IN ANY OTHER FORM OF IMMOVABLE PROPERTY. 4. THE PROVISIONS OF PARAGRAPHS 1 AND 3 SHALL ALSO APPLY TO THE INCOME FROM IMMOVABLE PROPERTY OF AN ENTERPRISE AND TO INCOME F ROM IMMOVABLE PROPERTY USED FOR THE PERFORMANCE OF INDEPENDENT PERSONAL SERVICES. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT (A). THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. C.I T.(A) IN DEL ETING THE AFORESAID ADDITIONS. HIS ORDER ON THIS ADDITION IS, THEREFORE, UPHELD AND TH E GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. ITA NO.585/KOL/2018 M/S UCO BANK 36 22. BEFORE PARTING, IT IS NOTED THAT THE ORDER IS B EING PRONOUNCED AFTER 90 DAYS OF HEARING. HOWEVER, TAKING NOTE OF THE EXTRAORDINARY SITUATION IN THE LIGHT OF THE COVID-19 PANDEMIC AND LOCKDOWN, THE PERIOD OF LOCKD OWN DAYS NEED TO BE EXCLUDED. FOR COMING TO SUCH A CONCLUSION, WE RELY UPON THE DECISION OF THE CO- ORDINATE BENCH OF THE MUMBAI TRIBUNAL IN THE CASE O F DCIT VS. JCB LIMITED IN ITA NO. 6264/MUM/2018 AND ITA NO. 6103/MUM/2018 FOR A.Y. 2013-14 ORDER DATED 14.05.2020. 23. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17/06/20 20. SD/- (S. S. GODARA) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED:17/06/2020 RS, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT- ACIT, LTU-2, KOLKATA 2. / THE RESPONDENT.- M/S UCO BANK 3. ( ) / THE CIT(A), (SENT THROUGH EMAI L) 4. / CIT 5. ! $$% , % , / DR, ITAT, KOLKATA (SENT THROUGH EMAIL) 6. ( / GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA .