Income Tax Officer, Ward- 1(1)(2), Bangalore V. M/s. Atria Hydel Power Limited, Bengaluru

ITA 647/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3199 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V NARENDRA SHARMA
• Section: 115JB; 201; 6; 10

Judgement Text

ITA NO.647/BANG/2020 M/S. ATRIA HYDEL POWER LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.647/BANG/2020 ASSESSMENT YEAR: 2008-09 ITO WARD-1(1)(2) BANGALORE VS. M/S. ATRIA HYDEL POWER LTD. NO.11, 1 ST FLOOR COMMISSARIAT ROAD BENGALURU PAN NO.AACCA3754E APPELLANT RESPONDENT APPELLANT BY : SHRI KANNAN NARAYANAN, D.R. RESPONDENT BY : SHRI V. NARENDRA SHARMA, A.R. DATE OF HEARING : 19.11.2020 DATE OF PRONOUNCEMENT : 20.11.2020 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY REVENUE IS DIRECTED AGAINST ORDER OF THE CIT(A)- 6, BENGALURU DATED 20.2.2020. THE REVENUE HAS RAIS ED FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT(A), IN SO FAR AS IT IS PRE JUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUM STANCES OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS .4,95,59,340/- MADE BY THE A.O. U/S 115JB. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE LD. CIT(A ) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO.647/BANG/2020 M/S. ATRIA HYDEL POWER LTD., BANGALORE PAGE 2 OF 5 2. FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COM PANY CARRYING ON THE BUSINESS OF GENERATION AND SELLING OF POWER HAD FILED NIL RETURN OF INCOME UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 ['THE ACT' FOR SHORT]. THE ASSESSEE ALSO CLAIMED THAT TH E PROVISIONS OF SECTION 115JB OF THE ACT WERE NOT APPLICABLE TO THE ASSESSEE AS THERE WAS NO TAX PAYABLE ON THE INCOME AS PER THE REGULAR COMPUTATION OF INCOME UNDER THE ACT, WHICH IS A SINE QUA NON FOR A PPLICATION OF THE PROVISIONS OF THE ACT U/S 115JB OF THE ACT. HOWEVE R, THE A.O. WHILE COMPLETING THE ASSESSMENT PROCEEDINGS, INVOKED THE PROVISIONS OF SECTION 115JB OF THE ACT AND SUBJECTED THE INCOME A S SHOWN IN THE P&L ACCOUNT AS BOOK PROFIT ASSESSABLE IN TERMS OF S ECTION 150JB OF THE ACT. 3. ON APPEAL, LD. CIT(A) OBSERVED THAT THERE IS A D ECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.913/BANG/ 2007 DATED 23.12.2008. HE OBSERVED THAT THE ASSESSEE IS NOT L IABLE TO PAY TAX U/S 115JB OF THE ACT BY VIRTUE OF THE POSITION THAT NO TAX WAS PAYABLE UNDER THE NORMAL PROVISIONS OF THE ACT. FURTHER, BY WAY OF ADDITIONAL GROUND, THE FOLLOWING GROUND WAS RAISED BEFORE LD. CIT(A) WHICH IS AS FOLLOWS: THE PROVISIONS OF SECTION 115JB OF THE ACT ARE NOT APPLICABLE TO THE APPELLANT, WHICH IS ENGAGED IN THE BUSINESS OF GENE RATING ELECTRICITY. 4. THIS GROUND WAS ALSO DECIDED IN FAVOUR OF THE AS SESSEE BY LD. CIT(A) BY FOLLOWING THE ORDER OF THE CIT(A) IN ASSE SSEES OWN CASE IN ITA NOS.534 TO 536/BANG/2018 DATED 31.10.2018 FOR T HE ASSESSMENT YEARS 2009-10, 2011-12 & 2012-13 AND OBS ERVED THAT ASSESSEE IS NOT LIABLE FOR PAYMENT OF TAX U/S 115JB OF THE ACT. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, LD. D.R. SUBMITTED THAT IN VIEW OF TH E FOLLOWING JUDGEMENTS THE ISSUE NEEDS TO BE DECIDED IN FAVOUR OF THE REVENUE:- ITA NO.647/BANG/2020 M/S. ATRIA HYDEL POWER LTD., BANGALORE PAGE 3 OF 5 I) CIT VS. UNITED INDIA INSURANCE CO. (2020) 117 TA XMANN.COM 849 (SC) II) PR. CIT VS. NEW INDIA ASSURANCE CO. LTD. (2020) 114 TAXMANN.COM 223 (SC) 5.1 FURTHER, IT WAS SUBMITTED THAT THE SLP WAS ADMI TTED BY HONBLE SUPREME COURT AGAINST THE JUDGEMENT OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. INGVYSYA BANK LTD . AND ASSESSEES OWN CASE (186 DTR 193) AND HENCE THE ISSUE MAY BE D ECIDED IN FAVOUR OF THE REVENUE. 6. ON THE OTHER HAND, LD. A.R. RELIED ON THE JUDGEM ENT OF THE HONBLE KARNATAKA HIGH COURT IN ASSESSEES OWN CASE AND ALSO ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, THIS ISSUE WAS CONSIDERED BY TH IS TRIBUNAL IN ASSESSEES OWN CASE IN FAVOUR OF ASSESSEE IN EARLIE R ASSESSMENT YEAR IN ITA NOS.534 TO 536/BANG/2018 DATED 31.10.2018. LATER, THIS WAS SUBJECT MATTER OF APPEAL BEFORE THE JUDICIAL HIGH C OURT IN THE CASE OF CIT VS. ING VYSYA BANK LTD. (186 DTR 193), ATRIA PO WER CORPORATION LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX (IT APPE AL NO.229 OF 2009 & 35 OF 2014) AND ATRIA HYDEL POWER LTD. VS. ITO (IT APPEAL NO.21 OF 2012). THE HONBLE HIGH COURT DECIDED THE ISSUE AS FOLLOWS: HELD : FROM CLOSE SCRUTINY OF S. 115JB(2), IT IS AXIOMATIC THAT EVERY ASSESSEE BEING A COMPANY FOR THE PURPOSES OF SAID SECTION PREPARES ITS P&L AC FOR RELEVANT PREVIOUS YEAR IN A CCORDANCE WITH PROVISIONS OF PART II AND PART III OF SCH. VI OF TH E COMPANIES ACT, 1956. THE ASSESSEE BEING A BANKING COMPANY IS NOT R EQUIRED TO PREPARE ITS ACCOUNT IN ACCORDANCE WITH PROVISIONS O F PART I: AND PART 111 OF SCH. VI OF THE COMPANIES ACT, 1956. THE ASSESSEE BEING A BANKING COMPANY. ITS ACCOUNTS (WE PREPARED AS PER THE BANKING REGULATION ACT. 1949 AND IT IS NOT OBLIGED EITHER T O CONVENE AN ANNUAL GENERAL MEETING OR PLACE ITS P&L A/C IN SUCH GENERAL MEETING. A GENERAL MEETING CONTEMPLATED UNDER S. 16 6 OF THE COMPANIES ACT. 1956 IS NOT POSSIBLE IN THE CASE OF THE ASSESSEE AS THERE ARE NO SHAREHOLDERS OF THE ASSESSEE. IT IS AL SO WORTH ITA NO.647/BANG/2020 M/S. ATRIA HYDEL POWER LTD., BANGALORE PAGE 4 OF 5 MENTIONING THAT UNDER 3. 166 OF THE COMPANIES ACT, 1956 EVERY COMPANY IS REQUIRED TO HOLD A GENERAL MEETING IN EA CH YEAR AND S. 201 MANDATES THAT EVERY YEAR THE BOARD OF DIRECTORS OF THE COMPANY IN GENERAL MEETING SHALL LAY BEFORE THE COM PANY A BALANCE SHEET AS AT THE END OF THE RELEVANT PERIOD AND ALSO P&L ARC FOR THE PERIOD. PART IF AND PART III OF SCH. VI TO THE COMPANIES ACT SPECIFY THE METHOD AND MANNER OF MAINTAINING P& L A/C. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE UNDER S. 2 10 OF THE COMPANIES ACT. 1956 IS ALSO REQUIRED TO LAY ITS ACC OUNT BEFORE THE ANNUAL GENERAL MEETING. HOWEVER SUCH ACCOUNTS 'LAVE TO BE PREPARED IN ACCORDANCE WITH THE BANKING REGULATION ACT, 1949 WHICH IS NOT POSSIBLE FOR THE REASONS ASSIGNED SUPRA. THE SUBMISSION THAT PROVISO TO SUB-S. (2) OF S. 115JB C REATES A LEGAL FICTION CANNOT BE ACCEPTED AS UNDER THE AFORESAID P ROVISO, THE COMPANY HAS TO PREPARE THE P&L A/C AND TO PLACE IT BEFORE THE ANNUAL GENERAL MEETING IN ACCORDANCE WITH PROVISION S OF S. 210 OF THE COMPANIES ACT, 1956. A BANKING COMPANY UNDER S. 115JB(2) CAN PREPARE ADDITIONAL ACCOUNTS AS PER PART II AND PART ILL OF SCH. VI OF THE COMPANIES ACT OR FULFILL THE REQUIREMENTS OF THE PROVISO OF SUB-S. (2) BUT IT CANNOT FULFILL BOTH THE CONDITION S. THE MACHINERY PROVISIONS PROVIDED IN SUB-S. (2) OF S. 115JB WOULD BE RENDERED WHOLLY UNWORKABLE IN CASE OF A BANKING COMPANY. IT IS ALSO PERTINENT TO MENTION HERE THAT THE COMPANIES ACT, 1956 HAS EX CLUDED INSURANCE, BANKING COMPANIES OR THE COMPANIES ENGAG ED IN THE GENERATION OR SUPPLY OF ELECTRICITY FROM THE PURVIE W OF S. 211(1) OF THE COMPANIES ACT, 1956 AND RESULTANTLY FROM THE PU RVIEW OF S. 115JB. ADMITTEDLY, THE PROVISIONS OF S. 115JB HAVE BEEN AMENDED W.E.F. 1ST APRIL, 2013, THE MEMORANDUM EXPLAINING T HE PROVISIONS OF FINANCE BILL, 2012 WHILE EXPLAINING THE AMENDMEN TS TO S. 115JB, NOTES THAT IN CASES OF CERTAIN COMPANIES SUCH AS IN SURANCE, BANKING AND ELECTRICITY COMPANIES, THEY ARE ALLOWED TO PREP ARE THE P&L A/C IN ACCORDANCE WITH THE SECTIONS SPECIFIED IN THEIR REGULATORY ACTS. THUS, TO ALIGN THE PROVISIONS OF THE IT ACT, 1961 W ITH THE COMPANIES ACT, 1956, IT WAS DECIDED TO AMEND S. 115JB W.E.F. 1ST APRIL, 2013TO PROVIDE THAT COMPANIES WHICH ARE NOT REQUIRED UNDER S. 211 OF THE COMPANIES ACT, 1956 TO PREPARE P&L A/C IN ACCORDANC E WITH SCH. VI OF THE COMPANIES ACT, 1956. P&L A/C PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THEIR REGULATORY ACT SHALL B E TAKEN AS BASIS FOR COMPUTING BOOK PROFIT UNDER S. 115JB. FOR THE F OREGOING REASONS, IT IS HELD THAT THE PROVISIONS OF S. 115JB (2) DO NOT APPLY TO THE BANKING COMPANIES.CIT VS. UNION BANK OF INDIA (2019) 308 CTR (BORN) 797: (2019) 177 DTR (BORN) 305 CONCURRED WITH. 8. BEING SO, AS ON DATE, THE ISSUE RAISED BY THE DE PARTMENT ENTIRELY COVERED BY THE ABOVE JUDGEMENT OF THE HON BLE KARNATAKA HIGH COURT AND ALSO TRIBUNAL IN FAVOUR OF THE ASSES SEE AND ITA NO.647/BANG/2020 M/S. ATRIA HYDEL POWER LTD., BANGALORE PAGE 5 OF 5 ACCORDINGLY, WE ARE INCLINED TO DECIDE THE ISSUE AG AINST THE DEPARTMENT AND IN FAVOUR OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOV, 2020. SD/- (N.V. VASUDEVAN ) VICE PRESIDENT SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER BANGALORE, DATED 20 TH NOV, 2020. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.