DIPSC Limited, Kolkata V. D.C.I T Cir - VI,kolkata, Kolkata

ITA 890/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4888 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2013
• Court: TRIBUNAL
• Assessee Lawyers: AMIT AGARWALACA
• Keywords: Depreciation; Deemed to accrue or arise in india
• Section: 143(3); 234B; 14A; 115JB; 80IB; 10B; 69; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A, KO LKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M.BALAGANES H, AM] ITA NO.890/KOL/2013 ASSESSMENT YEAR : 2007-08 DPSC LTD. -VERSUS- D.C.I.T., CIRCLE-VI, KOLKATA KOLKATA (PAN:AABCD0340G) (APPELLANT ) (RESPONDENT) FOR THE APPELLANT : SHRI SOUMEN ADAK, FCA & SHRI AM IT AGARWAL, ACA FOR THE RESPONDENT : SALLONG YADEN, ADDL. CIT, SR.D R DATE OF HEARING : 02.05.2016. DATE OF PRONOUNCEMENT : ORDER PER SHRI M.BALAGANESH, AM 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED CIT(A)-VI, KOLKATA IN APPEAL NO. 1/CIT(A)-VI/CIR-6/2010-11/KOL DATED 01.02 AGAINST THE ORDER OF ASSESSMENT FRAMED FOR THE ASST YEAR 2007-08 U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. DURING THE COURSE OF HEARING, THE LEARNED AR S TATED THAT IN VIEW OF THE SMALLNESS OF THE AMOUNT INVOLVED , HE IS NOT PRESSING THE GRO UND NO.1 ON THE ISSUE OF DISALLOWANCE U/S 14A OF THE ACT. ACCORDINGLY, THE GROUND NO. 1 IS DISMISSED AS NOT PRESSED. 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LEARNED CITA IS JUSTIFIED IN REJECTING THE ADDITIONAL GROUNDS RAISE D BY THE ASSESSEE BEFORE HIM ON 10.1.2013 IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. 3.1. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE IS A PUBLIC COMPANY ENGAGED IN THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELEC TRICITY AND BEING AN ELECTRICITY COMPANY, IS GOVERNED BY THE PROVISIONS OF ELECTRICI TY ACT, 2003 AND HAS TO PREPARE ITS ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 2 ACCOUNTS AS PER THE POLICIES AND STANDARDS PRESCRIB ED UNDER THE ELECTRICITY ACT AND ITS REGULATIONS. IN TERMS OF THE SAID REGULATIONS AND LOCATION OF THE ASSESSEE, THE ASSESSEE IS REQUIRED TO PREPARE ITS BALANCE SHEET AND PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH WEST BENGAL ELECTRICITY REGULATORY COMMISSION (TERM S & CONDITIONS OF TARIFF) REGULATIONS, 2005. SINCE THE ACCOUNTS WERE PREPARE D NOT IN ACCORDANCE WITH THE PROVISIONS OF PART II OF SCHEDULE VI TO THE COMPANI ES ACT, 1956, THE ASSESSEE PLEADED THAT THE PROVISIONS OF SECTION 115JB OF THE ACT COU LD NOT BE MADE APPLICABLE TO THE ASSESSEE COMPANY AND HAD ACCORDINGLY RAISED THE ADD ITIONAL GROUNDS TO THIS EFFECT BEFORE THE LEARNED CITA ON 10.1.2013. THE LEARNED CITA OBSERVED THAT THE ASSESSEE HAD NOT ADDUCED PROPER REASONS AS TO WHY T HE SAME ISSUE WAS NOT RAISED BEFORE THE LEARNED AO. MOREOVER, HE OBSERVED THAT THE ASSESSEE ITSELF HAD OFFERED THE INCOME TO TAX UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. ACCORDINGLY HE REFUSED TO ADMIT THE ADDITIONAL GROUNDS BUT PROCEED ED TO ADJUDICATE THE ISSUE ON MERITS. AGGRIEVED, THE ASSESSEE HAD RAISED THE FOLL OWING GROUND BEFORE US :- 2.0. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) WAS NOT JUSTIFIED & ERRED IN NOT ADMITTING ADDITIONAL G ROUNDS FILED BEFORE IT, WITHOUT CONSIDERING THE FACT THAT, THE ADDITIONAL GROUNDS W ERE MERELY QUESTIONS OF LAW ON THE FACTS AVAILABLE ON RECORD AND ESSENTIAL IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN APPELLANT. 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE BEFORE THE LEARNED CITA IS A LEGAL ISSUE AND DOES NOT REQUIRE ANY FRESH INVESTIGATION OF FACTS AND THE HONBLE SUPREME COURT IN THE CASE OF NTPC LTD VS CIT REPORTED IN 229 ITR 383 (SC) HAD ALREADY HELD THAT THE ISSUES INVOLVING QUESTIO N OF LAW AND NOT REQUIRING INVESTIGATION OF FACTS COU LD BE RAISED FOR THE FIRST TIME EVEN AT THE APPELLATE PROCEEDINGS. RESPECTFULLY FOLLOWING THE SAID JUDGEMENT, WE HOLD THAT THE DISMISSAL OF THE ADDITIONAL GROUND RAISED BY TH E ASSESSEE IS NOT JUSTIFIED. ACCORDINGLY THE GROUND NO.2 RAISED BY THE ASSESSEE BEFORE US IS ALLOWED. 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE PROVISIONS OF SECTION 115JB OF THE ACT COULD BE MADE APPLICABLE TO THE AS SESSEE COMPANY IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOR THE ASSESSMENT YE AR UNDER APPEAL. ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 3 4.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE LEARNED AR ARGUED THAT THE ASSESSEE BE ING A ELECTRICITY COMPANY IS BEING GOVERNED BY THE PROVISIONS OF THE ELECTRICITY ACT 2 003 AND THE ASSESSEE IS REQUIRED TO PREPARE ITS BALANCE SHEET AND PROFIT AND LOSS ACCOU NT IN ACCORDANCE WITH WEST BENGAL ELECTRICITY REGULATORY COMMISSION (TERMS & CONDITIO NS OF TARIFF) REGULATIONS, 2005. THE LEARNED CITA HAD A GIVEN A CLEAR FINDING TO THIS EFFECT IN HIS ORDER. THE LEARNED AR ARGUED THAT AS PER THE PROVISIONS OF SEC TION 115JB(2) OF THE ACT, FOR COMPUTING BOOK PROFIT UNDER THIS SECTION, THE ASESS EE HAS TO PREPARE ITS ACCOUNTS AS PER PART II AND III OF SCHEDULE VI TO THE COMPANIES ACT , 1956 AND NOT AS PER THE ELECTRICITY ACT, 2003. THE LEARNED CITA HAD HELD THAT THE AMENDMENT BROUGHT IN SECTION 115JB OF THE ACT BY THE FINANCE ACT 2012 IS CLARIFICATORY IN NATURE AND HENCE HAS TO BE CONSTRUED AS RETROSPECTIVE IN OPERATION. WE FIND THAT THE SECTION 211 AND SECTION 616 OF THE COMPANIES ACT, 1956 PROVIDES THA T IN CASE OF ELECTRICITY COMPANIES, PROVISIONS OF ELECTRICITY ACT SHALL PREV AIL OVER THE PROVISIONS OF COMPANIES ACT WHEREVER THEY ARE INCONSISTENT. FOR THE SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 616 OF THE COMPANIES ACT , 19 56 IS REPRODUCED BELOW:- APPLICATION OF ACT TO INSURANCE, BANKING, ELECTRICI TY SUPPLY AND OTHER COMPANIES GOVERNED BY SPECIAL ACTS . THE PROVISIONS OF THIS ACT SHALL APPLY- . A) TO INSURANCE COMPANIES; EXCEPT IN SO FAR AS THE SAID PROVISIONS ARE INCONSISTENT WITH- THE PROVISIONS OF THE INSURANCE ACT, 1938; B) TO BANKING COMPANIES. EXCEPT IN SO FAR AS THE S AID PROVISIONS ARE INCONSISTENT WITH THE PROVISIONS OF THE BANKING COMPANIES ACT, 1949; C) TO COMPANIES ENGAGED IN THE GENERATION OR SUPPLY OF ELECTRICITY. EXCEPT IN SO FAR AS THE SAID PROVISIONS. ARE INCONSISTENT WITH THE PROV ISIONS OF THE INDIAN ELECTRICITY ACT. 1910 OF THE ELECTRICITY SUPPLY 1948; . D) TO ANY OTHER COMPANY GOVERNED BY ANY SPECIAL ACT FOR THE TIME BEING IN FORCE, EXCEPT IN SO FAR, AS THE SAID PROVISIONS ARE INCONSISTENT WITH THE PROVISIONS OF SUCH SPECIAL ACT; E) TO SUCH BODY CORPORATE, INCORPORATED BY ANY ACT FOR THE TIME BEING IN FORCE, AS THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFI CIAL GAZETTE, SPECIFY IN THIS BEHALF, SUBJECT TO SUCH EXCEPTIONS, MODIFICATIONS OR ADAPTA TION, AS MAY BE SPECIFIED IN THE NOTIFICATION. 4.2. THE INDIAN ELECTRICITY ACT, 1910 AND THE ELEC TRICITY (SUPPLY) ACT, 1948 HAS SINCE BEEN REPEALED BY THE ELECTRICITY ACT, 2003. FROM PE RUSAL OF THE ABOVE IT COULD BE ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 4 NOTED THAT FOR AN ELECTRICITY COMPANY, PROVISIONS O F ELECTRICITY ACT, 2003 SHALL OVERRIDE PROVISIONS OF COMPANIES ACT WHEREVER THERE IS INCONSISTENCIES BETWEEN THE TWO. IN OTHER WORDS, WHEREVER THE PROVISIONS OF THE COMPANIES ACT DIFFER FROM THAT OF THE ELECTRICITY ACT, 2003, THE PROVISIONS OF THE ELECTRICITY ACT WOULD PREVAIL OVER THE PROVISIONS OF THE COMPANIES ACT. 4.3. SECTION 115JB(2) OF THE INCOME TAX ACT, 1961. SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN CO MPANIES (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 PROFIT AND LO SS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PART II OF SCHEDULE VI TO THE COMPANIES ACT, 1956 (1 OF 1956); OR (B) BEING A COMPANY, TO WHICH THE PROVISO TO SUB-SE CTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 (1 OF 1956 IS APPLICABLE, SHALL, FOR THE PURPOSES OF THIS SECTION, PREPARE ITS PROFIT AND LOSS ACCOUNT FOR TH E RELEVANT PREVIOUS 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 ACCOUNT AND LAID BEFORE T HE COMPANY AT ITS ANNUAL GENERAL MEETING IN ACCORDANCE WITH THE PROVISIONS OF SECTIO N 210 OF THE COMPANIES ACT, 1956 (1 OF 1956) : PROVIDED FURTHER THAT WHERE THE COMPANY HAS ADOPTED OR ADOPTS THE F INANCIAL YEAR UNDER THE COMPANIES ACT, 1956 (1 OF 1956), WHICH IS DIFFERENT FROM THE PREVIOUS YEAR UNDER 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 HA VE BEEN ADOPTED FOR PREPARING SUCH ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT FOR SUCH FINANCIAL YEAR OR PART OF SUCH FINANCIAL YEAR FALLING WITHIN THE RELEVANT PRE VIOUS YEAR. 4.4. SECTION 211(1), 211(2), 211(3), 211(3A), 211( 3B) AND 211(3C) OF COMPANIES ACT 1956: ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 5 211. FORM AND CONTENTS OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (1) EVERY BALANCE SHEET OF A COMPANY SHALL GIVE A T RUE AND FAIR VIEW OF THE STATE OF AFFAIRS OF THE COMPANY AS AT THE END OF THE FINANCI AL YEAR AND SHALL, SUBJECT TO THE PROVISIONS OF THIS SECTION, BE IN THE FORM SET OUT IN PART I OF SCHEDULE VI, OR AS NEAR THERETO AS CIRCUMSTANCES ADMIT OR IN SUCH OTHER FOR M AS MAY BE APPROVED BY THE CENTRAL GOVERNMENT EITHER GENERALLY OR IN ANY PARTI CULAR CASE; AND IN PREPARING 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 AP PLY TO ANY INSURANCE OR A BANKING COMPANY OR ANY COMPANY ENGAGED IN THE GENER ATION OR SUPPLY OF ELECTRICITY, OR TO ANY OTHER CLASS OF COMPANY FOR W HICH A FORM OF BALANCE SHEET HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVERNING SUCH C LASS OF COMPANY. (2) EVERY PROFIT AND LOSS ACCOUNT OF A COMPANY SHAL L GIVE A TRUE AND FAIR VIEW OF THE PROFIT OR LOSS OF THE COMPANY FOR THE FINANCIAL YEA R AND SHALL, SUBJECT AS AFORESAID, COMPLY WITH THE REQUIREMENTS OF PART II OF SCHEDUL E 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 COMPANY ENGAGED IN THE GENER ATION OR SUPPLY OF ELECTRICITY, OR TO ANY OTHER CLASS OF COMPANY FOR WHICH A FORM O F PROFIT AND LOSS ACCOUNT HAS BEEN SPECIFIED IN OR UNDER THE ACT GOVERNING SUCH C LASS OF COMPANY. (3) THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, EXEMPT ANY CLASS OF COMPANIES FROM COMPLIANCE WITH ANY OF THE REQUIREMENTS IN SCHEDULE VI IF, IN ITS OPINION, IT IS NECESSARY TO GRANT THE EXEMPTION IN THE PUBLIC INTEREST. ANY SUCH EXEMPTION MAY BE GRANTED EITHER UNCONDITIO NALLY OR SUBJECT TO SUCH CONDITIONS AS MAY BE SPECIFIED IN 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 ACCOUNTING STANDARDS, SUCH COMPANIE S SHALL DISCLOSE IN ITS PROFIT AND LOSS ACCOUNT AND BALANCE SHEET, THE FOLLOWING, NAMELY;- (A) THE DEVIATION FROM THE ACCOUNTING STANDARDS; (B) THE REASONS FOR SUCH DEVIATION; AND (C) THE FINANCIAL EFFECT, IF ANY, ARISING DUE TO SUCH D EVIATION. (3C) FOR THE PURPOSES OF THIS SECTION, THE EXPRESS ION ACCOUNTING STANDARDS MEANS THE STANDARDS OF ACCOUNTING RECOMMENDED BY THE INST ITUTE OF CHARTERED ACCOUNTANTS OF INDIA CONSTITUTED UNDER THE CHARTERED ACCOUNTANT S ACT, 1949 (38 OF 1949), AS MAY BE PRESCRIBED BY THE CENTRAL GOVERNMENT IN CONSULTA TION WITH THE NATIONAL ADVISORY COMMITTEE ON ACCOUNTING STANDARDS ESTABLISHED UNDER SUB-SECTION (1) OF SECTION 210A: PROVIDED THAT THE STANDARDS OF ACCOUNTING SPECIFIED BY THE I NSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA SHALL BE DEEMED TO BE THE ACCO UNTING STANDARDS UNTIL THE ACCOUNTING STANDARDS ARE PRESCRIBED BY THE CENTRAL GOVERNMENT UNDER THIS SUB- SECTION.] ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 6 4.5. EXPLANATION 3 TO SECTION 115JB OF THE INCOME T AX ACT, 1961 FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED T HAT FOR THE PURPOSES OF THIS SECTION, THE ASSESSEE, BEING A COMPANY TO WHIC H THE PROVISO TO SUB-SECTION (2) OF SECTION 211 OF THE COMPANIES ACT, 1956 (1 OF 195 6) 16A IS APPLICABLE, HAS, FOR AN ASSESSMENT YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2012, AN OPTION TO PREPARE ITS PROFIT AND LOSS ACCOUNT FOR THE RELEVAN T PREVIOUS YEAR EITHER IN ACCORDANCE WITH THE PROVISIONS OF PART II AND PART III OF SCHEDULE VI 17 TO THE COMPANIES ACT, 1956 OR IN ACCORDANCE WITH THE PROVI SIONS OF THE ACT GOVERNING SUCH COMPANY.] 4.5.1. THE EXPLANATION 3 TO SECTION 115JB OF THE AC T HAS BEEN INSERTED BY THE FINANCE ACT 2012 TO CLARIFY THAT ONLY ASSESSES BEING COMPAN IES 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 WITH IN THE AMBIT OF SECTION 211 OF THE COMPANIES ACT, 1956, IT WAS NOT COVERED BY THE EXPL ANATION 3 TO SECTION 115JB AND AS A NECESSARY COROLLARY SECTION 115JB WAS NOT APPL ICABLE TO IT. 4.6. THE NOTES TO CLAUSES TO FINANCE ACT, 2012 ON THE SU BJECT OF MINIMUM ALTERNATE TAX (MAT) IS REPRODUCED BELOW:- I. UNDER THE EXISTING PROVISIONS OF SECTION 115JB O F THE ACT, A COMPANY IS LIABLE TO PAY MAT OF EIGHTEEN AND ONE HALF PER CEN T 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 COMPUTED BY MAKING CERTAIN ADJUSTMENTS TO THE PROFIT DISCLOSED IN THE PROFIT AND LOSS ACCOUNT PREPARED B Y 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 ACT, 1956. HOWEVER , AS PER THE PROVISIONS OF THE COMPANIES ACT, 1956, CERTAIN COMPANIES E.G. INSURAN CE, BANKING OR ELECTRICITY COMPANY ARE ALLOWED TO PREPARE THEIR PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH THE PROVISIONS SPECIFIED IN THEIR REGULATORY ACTS. IN ORDER TO ALIGN THE PROVISIONS OF INCOME-TAX ACT WITH THE COMPANIES ACT, 1956, IT IS PROPOSED TO AMEND SECTION 115JB TO PROVIDE THAT THE COMPANIES WHICH ARE NOT REQUIR ED UNDER SECTION 211 OF THE COMPANIES ACT TO PREPARE THEIR PROFIT AND LOSS ACC OUNT IN ACCORDANCE WITH THE SCHEDULE VI OF THE COMPANIES ACT, 1956, PROFIT AND LOSS ACCOUNT PREPARED IN ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 7 ACCORDANCE WITH THE PROVISIONS OF THEIR REGULATORY ACTS SHALL BE TAKEN AS A BASIS FOR COMPUTING THE BOOK PROFIT UNDER SECTION 115JB. II. IT IS NOTED THAT IN CERTAIN CASES, THE AMOUNT S TANDING IN THE REVALUATION RESERVE IS TAKEN DIRECTLY TO GENERAL RESERVE ON DI SPOSAL OF A REVALUED ASSET. THUS, THE GAINS ATTRIBUTABLE TO REVALUATION OF THE ASSET IS NOT SUBJECT TO MAT LIABILITY. IT IS, THEREFORE, PROPOSED TO AMEND SECTION 115JB T O PROVIDE THAT THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB SHALL BE INCREASED BY THE AMOUNT STANDING IN THE REVALUATION RESERVE RELATING TO THE REVALUED ASSET WHICH HAS BEEN RETIRED OR DISPOSED, IF THE SAME IS NOT CREDIT ED TO THE PROFIT AND LOSS ACCOUNT. III. IT IS ALSO PROPOSED TO OMIT THE REFERENCE OF P ART III OF THE SCHEDULE VI OF THE COMPANIES ACT, 1956 FROM SECTION 115JB IN VI EW OF OMISSION OF PART III IN THE REVISED SCHEDULE VI UNDER THE COMPANIES ACT 1956. THESE AMENDMENTS WILL TAKE EFFECT FROM 1 ST APRIL, 2013 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2013-14 AND SUBSEQUENT ASSESSMENT YEARS. 4.7. IN VIEW OF THE ABOVE, WE HOLD THAT IN VIEW OF THE LEGISLATIVE CHANGE BROUGHT ABOUT BY THE INTRODUCTION OF EXPLANATION 3 IN SECTION 115 JB OF THE ACT BY THE FINANCE ACT, 2012 THE ASSESSEES CONTENTION IN FACT STANDS MORE FORTI FIED. THE EXPLANATION 3 TO SECTION 115JB MAKES IT EVIDENTLY CLEAR THAT SECTION 115JB I S APPLICABLE ONLY TO ENTITIES REGISTERED AND RECOGNIZED TO BE COMPANIES UNDER THE COMPANIES ACT, 1956. SINCE THE ASSESSEE IS NOT A COMPANY WITHIN THE MEANING OF COMPANIES ACT, 1956 , SECTION 211(2) AND PROVISO THEREON IS NOT APPLICABLE AND THEREFORE CONSEQUENTL Y WE HOLD THAT THE PROVISIONS OF SECTION 115JB OF THE ACT ARE ALSO NOT APPLICABLE. 4.8. THE BASIC INTENTION OF MAT U/S 115JB IS ONLY TO TAX THE BOOK PROFITS IRRESPECTIVE OF NIL OR LESSER TAXABLE INCOME DUE TO VARIOUS EXEMPTI ONS / DEDUCTIONS LIKE SECTIONS 10A/ 10B/ 80IA / 80IB ETC. THE INTENTION OF MAT IS THA T THE COMPANIES WERE DECLARING HUGE PROFITS AS PER THEIR COMPANIES ACT AND DECLARING DI VIDENDS TO ITS SHAREHOLDERS BUT PAYING NIL TAX OR LESSER TAX UNDER THE IT ACT DUE TO VARIOUS E XEMPTIONS / DEDUCTIONS LIKE SECTIONS 10A/ ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 8 10B/ 80IA / 80IB. TO JUSTIFY THE IMPOSITION, RE AL INCOME THEORY WAS STRESSED AND IT WAS HELD THAT THE COMPANIES CANNOT BE ALLOWED TO HAVE T WO FACES, ONE FOR SHAREHOLDER AND ANOTHER FOR TAXMAN. SECTION 115JA WAS ENACTED BY R ESTRUCTURING THE PROVISIONS OF SECTION 115J WITH CERTAIN MINOR CHANGES AND THEREAFTER SECT ION 115JB WAS ENACTED BY BRINGING MINOR CHANGES IN SECTION 115JA. THE PROVISIONS OF SECTION 115J, 115JA AND 115JB ARE BY AND LARGE SIMILAR TO EACH OTHER. 4.8.1. THE SCOPE AND EFFECT OF SECTION 115JA WAS E LABORATED IN THE DEPARTMENT CIRCULAR NO. 762 DATED 18.2.1998. THE RELEVANT PORTION IS R EPRODUCED HEREUNDER:- ALTERNATE MINIMUM TAX ON COMPANIES- 46.1 IN RECENT TIMES, THE NUMBER OF ZERO-TAX COMPA NIES AND COMPANIES MARGINAL TAX HAS GROWN. STUDIES HAVE SHOWN THAT IN SPITE OF THE FACT THAT COMPANIES HAVE ENTERED 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 NEW SECTION 115JA OF THE INCOME-TAX ACT, SO AS TO LEVY A MINIMUM TAX ON COMP ANIES WHO ARE HAVING BOOK PROFITS AND PAYING DIVIDENDS BUT ARE NOT PAYI NG ANY TAXES. THE SCHEME ENVISAGES THE PAYMENT OF A MINIMUM TAX BY DEEMING 30 PER CENT OF THE BOOK PROFITS COMPUTED UNDER THE COMPANIES ACT, AS TAXABL E INCOME, IN A CASE WHERE THE TOTAL INCOME AS COMPUTED UNDER THE PROVISIONS O F THE INCOME-TAX ACT, IS LESS THAN 30 PER CENT OF THE BOOK PROFIT. WHERE THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE INCOME-TAX ACT, IS MORE THAN 30 PER CENT OF THE BOOK PROFIT, TAX SHALL BE CHARGED ON THE SAME. 4.8.2. THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE (NO. 2) BILL, 1996 CATEGORISE THE AMENDMENT UNDER THE CAPTION RATIONA LISATION AND SIMPLIFICATION. THE RELEVANT PORTION IS REPRODUCE HEREUNDER:- RATIONALISATION AND SIMPLICATIONS MINIMUM ALTERNATIVE TAX ON COMPANIES IN RECENT TIMES, THE NUMBER OF ZERO-TAX COMPANIES AND COMPANIES PAYING MARGINAL TAX HAS GROWN. STUDIES HAVE SHOWN THAT INS PITE OF THE FACT THAT COMPANIES HAVE EARNED SUBSTANTIAL BOOK PROFITS AND HAVE PAID HANDSOME DIVIDENDS, NO TAX HAS BEEN PAID BY THEM TO THE EXCH EQUER. THE NEW PROPOSAL PROVIDES FOR THOSE COMPANIES TO PAY TAX ON 30% OF THE BOOK PROFITS, WHOSE TOTAL INCOME AS COMPUTED U NDER THE INCOME-TAX ACT IS LESS THAN 30% OF THE BOOK PROFITS AS PER THE BOOKS OF ACCOUNT PREPARED IN ACCORDANCE WITH PARTS II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956. BOOK PROFITS IS DEFINED AND CERTAIN ADJUSTMENTS A RE PROVIDED IN THE PROPOSED SECTION. THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1-4-19 97, AND WILL ACCORDINGLY, APPLY IN RELATION TO ASSESSMENT YEAR 1997-98 AND SU BSEQUENT YEARS. ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 9 4.8.3. THE HONBLE APEX COURT IN THE CASE OF SURANA STEELS P LTD VS DCIT REPORTED IN (1999) 237 ITR 777 AT PAGE 783 CONSIDERED THE LEGISLATIVE INTENT FOR THE INTRODUCT ION OF SECTION 115J. IT WAS FOUND THAT THE SECTION WSA IN TRODUCED TO TAKE CARE OF THE PHENOMENON OF PROSPEROUS ZERO-TAX COMPANIES WHICH HAD CONTINUE D INSPITE OF THE ENACTMENT OF SECTION 80VVA. THESE WERE COMPANIES WHICH WERE PAYING NO INCOME TAX THOUGH THEY HAD PROFITS AND WERE DECLARING DIVIDENDS. A MINIMUM C ORPORATE TAX WAS SOUGHT TO BE ENSURED ON PROSPEROUS COMPANIES. 4.8.4. IN FACT IN SECTION 115JB, ORIGINALLY THE C OMPANIES ENTITLED FOR EXEMPTIONS U/S 10A / 10B AND DEDUCTIONS U/S 80IA / 80IB WERE ELIGIBLE FO R DEDUCTION FROM BOOK PROFITS U/S 115JB. BUT LATER TO BE IN LINE WITH THE UNDERLYING INTENTION BEHIND INTRODUCTION OF MAT PROVISIONS TO TAX THE COMPANIES DECLARING HUGE DIVI DENDS TO SHAREHOLDERS BY REPORTING HIGHER PROFITS AS PER COMPANIES ACT BUT PAYING LESS ER TAX UNDER IT ACT, THE AMENDMENT WAS BROUGHT OUT IN THE STATUTE BOOK WHEREIN THE COMPANI ES ELIGIBLE TO CLAIM EXEMPTIONS AND DEDUCTIONS U/S 10A/ 10B/ 80IA / 80IB ALSO WOULD CO ME UNDER THE AMBIT OF MAT. FROM THIS, IT COULD BE SAFELY CONCLUDED THAT THE LE GISLATURE IN ITS WISDOM HAD TIME AND AGAIN APPLIED THE HEYDENS RULE TO PREVENT POSSIBLE MISCHIEF IN THE TAXING PROVISION. IN THIS REGARD, IT IS RELEVANT TO REPRODUCE THE FOLLOW ING :- 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 DEFECT FOR WHICH THE LAW H AD NOT PROVIDED; (III) WHAT REMEDY THE PARLIAMENT HAS APPOINTED; AND (IV) THE REASON OF THE REMEDY. 4.8.5. A STATUTORY PROVISION MUST BE SO CONSTRUED , IF POSSIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED. THE TASK OF A JUDGE IS TO GO BY THE INTENT OF THE STATUTE AND FILL THE GAPS. THE TWO RULES OF MOST GENERAL APPLI CATION IN CONSTRUING A STATUTE ARE THAT FIRST THAT IT SHALL, IF POSSIBLE, BE SO INTERPRET ED 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., ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 10 OF BODY, AND SOUL . THE LETTER OF THE LAW IS THE B ODY OF LAW AND TH SENSE AND REASON OF THE LAW IS THE SOUL OF THE LAW. LAW TO A LARGE EXT ENT, LIVES IN THE LANGUAGE EVEN IF IT EXPANDS WITH THE SPIRIT OF THE STATUTE. 4.9. WE FIND THAT THE ACCOUNTS LAID BEFORE THE ANNU AL GENERAL MEETING HAVE FOLLOWED THE ACCOUNTING POLICIES WHICH ARE REQUIRED TO BE FO LLOWED UNDER THE ELECTRICITY ACT READ WITH WEST BENGAL ELECTRICITY REGULATORY COMMIS SION (TERMS & CONDITIONS OF TARIFF) REGULATIONS, 2005 WHICH ARE ADMITTEDLY NOT IN ACCORDANCE WITH THE COMPANIES ACT, 1956. WE FIND THAT THERE ARE MAJOR DIFFERENCES WITH REGARD TO THE TREATMENT OF SEVERAL ITEMS IN THE ACCOUNTS IN THE ELECTRICITY AC T VIS A VIS THE COMPANIES ACT, 1956. HENCE IT CAN SAFELY BE CONCLUDED THAT THE ACCOUNTS OF ELECTRICITY COMPANIES ARE NOT PREPARED IN ACCORDANCE WITH PART II AND III OF SCHE DULE VI TO THE COMPANIES ACT, 1956 AND HENCE THE PROVISIONS OF SECTION 115JB OF T HE ACT CANNOT BE MADE APPLICABLE TO THE SAID COMPANIES. 4.9.1. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE FOLLOWING DECISIONS IN FAVOUR OF THE ASSESSEE:- KERALA STATE ELECTRICITY BOARD VS DCIT REPORTED I N (2010) 329 ITR 91 (KER), WHEREIN THEIR LORDSHIPS OF KERALA HIGH COURT HELD THAT :- SECTION 115JB OF THE INCOME-TAX ACT, 1961 CREATES A LEGAL FICTION REGARDING THE TOTAL INCOME OF ASSESSES WHICH ARE COMPANIES. THE BOOK PR OFIT OF THE COMPANY IS DEEMED TO BE THE TOTAL INCOME OF ASSESSEE IN THE CIRCUMSTANCE S SPECIFIED IN THE SECTION. THE EXPRESSION BOOK PROFIT FOR THE PURPOSE OF THE SEC TION IS EXPLAINED TO MEAN THE NET PROFIT AS INCREASED OR DECREASED BY THE VARIOUS AM OUNTS WHON IN THE VARIOUS SUB-CLAUSE OF THE SECTION. THE NET PROFIT ITSELF MUST BE T HE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT OF THE COMPANY. SUB-SECTION (2) MANDAT ES THAT THE PROFIT AND LOSS ACCOUNT OF THE COMPANY. SUB-SECTION (2) MANDATES THAT THE P ROFIT AND LOSS ACCOUNT OF THE 115JB STIPULATES THAT THE ACCOUNTING POLICIES, ACCOUNTING STANDARDS, ETC. SHALL BE UNIFORM BOTH FOR THE PURPOSE OF INCOME-TAX AS WELL AS FOR THE IN FORMATION STATUTORILY REQUIRED TO BE PLACED BEFORE THE ANNUAL GENERAL MEETING CONDUCTED, IN ACCORDANCE WITH SECTION 210 OF THE COMPANIES ACT, 1956. THOUGH THE KERALA STATE ELECTRICITY BOARD, A STATUT ORY CORPORATION CONSTITUTED BYVIRTUE OF SECTION 5 OF THE ELECTRICITY (SUPPLY) ACT, 1948 ANSWERS THE DESCRIPTION OF AN INDIAN COMPANY AND THEREFORE A COMPANY WITHIN THE MEANIN G OF SECTION 2(17) OF THE INCOME- TAX ACT, 1961 IT IS NOT A COMPANY FOR THE PURPOSE O F THE COMPANIES ACT, 1956. IT IS NOT OBLIGED TO EITHER TO CONVENE AN ANNUAL GENERAL MEET ING OR PLACE ITS PROFIT AND LOSS ACCOUNT IN SUCH GENERAL MEETING. ON THE OTHER HAND, UNDER SECTION 69 OF THE ELECTRICITY ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 11 (SUPPLY) ACT, 1948, THE BOARD IS OBLIGED TO KEEP PR OPER ACCOUNTS, INCLUDING THE PROFIT AND LOSS ACCOUNT, AND PREPARE AN ANNUAL STATEMENT O F ACCOUNTS, BALANCE SHEET ETC. IN SUCH FORM AS MAY BE PRESCRIBED BY THE CENTRAL GOVER NMENT AND NOTIFIED IN THE OFFICIAL GAZETTE. SUCH ACCOUNTS OF THE BOARD ARE REQUIRED TO BE AUDITED BY THE COMPTROLLER AND AUDITOR-GENERAL OF INDIA OR SUCH OTHER PERSON DULY AUTHORIZED BY THE COMPTROLLER AND AUDITOR-GENERAL OF INDIA. THE ACCOUNTS SO PREPARED ALONG WITH THE AUDIT REPORT ARE REQUIRED TO BE LAID ANNUALLY BEFORE THE STATE LEGIS LATURE AND ALSO TO BE PUBLISHED IN THE PRESCRIBED MANNER. AT THE EARLIEST POINT OF TIME WHEN SECTION 115J WAS INTRODUCED, THE SECTION EXPRESSLY EXCLUDED FROM ITS OPERATION BODIES LIKE THE ELECTRI CITY BOARD. THOUGH SUCH EXPRESS EXCLUSION IS ABSENT IN SECTION 115JA, THE CENTRAL BOARD OF DIRECT TAXES ISSUED CIRCULAR NO.762 DATED FEBRUARY 18, 1998 EXCLUDING B ODIES LIKE THE ELECTRICITY BOARD FROM THE OPERATION OF SECTION. CIRCULAR NO.762 NOT ONLY IS BINDING ON THE DEPARTMENT, BUT ALSO EXPLAINS THE PURPOSE IN INTRODUCING SECTI ON 115JA WHICH WAS TO TAX ZERO-TAX COMPANIES. THE CBDT UNDERSTOOD THAT COMPANIES ENGA GED IN THE BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY AND ENTE RPRISES ENGAGED IN DEVELOPING,, MAINTAINING AND OPERATING INFRASTRUCTURE FACILITI ES, AS A MATTER OF POLICY, ARE NOT BROUGHT WITHIN THE PURVIEW OF SECTION 115JA FOR THE REASON THAT SUCH A POLICY WOULD PROMOTE THE INFRASTRUCTURAL DEVELOPMENT OF THE COU NTRY. SECTION 115JB, WHICH IS SUBSTANTIALLY SIMILAR TO SECTION 115JA CANNOT HAVE A DIFFERENT PURPOSE AND NEED NOT BE INTERPRETED IN A MANNER DIFFERENT FROM THE UNDERSTA NDING OF THE CBDT OF SECTION 115JA. WHERE THE COMPUTATION PROVISION COULD NOT BE APPLIE D IN A PARTICULAR CASE, IT IS INDICATIVE OF THE FACT THAT THE CHARGING SECTION AL SO WOULD NOT APPLY. THE ELECTRICITY BOARD OR BODIES SIMILAR TO IT, WHIC H ARE TOTALLY OWNED BY THE GOVERNMENT, EITHER STATE OR CENTRAL, HAVE NO SHAREH OLDERS. PROFIT, IF AT ALL, MADE WOULD BE FOR THE BENEFIT OF ENTIRE BODY POLITIC OF THE ST ATE. THEREFORE, THE ENQUIRY AS TO THE MISCHIEF SOUGHT TO BE REMEDIED BY THE AMENDMENT BEC OMES IRRELEVANT. THEREFORE, THE FICTION FIXED UNDER SECTION 115JB CANNOT BE PRESSE D INTO SERVICE AGAINST THE ELECTRICITY BOARD WHILE MAKING THE ASSESSMENT OF THE TAX PAYABL E UNDER THE INCOME-TAX ACT. MAHARASHTRA STATE ELECTRICITY BOARD VS JCIT REPORT ED IN (2002) 82 ITD 422 (MUMBAI TRIBUNAL), WHEREIN IT WAS HELD THAT : 15. WE FIND THAT SUB-SECTION (2) OF SECTION 115JA REQUIRES THE COMPANY TO PREPARE ITS PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH THE PR OVISIONS OF PARTS II & III OF SCHEDULE VI TO THE COMPANIES ACT, 1956. THE ASSESSE E WAS REQUIRED TO PREPARE ITS ACCOUNT IN CONFORMITY WITH THE PROVISION OF SECTION 69 OF THE ELECTRICITY (SUPPLY) ACT. BESIDES PROVISO TO SECTION 115JA(2) PROVIDES THAT W HILE PREPARING THE ANNUAL ACCOUNTS, DEPRECIATION HAS TO BE PROVIDED ON THE SAME RATES, AND AS PER THE SAME METHOD AS WAS ADOPTED FOR CALCULATING DEPRECIATION FOR THE PURPOSE OF PREPARING THE PROFIT & LOSS ACCOUNT LAID BEFORE THE COMPANY AT I TS AGM UNDER SECTION 210 OF THE COMPANIES ACT. THIS SECTION CANNOT BE APPLIED IN RE LATION TO THE ASSESSEE. IN FACT, THE VERY CONCEPT OF A MEANING IS ALIEN TO MSEB. A MEE TING CAN BE BETWEEN TWO OR MORE PERSONS. IN CASE OF MSEB THERE IS NO OTHER PER SON. SIMILARLY, SECOND PROVISO TO SUB-SECTION (2) PROVIDES THAT WHERE A COMPANY HAS A DOPTED OR ADOPTS A FINANCIAL YEAR UNDER THE COMPANIES ACT, 1956, WHICH IS DIFFER ENT FROM THE PREVIOUS YEAR UNDER ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 12 THE ACT, THE METHODS AND THE RATES OF DEPRECIATION SHALL CORRESPOND TO THE METHOD AND RATES, WHICH HAVE BEEN ADOPTED FOR CALCULATING THE DEPRECIATION, FOR WHICH FINANCIAL YEAR OR PART OF SUCH FINANCIAL YEAR FALLING WITHIN OR RELEVANT PREVIOUS YEAR. 16. ONLY THOSE COMPANIES, WHICH ARE ENGAGED IN THE GENERATION OR SUPPLY OF ELECTRICITY, WILL COME WITHIN THE AMBIT OF SECTION 616 OF THE COMPANIES ACT. FOR THAT IT IS NECESSARY THAT ASSESSEE MUST BE A COMPANY. IF AS SESSEE IS NOT A COMPANY, THEN PROVISION OF SECTION 616( C) CANNOT BE APPLIED. FO R EXAMPLE, TATA ELECTRIC COMPANY IS A COMPANY REGISTERED UNDER THE COMPANIES ACT. I T IS COMPANY WITHIN THE MEANING OF SECTION 3 OF THE COMPANIES ACT. IT IS ENGAGED IN THE BUSINESS OF GENERATION OR SUPPLY OF ELECTRICITY. AS SUCH IT WILL COME WITHIN THE SWEEP OF THIS PROVISION. MSEB CANNOT BE CONSTRUED TO BE A COMPANY WITHIN THE ME ANING OF SECTION 3 OF THE COMPANIES ACT, THEREFORE, THOUGH IT IS ENGAGED IN T HE GENERATION/DISTRIBUTION OF ELECTRICITY, IT CANNOT BE DEEMED AS A COMPANY WITH IN THE MEANING OF SECTION 616( C). 17. EXPLANATION TO SECTION 115JA DEFINES THE TERM BOOK PROFIT TO MEAN THE NET PROFIT AS SHOWN IN THE PROFIT & LOSS ACCOUNT FOR TH E RELEVANT PREVIOUS YEAR PREPARED UNDER SUB-SECTION (2)[ I.E. IN ACCORDANCE WITH PART S II & III OF SCHEDULE VI] AS INCREASED BY.. WE HAVE NOTED THAT ASSESSEE DID NO T PREPARE ITS ACCOUNTS UNDER PARTS II & III OF SCHEDULE VI. ASSESSEE WAS UNDER N O LEGAL OBLIGATION TO DO SO. AS SUCH THE DEFINITION OF BOOK PROFIT CANNOT BE APPLIED I N THE CASE OF THE ASSESSEE. 18. ACCORDING TO SECTION 2(17) READ WITH SECTION 2( 26) OF THE ACT, MSEB COULD BE DEEMED TO BE A COMPANY FOR THE PURPOSE OF INCOME-TA X ACT. THE TERM COMPANY AS DEFINED IN THE SAID SECTION IS, NOMEN GENERALISSIMU M (TERM OF THE MOST GENERAL MEANING) AND ITS MEANING IN THE CONTEXT OF SECTION 115JA IS TO BE GATHERED FROM THE CONNECTION IN WHICH IT IS USED AND FROM THE SU BJECT-MATTER TO WHICH IT IS APPLIED. THE DEFINITION AS GIVEN IN SECTION 2 OF THE ACT BEG INS WITH THE QUALIFYING WORDS, UNLESS THE CONTEXT OTHERWISE REQUIRES. TEXT AND C ONTEXT ARE THE BASIS OF INTERPRETATION. IF THE TEXT IS THE TEXTURE, CONT EXT IS WHAT GIVES THE COLOUR. NEITHER CAN BE IGNORED. BOTH ARE IMPORTANT. THAT INTERPRETATION IS BEST WHICH MAKES THE TEXTUAL INTERPRETATION MATCH THE CONTEXTUAL. A STATUTE IS B EST INTERPRETED WHEN WE KNOW WHY IT WAS ENACTED. WORD IN SECTION IS SKIN OF THE LIVING THOUGH. IT MAY VARY IN COLOUR AND CONTENT ACCORDING TO THE CONTEXT. IT IS A SETTLED R ULE OF INTERPRETATION CANONIZED IN THE DICTUM: EX PRAECEDENTIBUS ET CONSEQENTIBUS OPTIMA F IT INTERPRETATIO ( THE BEST INTERPRETATION IS MADE FR OM THE CONTEXT). WHETHER THE SAME MEANING, AS HAS BEEN GIVEN IN THE INTERPRETATI ON CLAUSE, SHOULD BE GIVEN TO THE WORD WHEREVER IT OCCURS, WILL DEPEND UPON THE CONTE XT. THEREFORE, IT BECOMES NECESSARY NOT ONLY TO LOOK AT THE WORDS BUT ALSO TO LOOK AT THE CONTEXT, THE COLLOCATION AND THE OBJECTS OF SUCH WORDS RELATING TO SUCH MATT ER. 19. IT IS TRUE THAT THE WORD USED IN SECTION 115JA OF THE ACT IS COMPANY. THE HEADING OF THIS SECTION IS DEEMED INCOME RELATING TO CERTAIN COMPANIES. THE PROVISION BEGINS WITH A NON OBSTANTE CLAUSE. IT APP LIES TO EVERY ASSESSEE BEING A COMPANY. THE PANOPLY O THE SECTION IS ERECTED OVER THE STRUCTURE OF COMPANIES ACT, 1956. THE MINIMUM ALTERNATE TAX (MAT) ON COMPANIES WAS INTRODUCED BY THE FINANCE (NO.2) ACT, 1996 WITH EFFECT FROM 1-4-1997. THIS WAS NECESSITATED DUE TO THE RISE IN THE NUMBER OF ZERO TAX COMPANIES. STUDIE S HAVE SHOWN THAT IN SPITE OF THE FACT THAT COMPANIES HAVE EARNED SUBSTANTIAL BOOK PROFI TS AND HAVE PAID HANDSOME DIVIDENDS, NO TAX HAS BEEN PAID BY THEM TO THE EXCH EQUER. TO CURB THIS MISCHIEF MAT ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 13 WAS INTRODUCED BY INSERTING SECTION 115JA. THIS IS A DEEMING PROVISION. IT IS A TRITE LAW THAT DEEMING PROVISION SHOULD BE NARROWLY WATCH ED, JEALOUSLY REGARDED AND NEVER TO BE PRESSED BEYOND ITS TRUE LIMITS. IT IS A PPLICABLE TO A COMPANY. THE ASSESSEE IS NOT A COMPANY. IT IS NOT REQUIRED TO DISTRIBUTE ANY DIVIDEND. AS SUCH IT DOES NOT COME WITHIN THE MISCHIEF OF THIS SECTION STATE BANK OF HYDERABAD VS DCIT REPORTED IN (2013) 33 TAXMANN.COM 312 (HYDERABAD TRIBUNAL) VIDE ORDER DATED 7.9.2012 WHEREIN IT WAS HELD THAT: 12. THE NEXT ISSUE IS REGARDING THE APPLICABILITY O F PROVISION OF SEC.115JB TO THE ASSESSEE BANK. THE CONTENTION OF THE ASSESSEE IS TH AT THE ASSESSEE BEING A BANK, THE PROVISIONS OF COMPANIES ACT WILL NOT APPLY TO THE A SSESSEE AND HENCE THE ASSESSEE WILL NOT BE LIABLE TO TAX U/S.115JB. 13. THE PROVISIONS OF SEC.115JB WILL BE APPLICABLE TO ALL COMPANIES. HOWEVER, IT IS CONTENDED THAT SEC.115JB WILL BE APPLICABLE ONLY WH ERE THE ASSESSEE IS REQUIRED TO SHOW PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH SCHED ULE VI OF COMPANIES ACT. AS THE BANKS ARE REQUIRED TO PREPARE BALANCE SHEET AND PRO FIT & LOSS ACCOUNT IN ACCORDANCE WITH THE BANKING REGULATION ACT, PROVISI ON OF 115JB CANNOT BE APPLIED TO THE BANKS. IN THE CASE OF MAHARASHTRA STATE ELECTRI CITY BOARD V. CIT [2002] 82 ITD 422(MUM.) IT WAS HELD THAT PROVISIONS OF BOOK PROFIT CANNOT BE APPLIED TO ELECTRICITY COMPANIES. BANKING COMPANIES AND COMPANIES ENGAGED IN GENERATION AND SUPPLY OF ELECTRICITY DO NOT HAVE TO PREPARE THEIR ACCOUNTS I N ACCORDANCE WITH PARTS II AND III OF SCH. VI OF THE COMPANIES ACT BY THE VIRTUE OF PROVI SO TO SEC 211(2) OF THE COMPANIES ACT. WE FIND THAT BY THE FINANCE ACT 2012, WITH EFF ECT FROM 1.4.2013, EVEN COMPANIES TO WHICH PROVISO TO SEC 211(2) APPLIES (THE BANKING COMPANIES AND COMPANIES ENGAGED IN GENERATING AND DISTRIBUTION OF ELECTRICI TY), SHOULD PREPARE THEIR P&L AND BALANCE SHEET IN ACCORDANCE WITH THE PROVISIONS OF THE ACT GOVERNING SUCH COMPANIES. THIS WOULD MEAN THAT PRIOR TO AY 2013-14 , PROVISIONS OF SEC 115JB WILL NOT APPLY TO COMPANIES TO WHICH PROVISO TO SEC 211( 2) OF THE COMPANIES ACT, 1956 APPLIES. THE ASSESSEE BEING A COMPANY TO WHICH PROV ISO TO SEC 211(2) OF THE COMPANIES ACT 1956 APPLIES, WILL NOT BE LIABLE TO B E TAXED UNDER SEC 115JB. 14. THE MUMBAI TRIBUNAL IN THE CASE OF KRUNG THAI B ANK V. JT. CIT [2012] 49 SOT 70/[2011] 16 TAXMANN.COM 239 , TO WHICH ONE OF US IS A PARTY HAS HELD THAT PROVI SION OF SEC.115JB CANNOT BE APPLIED TO THE BANKING COMPA NY. 15. IN VIEW OF THE ABOVE, AS THE AMENDMENT TO SEC 1 15JB BY THE FINANCE ACT 2012 WILL BE APPLICABLE ONLY FROM THE AY 2013-2014, WE UPHOLD THE CLAIM OF THE ASSESSEE THAT PROVISION OF SEC.115JB WILL NOT BE APPLICABLE TO TH E ASSESSEE BANK AND SET ASIDE THE ASSESSMENT MADE U/S 115JB ON THE ASSESSEE COMPANY. ICICI LOMBARD GENERAL INSURANCE CO LTD VS ACIT REPO RTED IN 2012 TIOL- 690-ITAT- MUM IN ITA NO. 2398/MUM/2009 DATED 10.10.2012 FOR A SST YEAR 2003-04 , WHEREIN IT WAS HELD THAT : THE PROVISO TO SECTION 211(2) OF THE COMPANIES ACT CREATES AN EXEMPTION OF APPLICABILITY OF SUBSECTION (2) INTER ALIA IN RESPE CT OF INSURANCE COMPANIES OR BANKING COMPANIES OR ANY OTHER COMPANIES ENGAGED IN GENERAT ION AND SUPPLY OF ELECTRICITY FOR WHICH A FORM OF PROFIT AND LOSS ACCOUNT HAS BEEN S PECIFIED IN OR UNDER THE ACT ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 14 GOVERNING SUCH CLASS OF COMPANY. EVEN IF AN INSURA NCE COMPANY DOES NOT DISCLOSE ANY MATTER IN THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT BECAUSE THE SAME IS NOT REQUIRED TO BE DISCLOSED BY THE INSURANCE ACT SHALL NOT BE TREATED AS NON-DISCLOSURE OF A TRUE AND FAIR VIEW OF THE STATE OF AFFAIRS OF THE COMPANY AS THE SAID CONDITION HAS BEEN RELAXED BY SUBSECTION (5) OF SECTION 211 OF TH E COMPANIES ACT. IN ORDER TO ALIGN THE PROVISIONS OF THE IT ACT WITH THE COMPANIES ACT , AN AMENDMENT HAS BEEN BROUGHT IN TO THE STATUTE BY THE FINANCE ACT 2012 WHEREBY S ECTION 115JB HAS BEEN AMENDED W.E.F. 1.4.2013 AND THEREFORE, PRIOR TO 1.4.2013, T HE AMENDED PROVISIONS OF SECTION 115JB CANNOT BE APPLIED IN CASE OF INSURANCE, BANKI NG, ELECTRICITY GENERATION AND DISTRIBUTION COMPANIES AND OTHER CLASS OF COMPANIES , WHICH ARE NOT REQUIRED TO PREPARE THEIR ACCOUNTS AND PARTICULARLY BALANCE SHE ET AND PROFIT AND LOSS ACCOUNT AS PER PART II AND III OF SCHEDULE VI OF THE COMPANIES ACT . THUS, WHEN THE INSURANCE COMPANIES, BANKING COMPANIES AND ELECTRICITY GENERA TION AND DISTRIBUTION COMPANIES ARE TREATED IN THE SAME CLASS AS PER THE PROVISIONS OF SECTION 211 OF THE COMPANIES ACT IN PREPARING THE FINAL ACCOUNTS, THEN THOSE COMPANIES CANNOT BE TREATED DIFFERENTLY FOR THE PURPOSE OF SECTION 115J B AND ACCORDINGLY, THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. BANK OF INDIA VS ADDL CIT REPORTED IN 2014 (5) TMI 929 :N ITA NO. 1498/MUM/2011 DATED 9.4.2014 ITAT MUMBAI, WHEREIN IT WAS HELD THAT 6. GROUND NO. 5 IS REGARDING APPLICABILITY OF PROVI SIONS OF SECTION 115JB IN CASE OF BANK. 6.3 HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THIS ISSUE HAS BEEN CONSIDERED BY THIS TRIBUNAL IN THE SERIES OF DECISIONS INCLUDING THE DECISION RELIED UPON BY THE LD. AR OF THE ASSESSEE. IN THE CASE OF ICICI LOMBARD GENERAL INSURANCE (SUPRA) THE COORDINATE BE NCH OF THIS TRIBUNAL HAS CONSIDERED AND DECIDED AN IDENTICAL ISSUE IN PARA 6 AS UNDER:- AS DISCUSSED ABOVE, THE ASSESSEE IS FOLLOWING THE A CCOUNTING POLICIES UNDER THE ELECTRICITY SUPPLY ACT AND PREPARED ITS ACCOUNTS IN VIEW OF THOSE VERY POLICIES. FOLLOWING THOSE VERY POLICIES, THE ACCOUNTS IN ACCO RDANCE WITH PART II & III OF SCHEDULE VI OF THE COMPANIES ACT ARE NOT APPLICABLE AT ALL. ONCE THERE IS NO POSSIBILITY FOR PREPARING THE ACCOUNTS IN ACCORDANC E WITH THE PART II & II OF SCHEDULE VI OF COMPANIES ACT THEN THE PROVISIONS OF SEC. 115 JB CANNOT BE FORCED. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND RESPE CTFULLY FOLLOWING THE ABOVE DECISIONS OF THE HONBLE SUPREME COURT AND THE DECI SION OF THE TRIBUNAL FOR AY 88- 89, WE HOLD THAT PROVISIONS OF SEC. 115JB ARE NOT A PPLICABLE ON THE FACTS OF THE PRESENT CASE. FOLLOWING THE DECISIONS OF THE COORDINATE BENCHES O F THIS TRIBUNAL, WE HOLD THAT WHEN THE INSURANCE COMPANIES, BANKING COMPANIES AND ELEC TRICITY GENERATION AND DISTRIBUTIONS COMPANIES ARE TREATED IN THE SAME CLA SS AS PER THE PROVISIONS OF SEC. 211 OF THE COMPANIES ACT IN PREPARING THEIR FINAL ACCOU NTS, THEN THESE COMPANIES CANNOT BE TREATED DIFFERENTLY FOR THE PURPOSE OF SEC. 115J B AND ACCORDINGLY, THE PROVISIONS OF SEC. 115JB ARE NOT APPLICABLE IN THE CASE OF THE AS SESSEE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 15 THOUGH, SECTION 115JB HAS BEEN AMENDED TO BRING ALL THE COMPANIES IN ITS AMBIT VIDE FINANCE ACT 2012, W.E.F 1.4.2013, HOWEVER, THE SAID AMENDMENT IS NOT APPLICABLE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. M/S. RELIANCE ENERGY LTD. VS ACIT IN ITA NO. 218/MUM/05 DATED 24.01.2008 ITAT MUMBAI, WHEREIN IT WAS HELD THAT 24.4. THE ASSESSEE FURTHER BROUGHT TO OUR NOTICE T HE CASE OF DEPRECIATION. RATE OF DEPRECIATION UNDER THE ELECTRICITY SUPPLY ACT IS L OWER THAN THE RATES PROVIDED UNDER THE COMPANIES ACT AND IF THE RATES AS PROVIDED IN RESEN TED BEFORE THE ANNUAL GENERAL MEETING I.E. ELECTRICITY ACT ACCOUNTS, THE DEPRECIA TION AT THE SAME RATES IN THE ACCOUNTS FOR THE COMPANIES ACT WILL BE BELOW WHAT IS REQUIRE D UNDER THE COMPANIES ACT THEREFORE THE ACCOUNTS SO PREPARED UNDER THE COMPAN IES ACT WILL NOT BE IN ACCORDANCE WITH PARTS II & III OF SCHEDULE VI. 24.5. THE ASSESSEE ALSO REFERRED TO THE REQUIREM ENT OF ELECTRICITY SUPPLY ACT AS REGARDS THE REAL PROFITS AND REASONABLE RETURN. IN THE ACCOUNTS UNDER THE ELECTRICITY SUPPLY ACT, THE EXCESS OF PROFITS IS REQUIRED TO BE TRANSFERRED TO TARIFF AND DIVIDEND CONTROL RESERVE AND ALSO TO BE DISTRIBUTED LO THE C ONSUMERS. THIS TREATMENT IS NOT IN CONSONANCE WITH THE ACCOUNTING POLICY WHICH IS PERM ITTED UNDER THE COMPANIES ACT AS' THE COMPANY IS REQUIRED TO DISCLOSE THE ENTIRE PROF IT EARNED IRRESPECTIVE OF THE SAME BEING MORE OR LESS THAN REASONABLE RETURN. PART II OF SCHEDULE VI REQUIRES THE PROFIT AND LOSS ACCOUNT SHALL BE SO MADE OUT AS CLEARLY TO DISCLOSE THE RESULT OF WORKING OF THE COMPANY DURING THE YEAR. THEREFORE THE ABOVE ACCOUN TING POLICY OF TRANSFERRING THE EXCESS PROFITS TO BE FOLLOWED UNDER THE ELECTRICITY SUPPLY ACT CANNOT BE FOLLOWED UNDER THE COMPANIES ACT AND IF FOLLOWED THE ACCOUNTS WILL NOT BE IN ACCORDANCE WITH PARTS II & III OF SCHEDULE VI. 24.6. IT WAS, THEREFORE, SUBMITTED THAT AN ELECTRIC ITY COMPANY CAN NOT PREPARE THE ACCOUNTS UNDER PART IL & III OF SCHEDULE VI OF THE COMPANIES ACT FOLLOWING THE SAME ACCOUNTING POLICIES AS FOLLOWED IN THE ACCOUNTS UND ER THE ELECTRICITY SUPPLY ACT WHICH ARC PRESENTED BEFORE THE COMPANY IN ANNUAL GENERAL MEETING. THE ASSESSEE THEREFORE SUBMITTED THAT THE PROVISIONS OF SECTION 115JB(2) A S MANDATED BY THE FIRST PROVISO CANNOT BE COMPLIED WITH. 24.7 ATTENTION OF THE BENCH WAS ALSO DRAWN TO THE PROVISIONS OF SECTION 115JA. PROVISO TO SECTION 115JA(2) HAS PROVIDED THAT. WHI LE PREPARING PROFIT AND LOSS ACCOUNT UNDER PARTS II & III OF SCHEDULE VI THE SAME METHOD S AND RATES WHICH ARC ADOPTED FOR CALCULATION OF DEPRECIATION IN THE ACCOUNTS PRESENT ED BEFORE THE COMPANY IN ANNUAL GENERAL MEETING SHOULD BE FOLLOWED. THERE WAS NO PR OVISION FOR FOLLOWING THE SAME ACCOUNTING POLICIES AND SAME ACCOUNTING STANDARDS I N BOTH THE ACCOUNTS AS PREPARED UNDER THE ELECTRICITY SUPPLY ACT AND UNDER THE COMP ANIES ACT, THIS MATERIAL DEPARTURE IN SECTION 115JD FROM THE PROVISIONS IN SECTION 115 JA HAS RESULTED IN THE ACCOUNTS TO BE PREPARED UNDER. THE COMPANIES ACT FOLLOWING THE SAM E ACCOUNTING POLICIES FIND SAME ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 16 ACCOUNTING STANDARDS UNWORKABLE AND ANY SUCH ATTEMP T TO MAKE THE ACCOUNTS WILL BE NOT IN ACCORDANCE WITH THE PROVISIONS OF THE COMPAN IES ACT. 25. AS PER THE CONTENTIONS OF THE ID COUNSEL OR T HE ASSESSEE, THERE WILL BE A BIG ANOMALY IN PREPARING THE ACCOUNTS AS PER ELECTRICIT Y SUPPLY ACT AND AS PER COMPANIES ACT. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V S OFFICIAL LIQUIDATOR, PALAI CENTRAL BANK LTD., IN 150 ITR 539, ON WHICH RELIANCE WAS P LACED BY THE LD COUNSEL OF THE ASSESSEE SUPPORTS THE CASE OF THE ASSESSEE, THIS C ASE WAS UNDER SUPER PROFITS TAX ACT. IN THIS CASE THE ASSESSEE WAS A BANKING COMPANY, WH ICH WENT INTO LIQUIDATION. FOR A.Y.63-64 THE ASSESSING OFFICER WAS OF THE OPINION THAT THEIR TAXABLE INCOME WOULD ATTRACT LIABLE TO SUPER PROFITS TAX ACT. UNDER THE ACT THE SUPER PROFITS TAX IS LEVIABLE IN RESPECT OF CHARGEABLE PROFITS, WHICH ARC IN EXCE SS OF STANDARD DEDUCTION AS SPECIFIED IN THIRD SCHEDULE IN THE SAID ACT. STANDARD DEDUCTI ON WAS DEFINED TO MEAN AN AMOUNT EQUAL TO SIX PERCENT OF THE CAPITAL OF THE COMPANY OR RS.50,000 WHICHEVER IS HIGHER. THE ISSUE AROSE AS TO WHETHER A COMPANY IN LIQUIDAT ION CAN BE SAID TO HAVE A PAID-UP CAPITAL AND RESERVES. THE SUPREME COURT CAME TO CON CLUSION THAT AFTER LIQUIDATION OF COMPANY THERE CANNOT BE ANY SHARE CAPITAL. SUPREME COURT FURTHER HELD THAT ONCE THE PROVISIONS CONTAINED IN THE ACT FOR COMPUTING THE C APITAL OF THE COMPANY AND ITS RESERVES CANNOT HAVE ANY APPLICATION, THE 'STANDAR D DEDUCTION' IS INCAPABLE OF ASCERTAINMENT, AND THE CHARGE OF SUPER PROFITS TAX UNDER SECTION 4 OF THE ACT IS NOT ATTRACTED. IN THIS CASE THE DEFINITION OF 'STANDAR D DEDUCTION' WAS TO MEAN SIX PERCENT OF THE CAPITAL OR RS.50,000 WHICHEVER IS HIGHER. O UT OF TWO LIMBS OF THE CALCULATION, ONE LIMB BEING CAPITAL WAS NOT CAPABLE OF ASCERTAINMENT . SUPREME COURT HELD THAT WHEN ONE LIMB IS NOT CAPABLE OF ASCERTAINMENT. THE WHOLE PRO VISION FAILS, IN OTHER WORDS THERE IS 'BREAKDOWN' OF THE WHOLE PROVISION AND THE PROVISIO N CANNOT BE APPLIED. 25.1 WHILE DECIDING SO, THE HON'BLE SUPREME COURT H AS TAKEN INTO CONSIDERATION ITS OWN DECISION IN THE CASE OF CIT VS B C SRINIVASA SETTY IN 128 ITR 294 WHEREIN SUPREME COURT HAD POINTED OUT THAT UNDER THE SCHEME OF THE INCOME TAX ACT CHARGE OF TAX WILL NOT GET ATTRACTED UNLESS THE CASE OR TRANSACTION FA LLS UNDER THE GOVERNANCE OF THE RELEVANT COMPUTATION PROVISIONS. THE SUPREME COURT IN RC. SRINIVASA SETTY'S CASE HAS OBSERVED AS UNDER - 'THE CHARACTER OF THE COMPUTATION PROVISIONS IN EAC H CASE BEARS A RELATIONSHIP TO THE NATURE OF THE CHARGE. THUS THE CHARGING SECTION AND THE COMPUTATION PROVISIONS TOGETHER CONSTITUTE AN INTEGRATED CODE. WHEN THERE IS A CAS E TO WHICH THE COMPUTATION. PROVISIONS CANNOT APPLY AT ALL, IT IS EVIDENT THAT SU.CH A CASE WAS NOT INTENDED TO FALL WITHIN THE CHARGING SECTION. OTHERWISE, ONE WOULD B E DRIVEN TO CONCLUDE THAT WHILE A CERTAIN INCOME SEEMS TO FALL WITHIN THE CHARGING SE CTION. THERE IS NO SCHEME OF COMPUTATION FOR QUANTIFYING' IT. THE LEGISLATIVE PA TTERN DISCERNIBLE IN THE ACT IS AGAINST SUCH A CONCLUSION ' 26. AFTER GOING THROUGH THE RATIO OF THE DECISIONS OF THE HONBLE SUPREME COURT, IT IS CLEARLY SEEN THAT WHERE SOMETHING IS NOT POSSIBLE T HEN THE ASSESSEE CANNOT BE FORCED TO DO SO UNDER SPECIFIC PROVISIONS OF LAW. THOSE PROV ISIONS OF LAW CANNOT BE FOLLOWED BECAUSE IT IS IMPOSSIBLE TO DO SO. THE DOCTRINE OF IMPOSSIBILITY IS SQUARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE BECAUSE IT IS NOT P OSSIBLE TO PREPARE THE ACCOUNTS UNDER THE COMPANIES ACT BECAUSE THE ASSESSEE IS PREPARING THE ACCOUNTS AS PER THE POLICIES OF ELECTRICITY SUPPLY ACT. ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 17 26.1. THE HONBLE SUPREME COURT IN THE CASE OF KWAL ITY BISCUITS LTD IN 284 ITR 434 HAS HELD THAT PROVISIONS OF SEC. 234B & 234C ARE NOT AP PLICABLE IN RESPECT TO COMPUTATION OF DEDUCTION U/S 115J BECAUSE THE COMPUTATION OF PR OFIT UNDER THE PROVISIONS OF SEC. 115J HAS TO BE MADE ON THE BASIS OF BOOK PROFIT AND SINCE THE ENTIRE EXERCISE OF COMPUTING THE INCOME UNDER SECTION 115J CAN ONLY B E DONE AT THE END OF THE FINANCIAL YEAR, AND THE PROVISIONS OF SEC. 207,208, 209 & 21 0 CANNOT BE MADE APPLICABLE UNTIL AND UNLESS THE ACCOUNTS ARE AUDITED AND THE BALANCE SHEET PREPARED. THE RATIO OF THIS DECISION HELPS THE CASE OF THE ASSESSEE BECAUSE IT IS NOT POSSIBLE TO PREPARE THE ACCOUNTS IN ACCORDANCE WITH PART II & III OF SCHEDU LE VI OF THE COMPANIES ACT FOR THE PURPOSE OF PROVISIONS OF SEC. 115JB. THEREFORE, I N VIEW OF THE RATIO OF THIS DECISION, IN OUR CONSIDERED VIEW, THE PROVISIONS OF SEC. 115JB C ANNOT. BE ATTRACTED ON THE FACTS OF THE PRESENT CASE. 27. THE ISSUE IN REGARD TO DOCTRINE OR IMPOSSIBILI TY HAS BEEN DISCUSSED IN A DECISION OF THE 'TRIBUNAL IN THE CASE OF M/S DIVINE HOLDINGS PV T LTD IN ITA NO. 180/MUM/2000 VIDE ORDER DATED 26.6.2001. THE TRIBUNAL IN PARA 8 HAS O BSERVED THAT THE ASSESSEE DID WHATEVER WAS POSSIBLE ON ITS PART. IT IS WELL-KNOWN PRINCIPLES 'LAW CANONIZED IN THE DICTUM 'LEX NON COGIT AD IMPOSSIBILIA'. LAW CANNOT COMPEL YOU TO DO THE IMPOSSIBLE.' AGAIN THIS RATIO HAS BEEN CONSIDERED IN THE CASE OF SHRI HITEWSH S.MCHLAM IN ITA NO. 2469/MUM/2002 VIDE ORDER DATED 7.5.2004. IN THE CAS E OF GROWMORE LEASING INVESTMENTS LTD, THE TRIBUNAL HAS AGAIN TAKEN INTO CONSIDERATION THE RATIO OF THE DECISION OF THE TRIBUNAL IN CASE OF DIVINE HOLDINGS PVT .LTD (SUPRA) AND HAS HELD THAT THE ASSESSEE CANNOT FORCE TO DO SOMETHING, WHICH I S NOT POSSIBLE FOR IT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, .IT CAN BE EASILY HE LD THAT A PERSON CANNOT BE FORCED TO DO SOMETHING IMPOSSIBLE. THE LAW DOES NOT COMPEL A MAN TO DO THAT WHICH HE CANNOT POSSIBLE PERFORM. THE LAW CREATES A DUTY OR CHARGE, AND THE PARTY IS DISABLE TO PERFORM IT, WITHOUT ANY DEFAULT IN HIM, AND HAS NO REMEDY O VER, THERE THE LAW WILL IN GENERAL EXCUSE HIM AND THOUGH IMPOSSIBILITY OF PERFORMANCE IS IN GENERAL NO EXCUSE FOR NOT PERFORMING AN OBLIGATION WHICH A PARTY HAS EXPRESSL Y UNDERTAKEN BY CONTRACT YET WHEN THE OBLIGATIONS ONE IMPLIED BY LAW, IMPOSSIBILITY O F PERFORMANCE IS A GOOD EXCUSE. THUS IN A CASE IN WHICH CONSIGNEES OF A CARGO WERE PREVE NTED FROM UNLOADING A SHIP PROMPTLY BY REASON OF A DOCK STRIKE, THE COURT, AFT ER HOLDING THAT IN THE ABSENCE OF AN EXPRESS AGREEMENT TO UNLOAD IN A SPECIFIED TIME THE RE WAS IMPLIED OBLIGATION TO UNLOAD WITHIN A REASONABLE TIME, HELD THAT THE MAXIM LEX NON COGIT AD IMPOSSIBILIA APPLIED. 28 AS DISCUSSED ABOVE WHEN IT IS NOT POSSIBLE TO PR EPARE THE ACCOUNTS UNDER THE COMPANIES ACT FOR THE PURPOSE OF COMPUTATION U/S 11 5JB, THEREFORE, THE ASSESSEE CANNOT BE FORCED TO PREPARE THE ACCOUNTS WHEN IT IS NOT PO SSIBLE. THEREFORE, WE ARE IN AGREEMENT WITH THE CONTENTIONS OF THE ASSESSEE IN A S MUCH AS THE ACCOUNTING POLICIES FOLLOWING IN THE ELECTRICITY ACCOUNTS IF FOLLOWED F OR THE PREPARATION OF COMPANIES ACT AMOUNT WILL NOT DISCLOSE TRUE AND FAIR VIEW AND WIL L NOT BE IN ACCORDANCE WITH PART N AND M OF SCHEDULE V1 OF THE COMPANIES ACT. THE RATI O OF THE DECISIONS OF THE HON'BLE SUPREME COURT AND THE RATIO OF THE: DECISION OF THE TRIBUNAL DISCUSSED ABOVE ARC IN SUPPORT OF THE CONTENTIONS OF THE ASSESSEE. WE FUR THER FOUND THAT THE ISSUE OF APPLICABILITY OF SEC. 115J CAME BEFORE THE TRIBUNAL FOR AY 88-89. TAKING INTO CONSIDERATION THE PREPARATION OF ACCOUNTS UNDER THE ELECTRICITY ACT AND OTHER CONTENTIONS THE ASSESSEE INCLUDING THE DECISIONS OF THE SUPREME COURT IN THE CASE OF B.C.SRINIVASA SETTY (SUPRA), THE TRIBUNAL HAS HEL D THAT THE PROVISIONS OF SEC. 115J ARE NOT ATTRACTED ON THE FACTS OF THE PRESENT CASE. ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 18 29. AS DISCUSSED ABOVE, THE ASSESSEE IS FOLLOWING THE ACCOUNTING POLICIES UNDER THE ELECTRICITY SUPPLY ACT AND PREPARED ITS ACCOUNTS IN VIEW OF THOSE VERY POLICIES. FOLLOWING THOSE VERY POLICIES, THE ACCOUNTS IN ACCO RDANCE WITH PART II &. III OF SCHEDULE VI OF THE COMPANIES ACT ARE NOT APPLICABLE AT. ALL. ONCE THERE IS NO POSSIBILITY FOR PREPARING THE ACCOUNTS IN ACCORDANCE WITH THE PART II & II OF SCHEDULE VT OF COMPANIES ACT THEN THE PROVISIONS OF SEC. 115JB CA NNOT BE FORCED. THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND RESPECTFUL LY FOLLOWING THE ABOVE DECISIONS OF THE HON'BLE SUPREME COURT AND THE DECISION OF THE T RIBUNAL FOR AY 88-89, WE HOLD THAT PROVISIONS OF SEC. 115JB ARC NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 4.7. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS, WE ALLOW THE GROUND NO. 3 OF THE ASSESSEE. 5. THE LAST ISSUE RAISED BY THE ASSESSEE IS AS TO WHETHER THE DISALLOWANCE U/S 14A OF THE ACT COULD BE ADDED TO THE BOOK PROFITS COMPUTED U/S 115JB OF THE ACT. 5.1. WE HAVE ALREADY HELD THAT THE PROVISIONS OF SE CTION 115JB OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEE COMPANY. HENCE THE ISSU E OF ADDING BACK TO BOOK PROFIT THE DISALLOWANCE U/S 14A OF THE ACT DOES NOT ARISE ON THE SAME. HENCE THE GROUND NO. 4 RAISED BY THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON _______________ [MAHAVIR SINGH] [M.BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBE R DATE: R.G.(.P.S.) ITA NO.890/KOL/2013 DPSC LTD. A.Y.2007-08 19 COPY OF THE ORDER FORWARDED TO: 1 . DPSC LIMITED, PLOT NO.X-1,2 & 3, BLOCK EP, SECTOR-V , SALT LAKE, KOLKATA- 91. 2 THE D.C.I.T., CIRCLE-VI, KOLKATA. 3 . CIT(A)-VI, KOLKATA 4. CIT-II, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES