2010 (11) TMI 127 - KERALA HIGH COURT

Minimum Alternate Tax (MAT) - Applicability of section 115JB - Applicability on electricity company - Held that: the Central Board of Direct Taxes understood that companies engaged in the business of generation and distribution of electricity and enterprises engaged in developing, maintaining and operating infrastructure facilities, as a matter of policy, are not brought within the purview of the amendment (section 115JA) for the reason that such a policy would promote the infrastructural development of the country. Such an understanding of the Central Board of Direct Taxes is binding on the Department - the fiction fixed under section 115JB cannot be pressed into service against the appellant while making the assessment of the tax payable under the Income-tax Act.

Applicability of section 43B - in respect of the electricity duty collected - In substance, though it is not clearly indicated in the assessment order, the case of the Revenue is that section 43B(a) is attracted ; whereas the case of the appellant is that the said clause is applicable only in those cases where any sum is payable by the assessee qua tax, duties, cess or fee under any law for the time being in force - Held that: the only clause if at all is relevant in the context of the facts of the appellant's case is clause (a) which deals with "any sum payable by the assessee by way of tax, duty, . . . . under any law for the time being in force". - the words, "by way of tax" are relevant as they are indicative of the nature of liability. - The liability to pay and the corresponding authority of the State to collect the tax (flowing from a statute) is essentially in the realm of the rights of the sovereign. Whereas the obligation of the agent to account for and pay the amounts collected by him on behalf of the principal is purely fiduciary. The nature of the obligation, in our opinion, continues to be fiduciary even in a case wherein the relationship of the principal and agent is created by a statute. We are of the opinion that, when section 43B(a) speaks of the sum payable by way of tax, etc. ; the said provision is dealing with the amounts payable to the sovereign qua sovereign, but not the amounts payable to the sovereign qua principal.

Section 43B cannot be invoked in making the assessment of the liability of the appellant under the Income-tax Act with regard to the amounts collected by the appellant pursuant to the obligation cast on the appellant under section 5 of the Kerala Electricity Duty Act, 1963.