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2016 (8) TMI 855 - AT - Income TaxApplicability of Section 115JB - assessee is an electricity company Held that:- In view of the legislative change brought about by the introduction of Explanation 3 in section115JB of the Act by the Finance Act, 2012, the assessee's conten tion in fact stands more fortified. Explanation 3 to section 115JB makes it evidently clear that section 115JB is applicable only to entities registered and recognised to be companies under the Companies Act, 1956. Since the assessee is not a company within the meaning of the Companies Act, 1956, section 211(2) and the proviso thereon is not applicable and, therefore, consequently, we hold that the provisions of section 115JB of the Act are also not applicable. The basic intention of MAT under section 115JB is only to tax the book profits irrespective of nil or lesser taxable income due to various exemptions/deductions like section 10A/10B/80-IA/80-IB, etc. The intention of MAT is that the companies were declaring huge profits as per their Companies Act and declaring dividends to its shareholders but paying nil tax or lesser tax under the Income-tax Act due to various exemptions/ deductions like sections 10A/10B/80-IA/80-IB. To justify the imposition, the real income theory was stressed and it was held that the companies cannot be allowed to have two faces, one for the shareholder and another for the tax man. Section 115JA was enacted by restructuring the provisions of section 115J with certain minor changes and, thereafter, section 115JB was enacted by bringing minor changes in section 115JA. The provisions of sections 115J, 115JA and 115JB are by and large similar to each other. We find that the accounts laid before the annual general meeting have followed the accounting policies which are required to be followed under the Electricity Act read with the West Bengal Electricity Regulatory Commission (Terms and 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 Act 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 Parts II and III of Schedule VI to the Companies Act, 1956 and, hence the provisions of section 115JB of the Act cannot be made applicable to the said companies.
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