TMI Blog2020 (1) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... en inUNION BANK OF INDIA, MASHREQ BANK PSC, BANK OF INDIA, M/S THE NEW INDIA ASSURANCE CO. LTD., CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK [ 2019 (5) TMI 355 - BOMBAY HIGH COURT] on the common substantial question of law involved in these appeals. For the foregoing reasons, it is held that the provisions of Section 115JB(2) of the Act do not apply to the Banking companies. Amortization of investment held to maturity - allowable expenditure under Section 37(1) or not? - HELD THAT:- substantial question of law is squarely covered by instruction No.17/2008 dated 26.11.2008 issued by the Central Board of Direct Taxes/RBI and is covered by Clause (vii) provided therein. The decision in the case of SOUTHERN TECHNOLOGIES [ 2010 (1) TMI 5 - SUPREME COURT] was considered by a division bench of this court in KARNATAKA BANK LTD. [ 2013 (7) TMI 656 - KARNATAKA HIGH COURT] and it has been held that where the assessee maintains the accounts in terms of Reserve Bank of India Regulations, the assessee is entitled to deductions and it cannot be denied by the authorities under the pretext that it was showing as investment in the balance sheet. Accordingly, the common questions of law ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred an appeal. The Commissioner of Income Tax (Appeals) vide order dated 02.01.2012 upheld the order of the Assessing Officer. The assessee thereupon approached the Income Tax Tribunal. The Tribunal vide impugned order dated 14.08.2013 allowed the appeal preferred by the assessee and held that the provisions of Section 115JB of the Act do not apply to the assessee, as it was a Banking company. It was also held that the assessee was entitled to deduction of the amount in question on account of it being a bad debt under Section 36(1)(vii) of the Act. In the aforesaid factual background, this appeal has been filed. 4. Learned counsel for the assessee has invited the attention of this court to Section 115JB of the Act, which was amended with effect from 01.04.2013. It is submitted that Section 115JB(2) of the Act as it existed prior to its amendment with effect from 01.04.2013 mandates the companies to prepare its profit and loss account for the relevant previous year in accordance with provisions of Part-II and Part-III of Schedule-VI to the Companies Act, 1956. However, the aforesaid provision applies to every company and no exclusion has been made in respect of compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions made by the learned counsel for the parties and have perused the record. Before adverting to the substantial questions of law, we may take note of well settled rules of statutory interpretation with regard to taxing statutes. In construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law. If the revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering that was the substance of the matter. In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant previous year in accordance with provisions of Part II and Part III of Schedule VI of the Companies Act, 1956. The Assessee being a banking company is not required to prepare its account in accordance with provisions of Part II and Part III of Schedule VI of the Companies Act, 1956. The assessee being a banking company, its accounts are prepared as per the Banking Regulation Act, 1949 and it is not obliged either to convene an annual general meeting or place its profit and loss account in such general meeting. A General meeting contemplated under Section 166 of the Companies Act, 1956 is not possible in the case of the assessee as there are no shareholders of the assessee. It is also worth mentioning that under Section 166 of the Companies Act, 1956 every company is required to hold a general meeting in each year and Section 201 mandates that every year the Board Of Directors of the company in general meeting shall lay before the company a Balance sheet as at the end of the relevant period and also profit and loss account for the period. Part II and Part III of Schedule VI to the Companies Act specify the method and manner of maintaining profit and loss account. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt in accordance with the Sections specified in their Regulatory Acts. Thus, to align the provisions of the Income Tax Act, 1961 with the Companies Act, 1956, it was decided to amend Section 115JB of the Act to provide that companies which are not required under Section 211 of the Companies Act, 1956 to prepare profit and loss account in accordance with Schedule VI of the Companies Act, 1956. Profit and loss account prepared in accordance with the provisions of their Regulatory Act shall be taken as basis for computing book profit under Section 115JB of the Act. We agree with the view taken by Bombay High Court in THE COMMISSIONER OF INCOME TAX-LTU referred to supra on the common substantial question of law involved in these appeals. For the foregoing reasons, it is held that the provisions of Section 115JB(2) of the Act do not apply to the Banking companies. 12. Now we may advert to the second substantial question of law involved in ITA No.18/2014. The aforesaid substantial question of law is squarely covered by instruction No.17/2008 dated 26.11.2008 issued by the Central Board of Direct Taxes/RBI and is covered by Clause (vii) provided therein. The decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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