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TMI Blog2021 (8) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... pear in the appeal being ITA no.7257/Mum./2019, for assessment year 2011-12, the conclusive result of which will be applicable equally to other two appeals being ITA no.7258/Mum./2019, for the A.Y. 2012-13 and ITA no.7259/Mum./2019, for A.Y. 2013-14. ITA no.7257/Mum./2019 Assessment Year - 2011-12 2. The assessee has filed the present appeal on the following grounds:- Sl. no. Grounds of Appeal Tax Effect relating to each ground of appeal 1. The appellant submits that on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in confirming the order passed u/s 154 of the Act even though it is barred by limitation under the income tax provisions. Rs. 8,61,57,497 (Aprox.) 2. The appellant submits that on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in confirming the order passed u/s 154 of the Act even though there was no error which was apparent from the record. Rs. 8,61,57,497 (Aprox.) 3. The appellant submits that on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in confirming the order passed u/s 154 of the Act read with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-applicability of book profit under section 115JB of the Act in its case is not allowable. The Assessing Officer was of the view that the assessee made this mistake which is apparent from record and this is not a review of assessment as stated by the assessee in its reply. The Assessing Officer further noticed that the assessee had carried forward incorrect amount of unabsorbed depreciation. In this regard, the Assessing Officer in his order has made a chart showing year-wise carry forward of business loss and unabsorbed depreciation as per books of the assessee and the amount eligible for deduction as per clause (iii) of Explanation 1 to section 115JB of the Act. The Assessing Officer observed that as per the chart, the unabsorbed depreciation available to be carried forward for the year under consideration is at Rs. 8,92,93,814. Since the mistake was apparent from record, the AO rectified the same. The total income of the assessee as per order under section 143(3) of the Act passed on 10th February 2014 was determined at Nil and book profit under section 1I5JB of the Act at Nil. The total unabsorbed depreciation to be carried forward for the year under consideration was determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not found to be acceptable. The appellant further states that the provisions of section 115JB are not applicable to a banking company and for this purpose, the appellant placed reliance on the decisions including the case of CIT(LTU) v. Union Bank of India (supra). In respect of such the contentions and submissions of the assessee are not found to be acceptable and are therefore, rejected. The only issue raised in this appeal is accordingly decided against the assessee and the ground raised are accordingly treated as dismissed." 5. Insofar as the proceedings before the first appellate authority for the assessment year 2012-13 and 2013-14 is concerned, in these assessment years also, the learned CIT(A) did not find the claim of the assessee legitimate and dismissed the ground on identical issue by following his own order dated 25th September 2019, rendered in assessee's own case for the assessment year 2011-12. 6. The assessee being unsuccessful before the learned CIT(A) is in further appeal before the Tribunal. 7. Before us, at the time of hearing, the learned Authorised Representative submitted that the Assessing Officer passed rectification order under section 154 of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is very clear in establishing / determining the MAT credit and application of the unabsorbed depreciation / brought forward losses for the purpose of computation of tax as per MAT. The Assessing Officer has rightly interpreted the provisions of clause (iii) of Explanation to section 115JB of the Act that the assessee can reduce the amount of loss brought forward or unabsorbed depreciation whichever is less as per books of account. Therefore, he supported the calculation adopted by the Assessing Officer in order under section 154 of the Act and he relied on the orders passed by the authorities below. For that proposition, he relied upon the following decisions:- i) DCIT v/s Costal Resorts India Ltd., [2010] 125 ITD 170 (Cochin); ii) Smt. Batta Kalyani v/s CIT, [1985] 20 Taxman 387 (AP); iii) S.I.J. Chains Pvt. Ltd. v/s ACIT, [2006] 100 ITD 379 (Asr.); and iv) DCIT v/s Harjivandas J. Zaveri, [1998] 96 Taxman 338 (Ahd.). 9. In the rejoinder, the learned A.R. submitted that the Tribunal orders relied upon by the learned Departmental Representative are distinguishable in nature. 10. Considered the rival submissions and perused the material on record in the light of the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular clarifies that new Section 115JA has been inserted by the Finance Act, so as to levy a minimum tax on companies, who are having book profits and paying dividends, but not paying any taxes. Relevant portion of Section 115JB as is stood at the relevant time reads as under:- "Special provision for payment of tax by certain companies: 115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, (2007) is less than (ten percent) of its book profit, (such) book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of (ten percent). (2) Every assessee, being a company, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956) Provided that while preparing the annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 115JB, every assessee being a company would for the purposes of the said section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI of the Companies Act, 1956. It is undisputed that the respondent-a banking company is not required to prepare its accounts in accordance with the provisions of Parts II and III of Schedule VI of the Companies Act, 1956. The accounts of the banking company are prepared as per the provisions contained in Banking Regulation Act, 1949. The counsel for the revenue may still argue that irrespective of such requirements, for the purposes of the said Act and special requirements of Section 115JB of the Act, a banking company is obliged to prepare its profit and loss account as per the provisions of the Companies Act, as mandated by sub-section (2) of Section 115JB of the Act. His contention would be that such legislative mandate is not impermissible. 10. At the first blush, this argument seems attractive. However, when we read sub-section (2) further, certain complications arise in this line of argument. The first proviso to sub-section (2) of Section 115JB provides that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, a charing section and the computing provisions together constitute an integrated code. In a case where the computation provision can not apply, it would be evident that such a case was not intended to fall within the charging section. It was a case of charging a partnership firm for transfer of a capital asset in the nature of goodwill. The Supreme Court was of the opinion that it would not be possible to envisage a cost of acquisition of goodwill. Since computation of capital gain cannot be done without ascertaining the cost of acquisition, it was held that no capital gain tax can be levied. 12. For the completeness of the discussion, we may note that section 211 of the Companies Act, 1956 pertains to form of contents of balance-sheet and profit and loss account, sub-section (1) of Section 211 provided that every balance sheet of a company shall give true and fair view on the state of affairs of the company at the end of the financial year and would be subject to the provisions of the said section and be in the form set out in the Forms 1 and 2 of schedule VI. This sub-section contained a proviso providing that nothing contained in said sub-section would apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f (eighteen and one-half percent). (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 (statement of profit and loss) for the relevant previous year in accordance with the provisions of (Schedule III) to the (Companies Act, 2013 (18 of 2013); or (b) being a company, to which the (second proviso to sub-section (1) of section 129) of the (Companies Act, 2013 (18 of 2013) is applicable, shall, for the purposes of this section, prepare its (statement of profit and loss) for the relevant previous year in accordance with the provisions of the Act governing such company:) Provided that while preparing the annual accounts including (statement of profit and loss),- (i) the accounting policies; (ii) the accounting standards adopted for preparing such accounts including (statement of profit and loss); (iii) the method and rates adopted for calculating the depreciation, shall be the same as have been adopted for the purpose of preparing such accounts including (statement of profit and loss) and laid before the company at its annual general meeting in accordance with the provisions of (section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the assessment year 2013-14 and subsequent assessment years." 16. It can be seen that sub-section (2) of Section 115JB of the Act has now been bifurcated in two parts covered in the clauses (a) and (b). Clause (a) would cover all companies other than those referred to in clause (b). Such companies would prepare the statement of profit and loss in accordance to the provisions of schedule III of the Companies Act, 2013 (which has now replaced the old Companies Act, 1956). Clause (b) refers to a company to which second proviso to sub-section (1) of Section 129 of the Companies Act, 2013 is applicable. Such companies, for the purpose of Section 115JB, would prepare the statement of profit and loss in accordance with the provisions of the Act governing the company. Section 129 of the Companies Act, 2013 pertains to financial statement. Under sub-section (1) of Section 129 it is provided that the financial statement shall give a true and fair view of the state of affairs of the company, comply with the accounting standard notified under Section 113 and shall be in the form as may be provided for different classes of companies. Second proviso to sub-section (1) of Section 129 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B to provide that the companies which are not required under Section 211 of the Companies Act, to prepare profit and loss account in accordance with Schedule VI of the Companies Act, 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 115 JB of the Act. 19. Before closing, we may also take note of explanation (3) below sub-section (2) of section 115 JB of the Act which reads as under :- "Explanation 3-For the removal of doubts, it is hereby clarified that for the purposes of this section, the assessee, being a company to which the proviso to sub-section (2) of section 211 of the Companies Act, 1956(1 of 1956) 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 relevant previous year either in accordance with the provisions of Part II and Part III of Schedule VI to the Companies Act, 1956 or in accordance with the provisions of the Act governing such company." 20. This explanation starts with the expression "For the removal of doubts". It declares that for the purpose of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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