TMI Blog2021 (12) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies engaged in generation or supply of electricity. Effect of the amendment brought about to Section 115JB by Finance Act, 2012 with effect from 1st April, 2013 and sought to impress upon us the effect of such amendment to sustain their contention - This very issue was considered in the case of CIT, LTU vs. Union Bank of India [ 2019 (5) TMI 355 - BOMBAY HIGH COURT] as held that the amendments to Section 115JB are neither declaratory nor classificatory but are substantive and significant legislative changes and can be applied only prospectively. Further, the High Court of Kerala in Principal Commissioner of Income Tax vs. State Bank of India [ 2019 (10) TMI 638 - KERALA HIGH COURT] had considered the identical issue in respect of a banking company and following the decision of Union Bank of India [supra] had dismissed the appeal filed by the revenue. Appeal decided in favour of assessee. - THE HON BLE JUSTICE T.S. SIVAGNANAM AND THE HON BLE JUSTICE HIRANMAY BHATTACHARYYA For the appellant : Mr. Smarajit Roychowdhury, Adv. Mr. Arunava Ganguly, Adv. For the respondent : Mr. Rahul Tangri, Adv. Mr. Deepro Sen, Adv. ORDER T. S. SIVAGANANAM, J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le raising several other factual and legal contention pointed out that provision of Section 115JB is not applicable to their case. The assessing officer did not agree with the stand taken by the assessee and completed the assessment by order dated 12th March, 2013 under Section 143(3) of the Act. The assessee carried the matter on appeal before the Commissioner of Income Tax (Appeals)-15 (CIT(A)). The CIT(A) by order dated 17th March, 2016 allowed the assessee s appeal in so far as the issue on hand by following the decision of the assessee s own case for the assessment years 2008-09 and 2009-10. Aggrieved by the same, the revenue preferred appeal before the Tribunal. The Tribunal by impugned order dismissed the appeal following the decision rendered by the co-ordinate bench of the Tribunal in the assessee s own case vide common order dated 13th January, 2016 in ITA No.1622/Kol/2011 and 451/Kol/2013. Aggrieved by the same the revenue is before us by way of this appeal. Learned counsel appearing for the respondent/ assessee submitted that in so far as the assessment years which were the subject-matter of the order passed by the Tribunal dated 13th January, 2016 pursuant to the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VC Act, 1948. Therefore, we can safely proceed to hold that the decision of the Kerala High Court could be made applicable with fully force to the facts of the case on hand. In the said decision, the Hon ble Court has traced legislative history of Section 115JB and noted that Section 115JB was introduced for the first time in Chapter XII-B of the Income Tax Act and after tracing the legislative history, the Court proceeded to take note of Section 115JB which was inserted in the Income Tax Act, with effect from 1st April, 2001. Identical stand was taken by the revenue by contending that the assessee being a company, provisions of Section 115JB would stand attracted. While considering the said question, it was pointed that the appellant, though is by definition a company under the Income Tax Act and deemed to be a company for the purpose of income tax by virtue of the declaration of Section 80 of the Electricity Supply Act (therein) and Section 43 of the DVC Act, 1948 (herein), it is not a company for the purpose of Companies Act. The assessee is not obliged either to convene an annual general meeting or place its profit and loss account in such general meeting. Further, the Court po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 956. 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 pertinent to note that the assessee under Section 210 of the Companies Act, 1956 is also required to lay its accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions 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. The decision in ING Vysya Bank Ltd. (supra) was followed by the High Court of Karnataka in Principal Commissioner of Income Tax Ors. vs. Karnataka Power Corporation Limited reported in 2020(5) TMI 645 (Karnataka) and the appeal filed by the revenue was dismissed. The revenue had raised before us the effect of the amendment brought about to Section 115JB by Finance Act, 2012 with effect from 1st April, 2013 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions specified in their regulatory Acts. To align the Income Tax Act with the Companies Act, 1956 it was decided to amend Section 115JB 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. Further, the High Court of Kerala in Principal Commissioner of Income Tax vs. State Bank of India reported in 2019-TIOL-2558-HC-Kerala-IT had considered the identical issue in respect of a banking company and following the decision in the Kerala State Housing Board and Union Bank of India had dismissed the appeal filed by the revenue. In the light of the above legal position, we are of the clear view that the grounds canvassed by the revenue before us and the substantial questions of law raised by them have to be necessarily answered against the revenue. In the result, the appeal (ITAT/12/2021) stands dismissed and the substantial questions of law are answered against the revenue. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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