TMI Blog2023 (12) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... e of companies other than those which are required to prepare their financial statements in accordance with provisions of Part 2 3 of Schedule VI of Companies Act were not brought into the ambit and there was no clarification in the said provision. However, subsequent to the amendment by 01.04.2013 onwards, the remaining companies have also been brought into the ambit of Section 115JB of the Act. Hon'ble Jurisdictional High Court while dealing similar question of law in the case of the assessee for AY 2010-11 [ 2021 (12) TMI 1475 - CALCUTTA HIGH COURT ] held that prior to the amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 Section 115JB of the Act was not applicable on the categories of companies like that of the assessee but post-amendment it is applicable by virtue of the amendment effective from 01.04.2013 providing that certain companies such as Insurance, Banking, Electricity which are allowed to prepare the profit and loss account in accordance with the Sections specified in their regulatory Acts, post 01.04.2013, are required to prepare profit and loss account in accordance with Schedule VI of the Companies Act for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the sake of convenience. As the Revenue has raised similar grounds for all the four years, we reproduce below the grounds raised for AY 2012-13 and the same reads as follows: 1. Whether the Ld. CIT(A) is justified in facts and circumstances of the case in not considering the explanation 3 of Section 115JB inserted in statue by Finance Act, 2012, w.e.f. 01.04.2013 which starts with the words for the removable of doubts, it is hereby clarified that for the purpose 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 day of April, 2012, an option to prepare its profit and loss account for the relevant previous year either in accordance with 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 companies? 2. Whether Ld. CIT(A) is justified with its order despite the fact that the assessee voluntarily offered to tax u/s. 115JB of the act in its original return of income as well as in revised return? 3. That the department craves l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. On the other hand, ld. D/R vehemently argued supporting the order of ld. AO and stated that amendment has been brought in Section 115JB of the Act by way of insertion of Explanation effective from 01.04.2013 and the assessee company also falls under the provisions of Section 115JB of the Act. 9. We have heard rival contentions and perused the records placed before us. The issue for our consideration is whether Section 115JB of the Act is applicable on the assessee company. We observe that the assessee company is a Government undertaking owned by Central Government and the State of Bihar West Bengal and the activities are governed by Damodar Valley Corporation Act, 1948, Central Legislation. Section 115JB(1) of the Act which provides special provisions for payment of tax by certain companies is reads as follows: 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, 2012, is less than eighteen and one-half per cent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Jurisdictional High Court while dealing similar question of law in the case of the assessee namely Damodar Valley Corporation for AY 2010-11 has discussed this issue in detail. First, we would like to take note of the substantial question of law which was for consideration before the Hon'ble Court which reads as follows: (a) Whether in the facts and circumstances of the case, the learned Income Tax Appellate Tribunal has erred in law in directing the Assessing Officer not to apply the provisions of Section 115JB of the Income Tax Act, 1961? (b) Whether in the facts and circumstances of the case, the learned Income Tax Appellate Tribunal has correctly interpreted the Explanation-3 to the section 115JB of the Income Tax Act, 1961 as amended by Finance Act, 2012 w.e.f. 1st April, 2013? (c) Whether the amendment brought in Section 115JB of the Income Tax Act, 1961 read with Explanation-3 thereto by the Finance Act, 2012 is applicable in the case of the assesses with effect from the Assessment Year 2013-14 onwards or such provision covers the assessment in the case of the assesses for the Assessment Year 2010-11? 14. Thereafter, Hon'ble Court after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned 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 direction issued by the Government of India, the respondent/assessee had availed the benefit of Vivad se Vishwas scheme. Though the revenue had filed appeals before this Court, those appeals were dismissed on the same ground. Therefore, we are required to design the legal issue raised in this appeal before us by the revenue. The undisputed facts are that the assessee is incorporated under the Act of Parliament known as Damodar Valley Corporation Act, 1948. In terms of section 3(2) of the said Act, the respondent Corporation is a body corporate having perpetual existence and common seal. The revenue's case is that in terms of section 43 of the Corporation Act, the tax liability of the assessee has been clearly stipulated and in terms of sub-section (1) of section 143 the respondent Corporation is liable to pay any tax on income levied by the Central Government in the same manner and in the same extent as a company. Therefore, the revenue is before us contending that the stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein), 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 pointed out that the legislature took note of the fact that a number of companies paying marginal tax and also zero-tax has grown and such companies earn substantial book profit and pays handsome dividend to the share-holders without paying any tax to the exchequer. Further, it was pointed out that CBDT 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. The Court noted the circular issued by the CBDT and observed that the same is binding on the department. Thus, the Court concluded that the provisions namely, sub-section(2) of section 115JB would not stand attracted and consequently, the charging provision, namely, sub-section (1) of section 115JB woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 account before the annual general meeting. However such accounts have to be prepared in accordance with the Banking Regulation Act, 1949 which is not possible for the reasons assigned supra. 9. The submission that proviso to sub-section (2) of section 115JB creates a legal fiction cannot be accepted as under the aforesaid proviso, the company has to prepare the profit and loss account and to place it before the annual general meeting in accordance with provisions with section 210 of the Companies Act, 1956. A banking company under section 115JB(2) of the Act can prepare additional accounts as per Part II and Part III of Schedule VI of the Companies Act or fulfil the requirements of the proviso of sub-section(2) but it cannot fulfil both the conditions. 10. From perusal of general arrangement of provisions of the Income-tax Act, 1961 where under each head of income, the charging provision is accompanied by a set of provisions for computing the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led 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 sought to impress upon us the effect of such amendment to sustain their contention. This very issue was considered by the High Court of Bombay in the case of CIT, LTU v. Union Bank of India [2019] 105 taxmann.com 253/263 Taxman 685. The Court 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. The operative portion of the decision is as follows: 17. This proviso thus refers any insurance or banking companies or companies engaged in the generation or supply of electricity or to any other class of company in which form of financial statement has been specified in or under the Act governing such class of company. Combined reading of this proviso to sub-section (1) of section 129 of the Act, 2013 and clause (b) of sub-section (2) of section 115JB of the Act would show that in case of insurance or banking companies or companies engaged in generation or supply of electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the substantial questions of law raised by them have to be necessarily answered against the revenue. 8. In the result, the appeal (ITAT/12/2021) stands dismissed and the substantial questions of law are answered against the revenue. 9. Consequently, the connected application for stay (GA/2/2021) is also dismissed. 15. From perusal of the ratio laid down by the Hon'ble Jurisdictional High Court, we find that Hon'ble Court has held that prior to the amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 Section 115JB of the Act was not applicable on the categories of companies like that of the assessee but post-amendment it is applicable by virtue of the amendment effective from 01.04.2013 providing that certain companies such as Insurance, Banking, Electricity which are allowed to prepare the profit and loss account in accordance with the Sections specified in their regulatory Acts, post 01.04.2013, are required to prepare profit and loss account in accordance with Schedule VI of the Companies Act for the purpose of computation of book profit under Section 115JB of the Act. Hon'ble Court has further, held that the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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