MAT and tax deduction rules do not apply to a statutory electricity board's fiduciary collections or special-regime accounts.

Section 115JB did not apply to a statutory electricity board that was not a company under the Companies Act and whose accounts were governed by a special statutory accounting regime, because the MAT deeming fiction depends on book profit prepared in the prescribed Companies Act manner. Section 43B also could not be used to disallow electricity duty collected from consumers and held for remittance to the State, since the sums were fiduciary collections made as statutory agent, not the assessee's own tax, duty, cess, or fee liability. The Tribunal's tax additions were therefore unsustainable, and the assessee succeeded on both issues.

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Issues: (i) Whether section 115JB of the Income-tax Act, 1961 applied to a statutory electricity board which was not a company for the purposes of the Companies Act, 1956 and whose accounts were maintained under a special statutory regime; and (ii) whether section 43B of the Income-tax Act, 1961 could be invoked to disallow electricity duty collected from consumers by the board under the Kerala Electricity Duty Act, 1963 and held for remittance to the State.

Issue (i): Whether section 115JB of the Income-tax Act, 1961 applied to a statutory electricity board which was not a company for the purposes of the Companies Act, 1956 and whose accounts were maintained under a special statutory regime.

Analysis: Section 115JB creates a deeming fiction that operates only on a company's book profit prepared in the manner prescribed by that provision, including compliance with the accounting framework linked to the Companies Act, 1956. The board, though treated as a company for income-tax purposes, was not a company under the Companies Act and was not required to hold an annual general meeting or prepare accounts in the manner contemplated by section 115JB(2). Its accounts were instead governed by the special accounting provisions of the Electricity (Supply) Act, 1948. The legislative history of the MAT provisions and the earlier exclusionary treatment given to electricity undertakings supported the conclusion that the special fiction was not intended to apply to such a statutory body.

Conclusion: Section 115JB did not apply to the assessee.

Issue (ii): Whether section 43B of the Income-tax Act, 1961 could be invoked to disallow electricity duty collected from consumers by the board under the Kerala Electricity Duty Act, 1963 and held for remittance to the State.

Analysis: Section 43B(a) applies to sums payable by the assessee by way of tax, duty, cess or fee under a law in force, but the amount in question was not a tax liability owed by the board in its own right. It was duty collected from consumers on behalf of the State under a statutory agency arrangement, with the board retaining only a collection charge and accounting for the balance to the Government. Such receipts retained their fiduciary character and were payable to the sovereign in its capacity as principal, not as sovereign tax collector. On that footing, the statutory precondition for applying section 43B was not satisfied.

Conclusion: Section 43B could not be invoked against the assessee for the collected electricity duty.

Final Conclusion: The tax additions sustained by the Tribunal were unsustainable, and the assessee succeeded on both substantial questions of law.

Ratio Decidendi: A deeming provision for minimum alternate tax cannot be applied to a statutory body whose accounts are not prepared under the Companies Act in the manner mandated by the provision, and section 43B does not cover amounts collected as a statutory agent for the State, because the provision targets the assessee's own tax-like liabilities, not fiduciary collections held for remittance.

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