Statutory electricity duty attracts payment-based disallowance, while fiduciary surcharge collections and government electricity boards remain outside MAT.
Electricity duty payable to the Government falls within section 43B because it is a statutory due payable to the sovereign, whereas electricity supply surcharge collected from consumers and remitted under a statutory obligation is treated as a fiduciary collection and is not disallowable under that provision. The MAT regime under section 115JB does not extend to government-owned electricity boards where the statutory scheme, absence of shareholders and administrative understanding place such bodies outside its intended scope. Relief therefore remains available for the surcharge and book-profit computation, but not for unpaid electricity duty.
Issues: (i) Whether electricity duty payable under the Kerala Electricity Duty Act, 1963 and the electricity supply surcharge collected under the Kerala State Electricity Surcharge (Levy and Collection) Act, 1989 were disallowable under section 43B of the Income-tax Act, 1961. (ii) Whether section 115JB of the Income-tax Act, 1961 applied to the assessee for computing book profits.
Issue (i): Whether electricity duty payable under the Kerala Electricity Duty Act, 1963 and the electricity supply surcharge collected under the Kerala State Electricity Surcharge (Levy and Collection) Act, 1989 were disallowable under section 43B of the Income-tax Act, 1961.
Analysis: Section 43B applies to sums payable by way of tax, duty, cess or fee under any law, but the prior jurisdictional decision distinguished between amounts payable to the sovereign as tax and amounts collected under a statutory obligation in a fiduciary capacity. On that reasoning, the duty payable to the Government fell within the statutory disallowance, while the surcharge collected from consumers stood on the same footing as amounts covered by the earlier ruling on statutory collections and was not hit by section 43B.
Conclusion: The disallowance under section 43B was upheld for electricity duty payable, but deleted for electricity supply surcharge; the Revenue succeeded only in part on this issue.
Issue (ii): Whether section 115JB of the Income-tax Act, 1961 applied to the assessee for computing book profits.
Analysis: The jurisdictional ruling had held that electricity boards and similar government-owned bodies were outside the intended scope of the MAT regime, relying on the policy reflected in the earlier board circular and the absence of shareholders in such entities. Section 115JB, being substantially similar in purpose to the earlier MAT provision, was not to be pressed into service against the assessee.
Conclusion: Section 115JB did not apply to the assessee and the deletion made by the first appellate authority was affirmed.
Final Conclusion: The Revenue's appeal succeeded only to the limited extent of the electricity duty component, while relief was maintained for the surcharge and for the MAT issue.
Ratio Decidendi: Section 43B governs statutory dues payable to the sovereign, but not amounts collected and remitted in a fiduciary capacity under a special levy; and government-owned electricity boards are not within the intended ambit of the MAT provision where the statutory scheme and binding administrative understanding exclude them.