Section 115JB of Income Tax Act 1961 not applicable to electricity companies; Bombay HC aligns with previous rulings.

The HC of Bombay ruled that Section 115JB of the Income Tax Act 1961 does not apply to electricity companies whose financials are prepared under specific regulations rather than the Companies Act. This decision aligns with previous rulings by the Rajasthan HC and Delhi HC, which were upheld by the SC. The appeals by the Appellant-Revenue were disposed of in favor of the Respondent-Assessee, except for the assessment year 2002-2003, which favored the Revenue based on precedent. No costs were awarded.

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The High Court of Bombay heard a group of six appeals filed by the Appellant-Revenue concerning the applicability of Section 115JB of the Income Tax Act 1961 to companies engaged in the business of providing electricity and governed by the Electricity Supply Act. The core legal question in all appeals was whether the provisions of Section 115JB applied to such companies. The Respondent-Appellee argued that since financials of electricity companies are not required to be prepared as per Schedule VI of the Companies Act, Section 115JB should not be applicable to them.The Court noted that the issue of applicability of Section 115JB to electricity companies had been addressed in previous decisions of the Court related to banking companies. The Court referred to the decision of the Rajasthan High Court in the case of Principal Commissioner of Income-tax vs. Ajmer Vidyut Vitran Nigam Ltd., which ruled in favor of the Assessee. The Supreme Court had also dismissed the Special Leave Petition filed by the Revenue challenging the Rajasthan High Court decision.Both the Appellant-Revenue and the Respondent-Assessee agreed that the issue raised in the appeals was covered by the decisions of the Rajasthan High Court and the Delhi High Court in similar cases. The parties also acknowledged that the decisions of the Coordinate Benches of the Court in cases involving banking companies were relevant to the present case. These decisions established that companies not required to prepare financials according to the Companies Act, but as per other specific regulations, were not subject to Section 115JB.The Court concluded that the issue of the applicability of Section 115JB to electricity companies was answered against the Revenue and in favor of the Assessee based on the precedent set by previous decisions. For the assessment year 2002-2003, the Court ruled in favor of the Revenue and against the Assessee based on the decision in the case of Commissioner of Income-tax 10 vs. Indian Oil Corporation Ltd.In summary, the Court held that Section 115JB did not apply to electricity companies preparing financials in accordance with specific regulations other than the Companies Act. The appeals were disposed of accordingly, with no costs awarded.

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