2010 (1) TMI 281

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ith Parts II and III of Schedule VI to the Companies Act. The entire shareholding of the assessee is with the Government of India. Its accounts are audited by the Comptroller and Auditor General of India. They are laid before both the Houses of Parliament. 5. The assessee is required to sell electricity to State Electricity Board(s), Discoms, etc., at tariff rates notified by the CERC. The tariff consists of depreciation, AAD, interest on loans, interest on working capital, operation and maintenance expenses, return on equity. 6. On May 26, 1997, the Government of India introduced a mechanism to generate additional cash flow by allowing generating companies to collect AAD by way of tariff charge. It was decided that the year in which ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....r short). 9. We quote hereinbelow Explanation 1 to section 115JB of the 1961 Act which reads as under: "Explanation 1.-For the purposes of this section, `book profit' means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by- . . . (b) the amounts carried to any reserves, by whatever name called, other than a reserve specified under section 33AC; or . . . if any amount referred to in clauses (a) to (h) is debited to the profit and loss account, and as reduced by,-" 10. We find merit in this civil appeal. On reading Explanation 1, quoted above, it is clear that to make an addition under clause (b) two conditions must be jointly satisfied: (a) ....