TaxTMI 
TaxTMI 
2001 (8) TMI 310
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....eceived from the contractors and other miscellaneous receipts such as sale of tender forms, interest on loan to staff, profit on sale of excess stores, commission for collection of duty etc.? (iii) Whether on the facts and in the circumstances of the case the modus for the computation of book profit was correctly applied inasmuch as deduction was not made in respect of prior period adjustments and provision for bad and doubtful debts?" 3. We have heard the rival submissions in the light of material placed before us and precedents relied upon Maharashtra State Electricity Board (hereinafter called MSEB) is a statutory corporation. It was set up under section 5 of the Electricity (Supply) Act, 1948 vide Notification of the State Government dated 20th June, 1960. Section 5 reads as under:-- "5. Constitution and Composition of State Electricity Boards.--(1) The State Government shall, as soon as may be after the issue of the notification under sub-section (4) of section 1, constitute by notification in the Official Gazette, a State Electricity Board under such name as shall be specified in the notification. (2) The Board shall consist of not less than thre....
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....ative powers to link together under one control electrical development in contiguous areas by the establishment of what is generally known as the 'Grid System'. In the circumstances of this country such a system need not necessarily involve inter-connection throughout the length and the breadth of a province; regional co-ordination inclusive of some measures of inter-connection may be all that is needed. An essential pre-requisite is, however, the acquisition of necessary legislative power not only to facilitate the establishment of this system in newly licensed areas but also to control the operation of existing licensees so as to secure fully coordinated development." 6. The question posed before us is: "whether assessee could be construed to be a company for the purpose of section 115JA"? Section 115JA reads as under: "115JA(1) Notwithstanding anything contained in any other provisions of this Act, where in the case of an assessee, being a company, 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, 1997 (hereafter in this section referred to as the releva....
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....gistered under this Act or an existing company as defined in clause (ii); (ii) "existing company" means a company formed and registered under any of the previous Companies laws specified below:-- 9. Section 616 of the Companies Act, reads as under:-- "Section 616. Application of Act to insurance, banking, electricity supply and other companies governed by Special Acts--The provisions of this Act shall apply (a) ................... (b) ................... (c) to companies engaged in the generation or supply of electricity, except in so far as the said provisions are inconsistent with the provisions of the Indian Electricity Act, 1910 or the Electricity (Supply) Act, 1948 (LIV of 1948); 10. We have considered the text and the context of the various sections listed above in the light of the Heyden's Rule. Lord Coke in Heyden's case [1584] 3 Rep. 7b has said:-- "To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act; to consider (i) what was the law before the Act was passed; (ii) what was the mischief or defect for which the law ....
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....anies paying marginal tax has grown. Studies have shown that inspite of the fact that companies have earned substantial book profits and have paid handsome dividends, no tax has been paid by them to the exchequer. The new proposal provides for those companies to pay tax on 30% of the book profits, whose total income as computed under the Income tax Act is less than 30% of the book profits as per the books of account prepared in accordance with Parts II and III of Schedule VI of the Companies Act, 1956. "Book profits" is defined and certain adjustments are provided in the proposed section. The proposed amendment will take effect from 1-4-1997, and will accordingly, apply in relation to assessment year 1997-98 and subsequent years." 13. The Apex Court in the case of Surana Steels (P.) Ltd. v. Dy. CIT [1999] 237 ITR 777,783 considered the Legislative intent for the introduction of section 115J. It was found that the section was introduced to take care of the phenomenon of prosperous zero-tax companies which had continued inspite of the enactment of section 80VVA. These were companies which were paying no income-tax though they had profits and were declaring divide....
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.... previous year. 16. Only those companies, which are engaged in the generation or supply of electricity, will come within the ambit of section 616 of the Companies Act. For that it is necessary that assessee must be a company. If assessee is not a company, then provision of section 616(c) cannot be applied. For example, Tata Electric Company is a company registered under the Companies Act. It is company within the meaning of section 3 of the Companies Act. It is engaged in the business of generation or supply of electricity. As such it will come within the sweep of this provision. MSEB cannot be construed to be a company within the meaning of section 3 of the Companies Act, therefore, though it is engaged in the generation/distribution of electricity, it cannot be deemed as a company within the meaning of section 616(c). 17. Explanation to section 115JA defines the term "Book Profit" to mean the net profit as shown in the Profit & Loss Account for the relevant previous year prepared under sub-section (2) [i.e. in accordance with Parts II & III of Schedule VI] as increased by................ We have noted that assessee did not prepare its account under Parts II & III of Schedul....
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....s a trite law that deeming provision should be narrowly watched, jealously regarded and never to be pressed beyond its true limits. It is applicable to a company. The assessee is not a company. It is not required to distribute any dividend. As such it does not come within the mischief of this section. We have considered the various precedents relied upon. Legal precedents are like statistics. If you manipulate them, you can prove any thing. Each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect. Minutest differences on facts have swayed the judicial decisions one way or the other. In deciding such cases, one should avoid temptation as said by Cordozo, by matching the colour of one case against the colour of another. Learned Departmental Representative failed to produce any direct decision on the point. We have decided this issue after taking into consideration all the facts and circumstances of the case. In our opinion a corporation cannot be construed to be a company for the purpose of charging the Minimum Alternate Tax. The case of the assessee falls beyond the ken....
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....city. The amount of Rs.41.15 crores was received by the assessee from its contractors on account of liquidated damages and hire charges. Other receipts such as sale of tender forms, interest on loans to staff, rent from staff, profits on sale of excess stores, commission from the Government for collection of duty, etc. were all derived from business of generation and distribution of electricity. 23. Stating the position in regard to the prior period charges of Rs.109.69 crores, learned counsel submitted that the 'book profits' as defined in Explanation to section 115JA mean "the net profit shown in the Profit & Loss Account". Accordingly the Assessing Officer ought to have adopted the figure of Rs.346.58 crores as shown in the revenue account and not the figure of Rs. 456.27 crores. Such net profit means the bottom line in Profit & Loss Account. As per the Electricity (Supply) (Annual Accounts) Rules, 1985, all prior period revenue or costs are required to be accounted for prospectively and not retrospectively restating the past years figures was stated to be permitted. The practice adopted by MSEB of adopting the prior period expenses into the revenue account was in acc....