TaxTMI 
TaxTMI 
2025 (1) TMI 1389
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....d also reassessed u/s 143(3) of the Act read with section 254 of the Act. The assessee preferred appeals against the order of AO and the CIT(A) passed the orders on 17-07-2015 confirming the additions except addition on account of gratuity. For both assessment years, the CIT(A) held that the assessee, being a company incorporated under the Companies Act, was liable to MAT under Section 115JB, despite its statutory function under the Electricity (Supply) Act, 1948. 2.1. The details of assessments, re-assessments and appeals are tabulated below for the sake of clarity: Assessment Details A.Y. 2002-03 A.Y. 2004-05 Date of Filing Return 29.10.2002 29.10.2004 Returned Income under Section 115JB Rs. 98,09,88,263/- Rs. 12,47,80,000/- Original Assessed Income under Section 115JB Rs. 1,04,45,18,615/- Rs. 13,92,69,769/- Additions to income u/s 115JB in Original Assessment 1. Prior period expenses of Rs. 6,33,30,737/- 2. Gratuity and leave encashment of Rs. 1,99,615/- Gratuity and leave encashment of Rs. 1,44,89,769/- Date of Original Assessment Order 22.02.2005 29.12.2006 Reassessed Income under Section 115JB (after ITAT Set-Aside) Rs. 1,04,43,19,000/- Rs. 12,49,02,000....
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.... appellant craves leave to add to, alter, delete or modify the above ground of appeal either before or at the time of hearing of this appeal. Grounds of assessee in ITA No. 2842/Ahd/2015 (A.Y. 2004-05): 1.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts has confirmed the additions of Foreign Exchange Variation of Rs. 1,22,000/- made to the Book Profits computed under section 115JB of the I T Act without considering the facts of the case in right spirit. 1.1 The learned Commissioner of Income Tax (Appeals) ought to have appreciated that the Hon'ble Tribunal had set aside the issue to examine the applicability of provisions of section 115JB of the IT Act in view of the judgement of Kerala High Court in case of Kerala State Electricity Board vs. DCIT, reported at 196 Taxman 1 and the decision of Mumbai bench of ITAT in case of Maharashtra State Electricity Board, 77 TTJ 33. 1.2 The learned Commissioner of Income Tax (Appeals) has held that there has been a mistake apparent from record in the above two judgements whereby the High Courts held that there was no express exclusion of the companies engaged in the generation and distribution of ....
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....ive, on the other hand, pointed out that the assessee has taken this ground relating to applicability of section 115JB, for the first time before the Tribunal but did not object to admission of the same. The DR relied on the order of CIT(A) and stated that the assessee is not a Board but a company registered under Companies Act, 1956, which has share capital and also declared dividend. The DR stated that the accounts of the assessee are also audited by Comptroller and Auditor General of India and the assessee has calculated its income as per the provision of 115JB and paid taxes there on the basis of same audited financial statements. The DR also pointed out the statement of total income wherein by way of foot note, the assessee has accepted that the provisions relating to Minimum Alternate Tax are applicable to the assessee. The DR also stated that only AO has a power to reduce the income as disclosed by the assessee in the return of income. 6. In rejoinder, the AR stated that the assessee company was established in accordance with the restructuring plan of the Gujarat Electricity Board and therefore the judgement of Ajmer Vidyut Vitran Nigam Ltd. is applicable to the assessee be....
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....nies Act involves compliance with Parts II and III of Schedule VI, which dictate the accounting principles, presentation, and disclosure requirements. This is particularly relevant because Section 115JB mandates the computation of book profits based on financial statements prepared as per the Companies Act. It was pointed out that even though the Electricity (Supply) Act governed the preparation of accounts, the provisions of Section 115JB were clear in their scope and applied to any company defined under the Companies Act, thus encompassing GSECL. The CIT(A) also referred to specific provisions under Section 115JA, highlighting that while certain exemptions were provided to companies engaged in power generation under previous MAT provisions, such exclusions were not extended under Section 115JB. 7.2. The CIT(A) discussed that GSECL has an authorized share capital and has consistently declared and paid dividends to its shareholders, including during the relevant assessment years. The payment of dividends is a significant factor considered under MAT provisions, which aim to levy tax on companies paying dividends despite showing minimal or zero taxable income. CIT(A) noted that the ....
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....n incentives were provided under Section 115JA to promote infrastructural development, including generation and distribution of power, by exempting profits from such activities from MAT. However, CIT(A) highlighted that these incentives were policy-driven and specific to the legislative framework of Section 115JA. The lack of similar provisions in Section 115JB indicated a shift in legislative intent, aiming to include all companies within the MAT framework unless explicitly excluded. CIT(A) argued that GSECL's reliance on infrastructure-related exemptions was misplaced, as the MAT provisions under Section 115JB were designed to capture all companies preparing accounts under the Companies Act, regardless of the business sector. 7.6. The CIT(A) referred to the Mumbai ITAT's decision in Maharashtra State Electricity Board (MSEB) vs. DCIT, where MSEB was held not liable under MAT due to its status as a statutory corporation formed under the Electricity (Supply) Act, 1948. The ITAT in the MSEB case emphasized that MSEB was not a company incorporated under the Companies Act but was treated as a company only for taxation purposes under specific deeming provisions of the Income Tax Act. ....
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....no tax due to various deductions under the Act. However, the legislative framework before the 2012 amendment did not specifically include electricity companies because they prepared their accounts under specialized statutes and not under the Companies Act. This distinction was crucial in determining the applicability of MAT. The doctrine of substance over form typically emphasises that the economic reality of a transaction should take precedence over the legal form. However, in the context of Section 115JB, this principle does not override statutory exclusions. Various courts noted that the legislative intent was not to cover electricity companies under MAT prior to the amendment. They emphasized that companies preparing accounts under other statutes were not meant to be brought under MAT unless explicitly stated by an amendment. 7.10. In case of A.Y. 2002-03, the CIT(A) confirmed the addition of prior period expenses to the book profits computed under Section 115JB, arguing that GSECL, as a company incorporated under the Companies Act, was bound by the MAT provisions. The CIT(A) emphasized the statutory differences between GSECL and other statutory corporations, such as the Mahar....