TaxTMI 
TaxTMI 
2025 (6) TMI 1208
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....ake convenience the same are disposed of by this common order. 2. The assessee, the National Dairy Development Board (hereinafter referred as NDDB), is a statutory body established under the National Dairy Development Board Act, 1987, with the object of promoting, financing, supporting dairy and related rural industries. For the Asst. Year 2010-11 assessee e-filed its return of income on 01.10.2010 declaring loss of Rs. 39,92,593/. The AO passed regular assessment order u/s.143(3) of the Act on 30.10.2012 determining total income at Rs. 44,29,53,080/-. The assessee filed an appeal before Ld.CIT(A), Baroda which was partly allowed on 24.03.2014. An order giving effect [herein after referred as OGE] to the appellate order was passed by the A.O. on 09.12.2014. Further appeal was preferred against the said OGE order, which was decided by Ld. CIT(A) on 16.12.2016. Second giving effect order dated 27-03-2017 passed by the AO and then the A.O. passed the suo-motto rectification order u/s.154 of the Act dated 11.08.2017 determining the total income at Rs. 4,49,59,741/- with charging MAT liability on Book profit at Rs. 46,27,94,914/-, on the ground of mistake apparent from record. [which....
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....added to the Book Profit u/s 115JB of the Act, by holding that the issue stands deleted by Order of CIT(A) read with CIT(A) No. Vadodara- 4/10242/2019-20 without appreciating the fact that disallowance made u/s 14A of the Income Tax Act, 1961 on account of administrative expenses incurred of Rs. 2,29,89,221/- in earning exempt income is was required to be added to the book profit as per clause(f) to Explanation 1 of Section 115JB of the Income Tax Act, 1961. 4. As against the second rectification order, Ld CIT[A] allowed the assessee appeal by observing as follows: "2. GROUND No.2:- The AO erred in increasing the profit by disallowance u/s 14A of the Act Rs. 2,30,15,007/- without appreciating that provisions of section 14A apply only to the computation of income under chapter IV of the Act and not to the computation of book profit under Chapter XII-B since provisions of chapter XII-B of the Act are special provisions and complete code in itself. It is submitted it be so held now. Decision of Ground No.2: This ground is not being decided in view of decision in Appeal No 10242 of AY 2010-1 1, as it has become academic." 4.1. As against the second appellate ord....
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....(2) The Board shall cause the books and accounts of the National Dairy Development Board to be closed and balanced as on the 31st day of March each year or such other date as the Board may, with the con-currence of the Central Government, decide. 28. (1) The accounts of the National Dairy Development Board shall be audited by auditors duly qualified to act as auditors of companies under the Companies Act, and the appointment of auditors and remuneration payable to them shall be subject in the approval of the Central Government. (2) Every auditor in the performance of his duties shall have at all reasonable times access to books, accounts and other documents of the National Dairy Development Board. (3) The auditors shall submit their report to the Board which shall forward a copy of their report to the Central Government." 5.2. Further the Ministry of Finance, Department of Company Affairs vide Gazette Notification No.187 dated 23-02-2004 held that "National Dairy Development Board" to be public financial institution which reads as follows: MINISTRY OF FINANCE (Department of Company Affairs) NOTIFICATION New Delhi, the 23^rd February, 2004 ....
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.... Sections 1151, 115JA and 115JB create legal fictions regarding the total income of the companies. While the earlier two sections mandate the department to make the assessment on a fictitious amount of 'total income' where the actual amount of total income computed in accordance with the Act is less than 30 per cent of the book profits of the company, section 115JB mandates the department to resort to the fiction in those cases where the tax payable on the basis of the total income computed in accordance with the Act is less than a specified percentage (7 per cent for the years in issue) of the book profit. Further, sections 115JA and 115JB also stipulate a definite manner of preparing the annual accounts including the profit and loss accounts. More specifically, section 1151B stipulates that the accounting policies, accounting standards, etc., shall be uniform, both for the purpose of income-tax as well as for the information statutorily required to be placed before the annual general meeting conducted, in accordance with section 210 of the Companies Act, 1956. [Para 13] However, the assessee though was by definition a company under the Income-tax Act and deemed t....
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....e that the Legislature intended not to give the benefit of such a clause any more to those who were getting the benefit of such exclusionary clause, yet it is not an absolute rule. The other attendant circumstances, the context, the history and the mischief sought to be remedied by the amendment are all required to be examined before reaching a definite conclusion. [Para 18] The Circular No. 762 not only is binding on the department, but also explains the purpose of introducing section 115JA. On a reading of the said circular, it is clear that the Legislature took note of the fact that a number of companies paying marginal tax and also zero-tax had grown. Such companies earned substantial book profits and paid handsome dividends to the shareholders without paying any tax to the exchequer. Such a result was achieved by such companies by taking advantage of the then existing legal position which permitted the adoption of dual accounting policies and practices, one for the purpose of computation of income-tax and another for the purpose of determining the book profits for the purpose of payment of dividends. Therefore, the amendment was made to plug the loophole in the law. H....
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.... this Tribunal in Paragraphs 5 & 6 above, the second rectification order has no legs to stand in the eye of law, consequently Revenue's appeal against the second rectification order and appellate order passed for the Asst. Year 2010-11 in ITA No.734/Ahd/2023 are hereby dismissed. ITA No. 755/Ahd/2023 for A.Y. 2011-12 8. The assessee e-filed its Return of Income for Asst. Year 2011-12 on 26.09.2011 declaring total Income of Rs. 9,69,66,285/- and revised return was filed on 27.08.2012 declaring total income of Rs. 2,36,19,752/-. The AO passed regular assessment order u/s 143(3) of the Act on 18.03.2014 determining total income as Rs. 1,66,66,44,232/-. The assessee filed appeal against the said order before Ld. CIT(A) which was decided on 14.06.2016. The AO passed giving effect order on 20.10.2016, determining the total income at Rs. 1,66,66,44,232/- without calculating MAT liability on Book profit of Rs. 1,16,01,87,138/-. That was considered as mistake apparent from record, therefore the AO passed the rectification order u/s 154 of the Act on 23.03.2018 determining the total income at Rs. 22,90,72,703/- by computing MAT liability on Book profit at Rs. 1,16,01,87,138/- 8.1. O....
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....g effect to the appellate order. 9.1. That apart the assessee is a Statutory Board, not a company registered under the Companies Act, and its accounts are not prepared in accordance with Schedule VI, which is a pre-condition under section 115JB of the Act. This position has been subject to judicial scrutiny in several cases and cannot be said to be free from debate. Therefore, any attempt to apply MAT through a rectification order involves a long-drawn reasoning process and not a patent mistake and permissible as held by the Apex Court in T.S. Balaram v. Volkart Bros. (1971) 82 ITR 50 (SC). 10. In light of the above, the issue of applicability of Section 115JB to NDDB is clearly debatable and not a mistake apparent from record. The rectification order passed is beyond the scope of section 154 of the Act and therefore liable to be quashed as without jurisdiction. In the result the Revenue's appeal against the rectification order passed for the Asst. Year 2011-12 in ITA No.755/Ahd/2023 is liable to be dismissed. ITA No. 756 & 757/Ahd/2023 for A.Y. 2012-13 11. The assessee e-filed its return of income for AY 2012-13 on 27.09.2012 declaring total loss of Rs. (84,09,26,490/-....
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....eturn of Income in the status of Company. (c) that in view of decision on ground No.3 & 4, the ground regarding not reducing reversal of provision of non-performing assets and inventory of Rs. 89,56,26,283/- & reversal of excess provision of inventory of Rs. 316/- while computing book profit as per Section 115JB, as per clause (i) of Explanation 1, becomes academic, without deciding the issue on merit? (d) that in view of decision on ground No.3 & 4, the ground regarding increasing the book profit u/s 115JB of the Act by disallowance u/s 14A of the Act Rs. 2,97,33,479/- becomes academic without deciding the issue on merit ? 13.2. The Ground of Appeal raised by Assessee in C.O. No.2/Ahd/2024 are as follows: The Ld. Assessing Officer ('Appellant') being aggrieved by the order dated 4 August 2023 passed by the National Faceless Appeal Centre ('NFAC') preferred an appeal before Ahmedabad Bench of Hon'ble ITAT vide ITA No. 756 of 2023. Against the same, respondent wishes to cross object on the following ground: 1. The NFAC has erred on facts and in law in upholding the calculation of interest u/s 2348 of the Act amounting to Rs.....
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....on 19.01.2016 reducing the total loss to Rs. (14,24,39,000/-) without calculating MAT liability on Book Profit. That mistake was apparent from record, therefore the AO passed the rectification order u/s 154 of the Act on 03.11.2017 determining the total Book profit for the purpose of MAT at Rs. 27,10,93,612/- 16. On appeal, Ld CIT[A] held that the amendment made in Sec 115JB by Finance Act 2012 effective from 01.04.2013 which is applicable to the assessee company for the Asst. year 2013-14 by observing as follows: '... The question to be decided is whether section 115JB is applicable to statutory corporations enacted by an act of the legislature or 115JB applies exclusively to those incorporated under the Companies Act. The matter was discussed in great detail by the Kerala High Court vide judgment dated 12.11.2010 in I T A No. 1710 of 2009 in the case of Kerala State Electricity Board. Hon'ble Supreme court has confirmed the view taken by Hon'ble Kerala High Court and the case was dismissed vide judgment dated 16/08/20222. The appellant in its submission dated 25.04.2023 has relied heavily on the above mentioned decision of Hon'ble Kerala High Court. The matter pertain....
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....t is pertinent to mention that Electricity, Banking and Insurance are specifically mentioned in 2nd proviso to Section 129(1) of the Companies Act and it also includes "any other class of Company". Use of the expression "any other class of company" frees it from the purview of Companies Act 2013. National Dairy Development Board admittedly is a company under the IT Act 1961 and falls squarely within "any other class of company" as mentioned in second proviso of Sec 129 (1) of Companies Act, 2013. "Any other class of Company" is not discussed in the ITAT order and how it precludes Companies identified under the Income- Tax Act. Reducing it to just Banking, Electricity and Insurance as argued by AR of Rajasthan Finance Corporation is against the letter of 2 nd proviso to Section 129(1) of the Companies Act. Grounds of appeal did not include what constitutes "any other class of Company". Use of expression "any other class of Company" was not the subject matter before Hon'ble ITAT Jaipur. One class of Company are the ones incorporated under Companies Act. The expression "any other class of Company" includes the word 'other'. What Constitutes this 'other' has not been discussed as it wa....
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.... while adjudicating appellant's ground that the interest u/s 234B needs to be computed upto the date of order u/s 143(3) and not upto the order u/s 154 as done by AO. It is submitted it be so held now. 18. The question of applicability section 115JB to Statutory Corporations pursuant to the amendment made in Sec 115JB by Finance Act 2012 effective from 01.04.2013 is no more res-integra as the same considered by the Special Bench of Mumbai Tribunal in the case of Union Bank of India -Vs- DCIT reported in [2024] 166 taxmann.com 207 vide recent decision dated 06-09-2024 held as follows: "Section 115JB, read with section 2(26), of the Income-tax Act, 1961- Minimum alternate tax. Payment of Tax (Banks) Assessment years 2013-14 to 2015-16 Assessee-bank claimed that section 115JB would not be applicable in its case Assessing Officer denied said claim on ground that amended provision of section 115JB brought by Finance Act, 2012 with effect from 1-4-2013 by insertion of clause (b) to section 115JB(2) had brought within its ambit companies governed by Companies Act and also governed by other regulating act including Banking Regulation Act, 1949 It was noted that assessee cam....
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....n 115JB(2) of the Act. Summery of the Special Bench decision are as follows: A. Section 115JB applies only to companies registered under the Companies Act: • The expression "company" under Section 115JB must be interpreted in the context of the Companies Act, not merely by reference to the Income Tax Act. • Although Section 11 of the Acquisition Act deems a "corresponding new bank" to be an "Indian company" for income-tax purposes, this does not extend to deeming it as a company under the Companies Act. B. Union Bank of India is not a company under the Companies Act: • It was created under a special statute (the 1970 Act) and not incorporated under the Companies Act. • Thus, it is not covered by Section 129(1) second proviso of the Companies Act, 2013 - a prerequisite for Section 115JB(2)(b) to apply. C. Non-Applicability of Schedule III or Section 129 of the Companies Act: • The bank's financials are prepared under the Banking Regulation Act, not the Companies Act, which is essential under 115JB(2)(a)/(b). D. Deeming fiction under Section 11 is limited: • It is only fo....