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2017 (7) TMI 1196 - HC - Income TaxSection 115JA applicability to assessee - whether the respondent assessee will be governed under Section 115 JA read with Section 2(18)(a). Held that - On a plain reading as reproduced above and in view of forgoing conclusion and even as per statement of Mr. Mathur it will not be covered. However he has tried to take support of Section 43 which is misconceived. While interpreting the taxing statute the Court has to rely upon the taxing statute and not any other provisions. - Decided in favour of assessee
Issues Involved:
1. Applicability of Section 115JA and Section 115JB of the Income Tax Act to the assessee. 2. Interpretation of "company" under Section 2(18)(a) of the Income Tax Act. 3. Relevance of the State Financial Corporation Act in determining tax obligations under the Income Tax Act. Issue-wise Detailed Analysis: 1. Applicability of Section 115JA and Section 115JB of the Income Tax Act to the Assessee: The primary issue in these appeals was whether the provisions of Section 115JA and Section 115JB of the Income Tax Act, which pertain to the computation of income for certain companies, were applicable to the assessee. The appellant contended that the Tribunal erred in holding that the assessee cannot be termed as a company within the meaning of Section 2(18)(a) of the Income Tax Act, and therefore, Sections 115JA and 115JB were not applicable. 2. Interpretation of "Company" under Section 2(18)(a) of the Income Tax Act: The appellant argued that the assessee should be considered a company under Section 2(18)(a) of the Income Tax Act, which would make Sections 115JA and 115JB applicable. The court examined the provisions of Section 115JA and the definition of a company under Section 2(18)(a). The court also considered the legislative intent behind Section 115JA, which aims to tax companies on at least 30 percent of their book profits, as highlighted in the Supreme Court judgment in Apollo Tyres Ltd. vs. Commissioner of Income Tax. 3. Relevance of the State Financial Corporation Act in Determining Tax Obligations under the Income Tax Act: The respondent's counsel argued that the State Financial Corporation Act, which governs the assessee, should be considered while determining tax obligations. The court reviewed the relevant provisions of the State Financial Corporation Act, including Sections 3, 36, 37, 38, and 43. The court noted that the State Financial Corporation Act provides specific guidelines for the maintenance and audit of accounts, which differ from the Companies Act. The court also considered the Kerala High Court judgment in Kerala State Electricity Board vs. Deputy Commissioner of Income Tax, which discussed the applicability of Section 115JB to entities not governed by the Companies Act. Court's Conclusion: The court concluded that the provisions of the State Financial Corporation Act do not override the Income Tax Act when assessing tax obligations. The court emphasized that while interpreting a taxing statute, reliance must be placed on the specific provisions of the taxing statute itself. The court found that the assessee, being governed by the State Financial Corporation Act, does not fall within the definition of a company under Section 2(18)(a) of the Income Tax Act for the purposes of Sections 115JA and 115JB. Final Judgment: The court ruled in favor of the assessee, holding that the provisions of Sections 115JA and 115JB of the Income Tax Act were not applicable. Consequently, the appeals filed by the department were dismissed.
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