2021 (7) TMI 1394 - HC - Income Tax

MAT computation applicability - Tribunal held that the assessee is governed by the different Acts and Rules and is not required to prepare its profit and loss account and balance sheet as per Part II and III of Schedule VI of the Companies Act, hence the provisions of Section 115JB cannot be invoked in the instant case - HELD THAT - When the matter was taken up today, the learned senior counsel for the assessee submitted that the aforesaid substantial question of law involved in this appeal has already been answered in favour of the assessee for the previous assessment year namely 2005-2006, by this Court vide judgment 2017 (12) TMI 1631 - ITAT BANGALORE The aforesaid submission could not be disputed by the learned counsel for the revenue.

Summary

Issues: Interpretation of Section 115JB of the Income Tax Act, 1961 regarding preparation of profit and loss account and balance sheet as per Companies Act Schedule VI for Assessment year 2010-2011.

In this judgment by the High Court of Karnataka, the appeal under Section 260A of the Income Tax Act, 1961 was filed by the revenue against the order of the Income Tax Appellate Tribunal for the Assessment year 2010-2011. The substantial question of law in this appeal was whether the assessee is required to prepare its profit and loss account and balance sheet as per Part II and III of Schedule VI of the Companies Act, thus impacting the invocation of Section 115JB. The senior counsel for the assessee argued that a similar question was decided in favor of the assessee for the previous assessment year 2005-2006 by the same Court. The revenue did not dispute this submission. Consequently, based on the reasoning and decision in the previous judgment, the substantial question of law in this appeal was answered in favor of the assessee and against the revenue. Thus, the appeal filed by the revenue was dismissed.

This judgment highlights the importance of consistent judicial interpretation in tax matters, especially concerning the application of Section 115JB of the Income Tax Act, 1961. The Court's decision was influenced by a prior judgment on a similar issue, emphasizing the significance of precedent in tax law. The ruling also underscores the need for clarity and uniformity in legal interpretations to ensure fair treatment of taxpayers and maintain consistency in tax assessments. By upholding the decision in favor of the assessee based on previous legal reasoning, the Court reaffirmed the principle of legal certainty and predictability in tax matters, providing guidance for future cases with similar factual and legal contexts.