2016 (9) TMI 999 - AT - Income Tax

MAT applicability u/s 115JA/115JB - Held that - Provisions of section 115JA/115JB are not applicable against the Assessee- Bank.

Summary

Issues involved:
1. Computation of book profits under Section 115JA
2. Computation of total income under normal provisions of the Act

Issue 1: Computation of book profits under Section 115JA
The case involved a bunch of appeals where the Assessee-Bank filed nine appeals, with common grounds, challenging the assessment order. The primary issue focused on the computation of book profits under Section 115JA for the assessment year 2000-01. The Assessee-Bank declared a total income of Rs NIL, which was selected for scrutiny. The Assessing Officer (AO) disallowed certain amounts under various sections, including a disallowance under Section 36(1)(viia) for bad debts and non-deduction of TDS on payments to Visa and Master-Card. The Commissioner of Income Tax (Appeals) upheld these disallowances, leading the Assessee to file an appeal. The Assessee contended that the determination of taxable income under Section 115JA was erroneous, specifically challenging the disallowance of bad debts and the addition of an adhoc amount to book profits. The Assessee argued that certain deductions were allowable and that the adhoc expenses should be deleted. The Appellate Tribunal, after considering the arguments and relevant case laws, allowed the appeal, holding that the provisions of Section 115JA were not applicable to banking companies, thus rendering the discussions on other grounds of appeal academic.

Issue 2: Computation of total income under normal provisions of the Act
Another significant issue in the case was the computation of total income under the normal provisions of the Act. The Assessee challenged the disallowance of non-rural bad debts written off and the disallowance of payments to Mastercard/Visa due to non-deduction of tax at source. The Assessee argued that the payments made were for services rendered outside India and not subject to tax in India. Additionally, the Assessee contested the allocation of interest and business expenses to income from dividends and interest exempt under Section 23G. The Assessee claimed that the allocation was adhoc and unjustified, relying on relevant legal precedents to support their position. The Appellate Tribunal, after thorough consideration of the arguments and applicable case laws, allowed the appeals filed by the Assessee for various assessment years, as the provisions of Section 115JB were held not applicable to the Assessee-Bank. Consequently, the appeals filed by the Revenue were dismissed.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the ultimate decision rendered by the Appellate Tribunal, providing a comprehensive overview of the legal complexities addressed in the case.