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2025 (1) TMI 878 - HC - Income TaxMAT/Section 115JB applicability on the assessee engaged in the business of electricity generation and distribution - additions made on account of Book Profit u/s 115JB - HELD THAT - By way of judgment 2025 (1) TMI 822 - DELHI HIGH COURT answered the question of law in favour of the assessee and against the Revenue, and held that Section 115JB of the Act would be inapplicable to an electricity generation company, prior to its amendment by virtue of Finance Act, 2012. We are of the opinion that the order of the ITAT does not suffer from any infirmity or error and, is, therefore upheld. 1. ISSUES PRESENTED and CONSIDERED The core legal question considered in this judgment is:
2. ISSUE-WISE DETAILED ANALYSIS Issue: Applicability of Section 115JB of the Income Tax Act to the Assessee Relevant Legal Framework and Precedents: Section 115JB of the Income Tax Act pertains to the computation of book profits for the purpose of levying Minimum Alternate Tax (MAT). The legal question revolves around whether this section applies to companies engaged in the business of electricity generation and distribution, particularly before the amendment introduced by the Finance Act, 2012. The ITAT relied on the precedent set by the Kerala High Court in the case of Kerala State Electricity Board v. Deputy Commissioner of Income-tax, which held that Section 115JB did not apply to electricity companies. Court's Interpretation and Reasoning: The court examined whether Section 115JB applied to the assessee, a company involved in electricity generation and distribution, for the assessment year 2007-08. The court noted that the ITAT had relied on the Kerala High Court's decision, which found that Section 115JB did not apply to electricity companies. The High Court reiterated that the legal position prior to the Finance Act, 2012, was that electricity companies were not subject to the provisions of Section 115JB. Key Evidence and Findings: The ITAT's decision was based on the precedent from the Kerala High Court, which provided a legal basis for excluding electricity companies from the ambit of Section 115JB. The court found that the ITAT's reliance on this precedent was appropriate and applicable to the facts of the case. Application of Law to Facts: The court applied the legal principles established in the Kerala High Court's decision to the facts of the case, concluding that Section 115JB was not applicable to the assessee for the assessment year in question. The court emphasized that the legal framework prior to the 2012 amendment did not encompass electricity companies within the scope of Section 115JB. Treatment of Competing Arguments: The Revenue argued that the additions made under Section 115JB should be upheld. However, the court found that the ITAT correctly applied the legal precedent from the Kerala High Court, which supported the assessee's position. The court dismissed the Revenue's appeal, affirming the ITAT's decision to delete the additions. Conclusions: The court concluded that the ITAT's decision was correct and that Section 115JB did not apply to the assessee for the relevant assessment year. The court upheld the ITAT's order and dismissed the Revenue's appeal. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "The Hon'ble Kerala High Court in case of Kerala State Electricity Board 329 ITR 91 [has answered the question of applicability of provisions of section 115JB] in favour of the assessee and against the revenue." "We hold the provisions of section 115JB of the Act are not applicable to the appellant company." Core Principles Established:
Final Determinations on Each Issue:
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