2023 (12) TMI 968 - AT - Income Tax

Applicability of Section 115JB on the assessee Govt. company - scope of amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 - HELD THAT - We observe that the assessee company is a Government undertaking owned by Central Government and the State of Bihar West Bengal and the activities are governed by Damodar Valley Corporation Act, 1948, Central Legislation. Section 115JB(1) of the Act which provides special provisions for payment of tax by certain companies. We notice that prior to the amendment brought in by 01.04.2013 Section 115JB(2) of the Act read as Every assessee being a company, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Part 2nd 3rd of Schedule VI to the Companies Act, 1956 (1 of 1956) . Considering amendments and the provisions existing prior to 01.04.2013, we notice that prior to 01.04.2013 the type of companies other than those which are required to prepare their financial statements in accordance with provisions of Part 2 3 of Schedule VI of Companies Act were not brought into the ambit and there was no clarification in the said provision. However, subsequent to the amendment by 01.04.2013 onwards, the remaining companies have also been brought into the ambit of Section 115JB of the Act. Hon'ble Jurisdictional High Court while dealing similar question of law in the case of the assessee for AY 2010-11 2021 (12) TMI 1475 - CALCUTTA HIGH COURT held that prior to the amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 Section 115JB of the Act was not applicable on the categories of companies like that of the assessee but post-amendment it is applicable by virtue of the amendment effective from 01.04.2013 providing that certain companies such as Insurance, Banking, Electricity which are allowed to prepare the profit and loss account in accordance with the Sections specified in their regulatory Acts, post 01.04.2013, are required to prepare profit and loss account in accordance with Schedule VI of the Companies Act for the purpose of computation of book profit under Section 115JB of the Act. Hon'ble Court has further, held that the said amendment effective from 01.04.2013 in Section 115JB of the Act is neither declaratory nor classificatory but are substantive and significant legislative changes applicable prospectively. As the years under consideration are AY 2012-13, AY 2016-17, AY 2017-18 AY 2018-19 and therefore, we are of the considered view that post-amendment with effect from 01.04.2013, the assessee company falls under the provisions of Section 115JB of the Act. Thus, the Revenue fails to succeed in its appeal for AY 2012-13 but for the remaining appeals for assessment years AY 2016-17, AY 2017-18 AY 2018-19, finding of ld. CIT(A) is set aside and the issue is decided in favour of the Revenue.

Summary

Issues Involved:
1. Condonation of delay in filing appeals.
2. Applicability of Section 115JB of the Income Tax Act, 1961 to the assessee.
3. Whether the amendment to Section 115JB by Finance Act, 2012 is applicable retrospectively or prospectively.

Condonation of Delay:

The Registry informed that there was a delay of 109 days in filing the appeals. The Department argued that the delay was due to the time taken in receiving the appellate orders and obtaining necessary permissions. The Tribunal found merit in the Department's contentions and condoned the delay, emphasizing that the National Faceless Appeal Centre system should be streamlined to avoid such delays in the future.

Applicability of Section 115JB:

The main issue was whether Section 115JB, which provides for the payment of tax by certain companies based on book profit, was applicable to the assessee, a government undertaking engaged in electricity generation and distribution. The assessee argued that it was exempt from Section 115JB as it maintained accounts in conformity with the Damodar Valley Corporation Act, 1948. However, the Assessing Officer (AO) applied Section 115JB, leading to the assessee's appeal before the Commissioner of Income-tax (Appeals) [CIT(A)], who ruled in favor of the assessee based on past Tribunal decisions.

Amendment to Section 115JB:

The Tribunal considered whether the amendment to Section 115JB by the Finance Act, 2012, effective from 01.04.2013, was applicable retrospectively or prospectively. The Tribunal noted that the Hon'ble Jurisdictional High Court had ruled that the amendment was substantive and applied prospectively. Therefore, for the assessment year (AY) 2012-13, the amendment did not apply, and the Revenue's appeal was dismissed. However, for AYs 2016-17, 2017-18, and 2018-19, the amendment was applicable, and the Tribunal ruled in favor of the Revenue, setting aside the CIT(A)'s findings.

Conclusion:

In summary, the Tribunal condoned the delay in filing the appeals, ruled that Section 115JB did not apply to the assessee for AY 2012-13, but applied for AYs 2016-17, 2017-18, and 2018-19, following the prospective application of the amendment by the Finance Act, 2012.