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TMI Blog2017 (7) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case the ITAT has not acted perversely and was justified in holding that the assessee cannot be termed as a company with in the meaning of Section 2(18)(a) of the IT Act and consequently section 115JB is not applicable to the assessee." In DBITA No.157/2010 "1. Whether in the facts and circumstances of the case the ITAT has not acted perversely and was justified in holding that the assessee cannot be termed as a company with in the meaning of Section 2(18)(a) of the IT Act and consequently section 115JA is not applicable to the assessee." In DBITA No. 261/2016 1. Whether in the facts and circumstances of the case, the ITAT has not acted perversely and was justified in holding that the provision of section 115JB of the IT Act are not applicable in the case of assessee.? 3. Counsel for the appellant Mr. Mathur has taken us to the provisions of Section 115JA(2) alongwith Section 2(18)(a) of the Income Tax Act which reads as under:- "'115JA. Deemed income relating to certain companies.- (1) Notwithstanding anything contained in any other provisions of this Act, where in the case of an assessee, being a company, the total income, as computed under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral meeting may be convened by the Board at any other time. [(2) The Shareholders present at the annual General meeting shall be entitled to discuss and adopt - (a) the balance sheet and profit and loss account of the Financial corporation made up the date on which it's accounts are closed and balanced; (b) the report of working of the Financial Corporation for the period covered by the accounts (c) the auditor's report on the balance sheet and accounts; and (d) proposals for declaration of dividend and capitalization of reserves. (3) The Shareholders present at an annual general meeting may also discuss any other matter to be transacted at such meetings in accordance with the provisions of this Act.] 37. Audit[(1) The accounts of the Financial Corporation shall be audited by auditors duly qualified to act as the auditors under sub-section (1) of section 226 of the companies Act,1956(1 of 1956), who shall be appointed by the Financial Corporation in general meeting of shareholders out of the panel of auditors approved by the Reserve Bank of India for such terms and on such remuneration the Reserve Bank may fix.] (2) Every auditor shall be supplied with a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government, the [Small Industrtes Bank] or the Reserve Bank may require from time to time.] (3) The Financial Corporation shall furnish [To the State Govt., the [Small industries Bank] and the Reserve Bank] within[four months] of the close of each financial year a statement in the prescribed form of its assets and liabilities as at the close of that year, together with a profit and loss account for the year, the auditors' report and report of the working of the Financial Corporation during the year and copies of the said statement, account and reports shall be published in the Official Gazette and shall also be laid before the Legislature of the State. 43. Provision relating to income-tax and super-tax.- For the purpose of the [income tax act, 1961(43 of 1961)], the financial corporation shall be deemed to be a company within the meaning of that Act and shall be liable to income tax and super-tax accordingly on its income, profits and gains: Provided that any sum paid by the State Government under the guarantee en in pursuance of [section 7 or section 8] shall not be treated as the income, profits and gains of the Financial Corporation and any interest on debenture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act has to accept the authenticity of the accounts with reference to the provisions of the Companies Act which obligates the company to maintain its account in a manner provided by the Companies Act and the same to be scrutinised and certified by the statutory and will have to be approved by the company in its general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and satisfy that the accounts of the company are maintained in accordance with the requirements of the Companies. In spite of all these procedures contemplated under the provisions of the Companies Act, we find it difficult to accept the argument of the Revenue that it is still open to the Assessing Officer to rescrutinise this account and satisfy himself that these accounts have been maintained in accordance with the provisions of the Companies Act. In our opinion, reliance placed by the Revenue on sub-section section (1A) of Section 115J of the Income tax Act in support of the above contention is misplaced. Sub-section (1A) of section 115J does not empower the Assessing officer to embark upon a fresh inquiry in regard to the entries made in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Department to resort to the fiction in those cases where the tax payable on the basis of the "total income computed in accordance with the Income-tax Act is less than a specified percentage (7 percent for the year in issue) of the book profit. Further, sections 115JA and 115JB also stipulate a definite manner of preparing the annual accounts including the profit and loss accounts. More specification 115JB stipulates that the accounting policies, accounting standards etc., shall be uniform both for the purpose of income-tax as well as for the information statutorily required to be placed before the annual general meeting conducted in accordance with section 210 of the Companies Act, 1956. It may be mentioned here that under section 166 of the Companies Act every company is mandated to hold a general meeting in each year Section 210 mandates that every year the board of directors of the company in the general meeting shall lay before the company a balance-sheet as at the end of the relevant period and also a profit and loss account for the period. Parts II and III of Schedule VI to the Companies Act specify the method and manner of maintaining the profit and loss account. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n regarding the total income of the assessees which are companies. The book profit of the company is deemed to be total income of the assessee in the circumstances specified in the said section, which are already noticed earlier. The expression "book profit" for the purpose of the said section is explained in the section itself to mean the net profit as increased or decreased by the various amounts shown in the various sub-clauses of the section. The "net profit" itself must be the net profit as shown in the profit and loss account of the company. Sub-section (2) mandates that the profit and the loss account of the company is required to be prepared in the manner specified therein. Though in view of the requirement under section 69 of the Electricity (Supply) Act the appellant is required to maintain accounts in a different form than the one contemplated under section 115JB(2), the prescription under section 69 is only regarding the general duty of the appellant for the purpose of the Electricity (Supply) Act. Nothing in theory prevents Parliament from obligating the appellant to prepare another profit and loss account as prescribed under section 115JB(2) for the purpose of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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