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TMI Blog2018 (8) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany was not a company within the meaning of Companies Act, 1956 and, therefore, the proviso to sec. 211(2) of the Companies Act, 1956 was not applicable. - the provisions of section 115JB of the Act imposing tax liability on the book profit were not applicable. Further, as per the specific provisions of section 115JC of the Act, however, the assessee did not have any alternate minimum tax liability. - Decided against the revenue. Diallowance u/s 14A - assessee derived exempt income in the form of interest from CPF investment, interest from tax free RBI Bond and dividend of shares of Power Trading Corporation and Bokaro Power Supply Corporation Ltd. - Held that:- following the decision for the earlier years, no disallowance can be made - Decided against the revenue. - I.T.A. No. 438/Kol/2017 - - - Dated:- 21-8-2018 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For the Appellant Shri G. Hangshing, CIT, DR For the Respondent Shri D. S. Damle, FCA ORDER Per Shri A.T.Varkey, JM This appeal preferred by the revenue is against the order of Ld. CIT(A) 16, Kolkata dated 06.01.2017 for AY 2013-14. 2. Ground nos. 1 and 2 of the revenue are against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd rival submissions and gone through the facts and circumstances of the case. After considering the submissions of both the parties we note that the assessee corporation was incorporated through the Act of Parliament legislated in 1948. The assessee corporation was constituted with three participating government namely, Union government, State Govt. of Bihar (now Govt. of Jharkhand) and State Govt. of West Bengal. The three participating governments contributed the capital. We note that the accounts of the assessee are maintained inconformity with the provisions of 1948 Act. We find from the copy of the Annual Report of the assessee that audit was not conducted by Chartered Accountant as required under the Companies Act, 1956, but was carried out by the Principal Director of Commercial Audit and Ex-officio Principal Audit, Part-1, Kolkata. We also note that while certifying the annual accounts, the auditor has stated that the Balance Sheet and the Statement of Profit Loss have been drawn up in the format approved by the Govt. of India under section 47 of the DVC Act, 1948 and Damodar Valley Corporation Rules, 1948. We, therefore, find that the accounts were prepared inconformity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15JB to provide that the companies which are not required under section 211 of the Companies Act to prepare their profit and loss account in accordance with the Schedule VI of the Companies Act, 1956, profit and loss account prepared in accordance with the provisions of their regulatory Acts shall be taken as a basis for computing the book profit under section 115JB. ii. It is noted that in certain cases, the amount standing in the revaluation reserve is taken directly to general reserve on disposal of a revalued asset. Thus, the gains attributable to revaluation of the asset is not subject to MAT liability. It is, therefore, proposed to amend section 115JB to provide that the book profit for the purpose of section 115JB shall be increased by the amount standing in the revaluation reserve relating to the revalued asset which has been retired or disposed, if the same is not credited to the profit and loss account. iii. It is also proposed to omit the reference of Part III of the Schedule VI of the Companies Act, 1956 from section 115JB in view of omission of Part III in the revised Schedule VI under the Companies Act 1956. These amendments will take effect from 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax by enacting section 115JC of the Act applicable from AY 2013-14. The assessees other than companies who earned profits from carrying on business but because of the profit post deductions allowed under the Act did not pay any taxes, then in such case, section 115JC of the Act in post obligation to pay alternate minimum tax as per the mandate provided in that section. As per the specific provisions of section 115JC of the Act, however, the assessee did not have any alternate minimum tax liability. We, therefore, find that the ratio laid down by the coordinate bench of this Tribunal continued to be applicable to the assessee in the year under consideration as well because the assessee corporation was not a company within the meaning of Companies Act, 1956 and in this view of the matter in terms of section 115JB(2)(b) of the Act, the provisions of section 115JB of the Act imposing tax liability on the book profit were not applicable. We accordingly, uphold the order of the Ld. CIT(A). Ground nos. 1 and 2 of the appeals of revenue are dismissed. 7. Ground nos. 3 to 5 of the revenue s appeal relate to the action of the Ld. CIT(A) in deleting the disallowance of ₹ 36,86,72,174 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing findings: 5. I have carefully considered the submissions of the A/R and AO's findings in the impugned order. I have also examined the relevant investment schedule of the assessee and the appellate order passed by the ITAT in the appellant's own case for the A.Ys. 2008-09 2009-10 wherein this issue was adjudicated in assessee's favour. The basic facts are in narrow compass and not in dispute. For the A.Y. 2013-14 the average cost of investment was ₹ 1105.39 Crores which principally comprised of tax-free bonds of RBI and investment in shares of Companies. From the appellate order passed by the ITAT for the A.Y. 2008-09 2009-10 it was noted that the composition of investment in the relevant years as also in the year under consideration was same and identical. In the A.Ys. 2008-09 2009-10 also the assessee had offered 20% of the gross salary paid to employees of Provident Fund Section as expenditure incurred in relation to income exempt u/s 10(25) of the Act. In respect of income which the assessee earned in the form of interest on tax-free bonds and dividend on shares the AO however invoked provisions of Rule 8D and made the disallowance out of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial or evidence to co-relate any specific expense which the assessee can be said to have incurred for the purpose of earning interest on tax-free bonds dividend. On the other hand the assessee pointed out that the interest on tax-free bonds was paid directly to the assessee's Bank A/c by RBI on six monthly basis and no expenses were incurred on collection of such interest. The interest was received only on 2 occasions in a year and interest was credited without incurring bank or collection charges. Similarly the dividend was earned only once in a year from Bokaro Power Supply Co. Ltd Power Trading Corporation and such dividend was also received through ECS by credit to assessee's Bank A/c. Keeping in mind the number of transactions involved in receiving taxfree income I find force in the A/R's submissions that there was no necessity for the assessee to incur expenses of ₹ 5,52,69,466/- on earning or making of tax-free income particularly when only the investments brought forward from the earlier years had produced the tax-free income during the relevant year. I further note on the identical facts which prevailed in A.Y. 2008-09 to 2010-11 no disallowance as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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