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TMI Blog2017 (12) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of power to fulfill certain obligations from out of the business funds and these monies have not been deposited solely with a view to earn any interest income and are liable to be taxed only under the head "Business" and not under the head "Other Sources". 3. The learned CIT[A] is not justified in upholding the restricting the claim u/s.80IA[4][iv] of the Act, in respect of the income computed under the head "Business" only and not in respect of income under the head "Other Sources" appertaining to the undertaking carrying on the business of generation of power, to which it is legitimately entitled to deduction u/s.80IA[4][iv] of the Act. 4. The appellant denies itself liable to be charged to tax u/s.115JB of the Act, in as much as, no tax is liable to be paid under normal provisions and consequently, the provisions of Section 115JB of the Act cannot be invoked. 5. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s. 234-B and 234-C of the Act, which under the facts and in the circumstances of the appellant's case and the levy deserves to be cancelled. 6. For the above and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that FDRs were purchased on account of business exigencies. The judgments of the Hon'ble Apex Court in the cases of Sterling Foods (supra) and Pandian Chemicals Ltd. (supra) were examined by the jurisdictional High Court in the case of CIT v. Chinna Nachimuthu Constructions, 179 Taxman 272 (Kar), CIT v. Hajee Jaffar Shariff in ITA No.1521 of 2005 and by the Hon'ble Delhi High Court in the case of CIT v. Jaypee DSC Ventures Ltd., 335 ITR 132 (Del), in which it was held that wherever the fixed deposits were purchased on account of business exigencies, the interest income generated thereon shall be treated as business income and not income from other sources. 7. Having carefully examined the orders of authorities below, we find that though assessee has claimed that FDRs were purchased on account of business exigencies, but it is not specifically borne out from the orders of the lower authorities. We have, however, examined the judgments of jurisdictional High Court in the case of Chinna Nachimuthu Constructions (supra), M/s. Hajee Jaffar Shariff (supra) and the Delhi High Court judgment in the case of Jaypee DSC Ventures Ltd. (supra). In all these cases, the Hon'ble High Courts have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PANDIAN CHEMICALS LTD. VS. COMMISSIONER OF INCOME TAX can be distinguished. Accordingly we answer the substantial questions of law raised in this appeal against the revenue and dismiss the appeal." 8. The Hon'ble Delhi High Court while delivering the judgment on 11.03.2011 in the case of Jaypee DSC Ventures Ltd. (supra) has confirmed the view taken by the Hon'ble Karnataka High Court while holding that the amount of investment in fixed deposits which were kept in bank for furnishing of bank guarantee is business income, not income from other sources. The relevant observations of the Hon'ble Delhi High Court are extracted hereunder for the sake of reference:- "21. Keeping in view the aforesaid pronouncements in the field, the present controversy is to be adjudged. As is noticeable from the stipulations in the agreement, the performance guarantee by way of bank guarantee was required for faithful performance of its obligations. The nonsubmission of the guarantee would have entailed in termination of the agreement and NHAI would have been at liberty to appropriate bid security. That apart, the release of such performance security depended upon certain conditions. Thus, it is clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the statutory Act. The ld. Counsel for the assessee further invited our attention to the provisions of clause (b) of sub-section (2) of section 115JB with the submission that by virtue of amendment by the Finance Act, 2012 w.e.f. 1.4.2013, the companies to which the provisions of sub-section (2) of section 211 applies, shall for the purpose of the section prepare its profit & loss account for the relevant previous year in accordance with the provisions of the Act governing such company, meaning thereby, the provisions of section 115JB would apply to all those companies specified in proviso to sub-section (2) of section 211 of the Companies Act. 11. The ld. Counsel for the assessee further contended before the aforesaid amendment, companies were required to prepare its profit & loss account for the relevant previous year in accordance with the provisions of Part II & III of Schedule VI of the Companies Act, 1956. Therefore, prior to 1.4.2013 companies which are not required to maintain its profit & loss account in accordance with the provisions of Part I & III of the Schedule VI to the Companies Act do not fall within the purview of section 115JB of the Act. In support of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its profit & loss account for the relevant previous year in accordance with the provisions of Part II & III of Schedule VI to the Companies Act, 1956. Before this amendment it was not realized by the Legislature that there are certain companies who are not obliged to prepare its profit & loss account for the relevant previous year in accordance with the provisions of Part II & III of the Schedule VI to the Companies Act, 1956, as they were governed by different Acts/statute. It was not clear as to when these companies are not required to prepare their profit & loss account in accordance with the provisions of Part II & III of Schedule VI to the Companies Act, 1956, whether the provisions of section 115JB are applicable to these companies. Having realized this position, sub-section (2) was amended and according to the amendment, it was categorized in two clauses and for the sake of reference, we extract the provisions of section 115 JB (1) & (2) hereunder:- "115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et out in Part I of Schedule VI, or as near thereto as circumstances admit or in such other form as may be approved by the Central Government either generally or in any particular case; and in preparing the balance sheet due regard shall be had, as far as may be, to the general instructions for preparation of balance sheet under the heading "Notes" at the end of that Part: Provided that nothing contained in this sub-section shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity or to any other class of company for which a form of balance sheet has been specified in or under the Act governing such class of company. (2) Every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year and shall, subject as aforesaid, comply with the requirements of Part II of Schedule VI, so far as they are applicable thereto: Provided that nothing contained in this sub-section shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity, or to any other class of company for which a form of profit and loss account ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 115JB of the Act are not applicable to it and since the assessee being a company to which the proviso to section 211(2) of the Companies Act, 1956 applies, it will not be liable to tax under section 115JB of the Act. In this context, the learned Authorised Representative placed reliance on the parity of reasoning of the following Tribunal decisions :- i) State Bank of Hyderabad V DCIT (ITA No.578 & 579/Hyd/2010 dt.7.9.2012); and ii) Decision of the co-ordinate bench of ITAT, Bangalore in the case of Syndicate Bank V DCIT (ITA Nos.668 and 669/Bang/2010 and 708 & 709/Bang/2010 dt.19.6.2013.) 11.2.1 We have heard both parties and perused and carefully considered the material on record. It is not in dispute that the assessee in the case on hand is an electric company engaged in the generation of power. The provisions of section 115JB(2) read as under : " 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 Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956)" The assessee, in the case on hand, however does not have to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has not been strictly preparing its audited annual accounts as per Parts II and III of Schedule VI of the Companies Act, 1956. 22.11 In the aforesaid context, it may also be pertinent to note that prior to the amendment to sub-section (2) of section 115JB of the Income-tax Act, 1961 ('the Act'), the deeming provisions of the said section were not applicable to companies to which proviso to subsection (2) of section 211 of the Companies Act applied. 22.12 This is clearly evident from a bare reading of the provisions of section 115JB of the Act, as applicable to the relevant year under consideration. 22.13 The Learned AR submitted that on perusal of the aforesaid, it will kindly be noticed that the provisions of section 115JB of the Act applied during the relevant year only to companies required, under the law, to prepare its profit and loss account in accordance with Parts II and III of Schedule VI of the Companies Act and not otherwise. 22.14. It is of utmost importance to note that the Legislature reintroduced the MAT provisions vide Finance Bill, 1996: 220 ITR (St.) 107 and the Hon'ble Finance Minister while introducing this provision, inter-alia, stated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , made to the following decisions:- - Kerala State Electricity Board v. DCIT: ITA Nos. 1703/1710 and 1716 of 2009 (Ker) = 2010-TIOL-827-HC- KERALA -IT - Maharashtra State Electricity Board v. JCIT: 82 ITD 422 (Mum.) = 2003-TIOL-87-ITAT-MUM - Reliance Energy Ltd. vs. ACIT: ITA No. 218/Mum/2005 (Mum.) - Krung Thai Bank PCL v. JDIT: 133 TTJ 435 (Mum.) 22.18 Accordingly, the provisions of section 115JB of the Act were, during the relevant year, not applicable to the appellant, contended the Learned AR. 22.19 The Learned AR submitted that the aforesaid contention of the appellant, is fortified by substantive amendments in section 115JB of the Act made by the Finance Act, 2012, with effect from April 1, 2013, which are discussed hereunder: 22.20 The scope of the deeming provisions of section 115JB of the Act was widened w.e.f. 01.04.2013, by including within the ambit of the said section, companies to which proviso to sub-section (2) of section 211 of Companies Act applied. The Learned AR referred subsection (2) to section 115JB of the Act as substituted by the Finance Act, 2012 w.e.f. 01.04.2013. 22.21 Thus, vide Finance Act, 2012 the scope of section 115JB of the Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 April, 2013 and will, accordingly, apply in relation to the assessment year 2013-14 and subsequent assessment years. [Clause 46]" (emphasis supplied) 22.24 On perusal of the aforesaid, it will kindly be appreciated that the Legislature recognized that "as per the provisions of the Companies Act, 1956, certain companies, e.g. insurance, banking or Electricity Company, are allowed to prepare their profit and loss account in accordance with the provisions specified in their regulatory Acts". In these circumstances, since the provisions of section 115JB of the Act were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in the case of Bank of Tokyo Mitsubishi UFJ Ltd. vs. ADIT: ITA No.5364 of 2010 wherein the Tribunal was adjudicating the issue regarding applicability of provisions of section 115JB to a foreign bank which was subject to tax in India on income earned by the branch in India (PE)and preparing its accounts as per requirements of Banking Regulation Act. The Tribunal while following the principles laid down by the Supreme Court in Vatika Township (supra) observed that the amendment to section 115JB of the Act by the Finance Act, 2012 was prospective since the same resulted in substantial change in computation provisions. 22.30 To the same effect are the following decisions, wherein amendment to sub-section (2) of section 115JB of the Act vide Finance Act 2012 has been held to be prospective: - State Bank of Hyderabad v. DCIT: ITA No. 578/Hyd./2010 (Hyd.) - ICICI Lombart General Insurance Co. Ltd. V. ACIT: 54 SOT 538 (Mum.) 22.31 Applying the aforesaid legal principles, the Finance Act, 2012, in no uncertain terms, clearly provides that the provision of section 115JB(2) and Explanation 3 to said sub-section shall come in force with effect from April 1, 2013 and will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able facts are not applicable in the case of the assessee. He pointed out that the assessee itself had declared income under the deeming provisions of sec. 115JB of the Act, thus, the assessee has no grievance in this regard and the issue raised in the additional ground may be decided in favour of the Revenue. 24. We find that in support of the issue that deeming provisions of sec. 115JB of the Act were not applicable in the case of the assessee during the assessment year under consideration, the Learned AR has cited provisions of different laws and has placed reliance on several decisions. We thus prefer to examine provisions of different laws on the issue first. It was claimed that books of account of the assessee are drawn in accordance with the statutory provisions as applied to an electricity company, i.e. the Repealed Electricity (Supply) Act, 1948 and the Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 and provisions of the Companies Act, 1956 to the extent the same are not inconsistent with the Electricity Act/DERC Regulation. It was submitted in other words that in case of any variation/conflict in the aforesaid provisions, the assessee is bound to mandator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istent with the provisions of such special Act; (e) to such body corporate, incorporated by any Act for the time being in force, as the Central Government may, by notification in the Official Gazette, specify in this behalf, subject to such exceptions, modifications or adaptations, as may be specified in the notification.] Application of Act to Government Companies" Further, Section 1(4) of the Companies Act, 2013 reads as under: "1. Short title, extent, commencement and application (1) This Act may be called the Companies Act, 2013. .......................... (4) The provisions of this Act shall apply to- (a) companies incorporated under this Act or under any previous company law; (b) insurance companies, except in so far as the said provisions are inconsistent with the provisions of the Insurance Act, 1938 or the Insurance Regulatory and Development Authority Act, 1999; (c) banking companies, except in so far as the said provisions are inconsistent with the provisions of the Banking Regulation Act, 1949; (d) companies engaged in the generation or supply of electricity, except in so far as the said provisions are inconsistent with the provisions of the Electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not strictly as per the provisions of the Companies Act. It is also an established position of law that provisions of a specific Act would override the provisions of all other Acts, which is supported by the decisions relied upon by the assessee including the decision so Hon'ble Supreme Court in the case of TRO vs. Custodian - Special Court at - 934 (supra). Thus, it can be safely arrived at a conclusion that the assessee prepares its annual account in accordance with the applicable laws including provisions of the Delhi Electricity Reforms (Transfer Scheme), Rule 2001 and is not required to and has not been strictly preparing its audited annual account as per Parts II and III of Schedule-6 of the Companies Act, 1956. 24.6 Further contention of the Learned AR remained that prior to the amendment to sub-section (2) of sec. 115JB of the Income-tax Act, 1961, the deeming provisions of the said section were not applicable to Companies to which proviso to sub-section (2) of sec. 211 of the Companies Act were abolished. To examine this contention, we have gone through the provisions of sec. 115JB of the Income-tax Act, 1961, as applicable to the relevant year under consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by the Learned AR in the cases of Kerala State Electricity Board, vs. DCIT (supra), Maharashtra State Electricity Board vs. JCIT (supra), Reliance Energy Ltd. vs. ACIT (supra) and Crung Thai Bank PCL vs. JDIT (supra) also support the contention of the assessee that provisions of sec. 115JB of the Act shall not apply to Companies referred in proviso to sub-sections (1) and (2) of sec. 211 of the Companies Act, i.e. companies covered by Special Acts viz. Banking Regulation Act, 1949, Electricity Act, 2003, Insurance Regulatory Act, 1999 etc. We accordingly hold that provisions of sec. 115JB of the Act were not applicable to the assessee during the year under consideration as the same is also fortified by substantive amendments in section 115JB of the Act by the Finance Act, 2012 w.e.f. 01.04.2013. Sub-section (2) to section 115JB of the Act as substituted by the Finance Act, 2012 w.e.f. 01.04.2013 reads as under: "Special provision for payment of tax by certain companies 115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR (St.) 288 whereby sub-section (2) of sec. 115JB was substituted provides that the amendment is applicable w.e.f. 01.0.2013 i.e. for the assessment year 2013-14 onwards. The relevant extracts of the memorandum has been reproduced hereinabove in the submissions of the Learned AR. From the aforesaid amendments, it is clear that prior to amendment applicable from the assessment year 2013-14, provisions of sec. 115JB of the Act were not applicable to an electricity company such as the assessee up to the assessment year 2012-13. 24.9 The Explanation-3 to section 115JB of the Act which provides an option to prepare its accounts as per Schedule-VI of the Companies Act or the governing law/special Act in respect of assessment year prior to 2013- 14, has also been inserted as per the substantive amendments applicable from assessment year 2013-14 and onwards. The amendments to section 115JB of the Act made by Finance Act, 2012 are substantive in nature resulting in fresh liability to tax and would, therefore, apply only prospectively. The same cannot unless specifically mandated by the statute, be applied from retrospective effect. In this regard, we find support from the ratios laid dow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. ............................. .......................................... Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. 35. Let us sharpen the discussion a little more. We may note that under certain circumstances, a particular amendment can be treated as clarificatory or declaratory in nature. Such statutory provisions are labeled as "declaratory statutes". The circumstances under which a provision can be termed as "declaratory statutes" is explained by Justice G.P. Singh7 in the following manner: "Declaratory statutes: The presumption against retrospective operation is not applicable to declaratory statutes. As stated in CRAIES and ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-existing legislation which was ambiguous or defective. The power of the High Court to entertain a petition for exercising revisional juris-diction was before the amendment derived from s. 115, Code of Civil Procedure, and the legislature has by the amending Act attempted to explain the meaning of that provision. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act." 36. It would also be pertinent to mention that assessment creates a vested right and an assessee cannot be subjected to reassessment unless a provision to that effect inserted by amendment is either expressly or by necessary implication retrospective. (See Controller of Estate Duty Gujarat-I v. M.A. Merchant 1989 Supp (1) SCC 499. We would also like to reproduce hereunder the following observations made by this Court in the case of Govinddas v. Incometax Officer (1976) 1 SCC 906, while holding Section 171 (6) of the Income- Tax Act to be prospective and inapplicable for any assessment year prior to 1st April, 1962, the date on which the Income Tax Act came into force: "11. Now it is a well settled rule of interpretation hallowed by time a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Branch in India (P.E) and preparing its accounts as per requirements of Banking Regulation Act. The relevant finding in that case are being reproduced hereunder: "74..........In our opinion this explanation cannot be held to be retrospective in operation because it has brought in a substantial change in the computation provision. Till the insertion of this amendment, various decisions clearly held that in case of Banking Companies, Electricity Companies and Insurance Companies, since they were governed by Special Acts and the profit and loss account was not prepared as per part II of schedule VI to the Companies Act, therefore, the computation provisions failed. Accordingly, in view of the decision of Supreme Court in the case of B.C. Srinivasa Setty (supra), the law till the insertion of this explanation was that the provisions of section 115JB were not applicable on account of impossibility of computation as the accounts were not prepared in accordance with part II, schedule VI to the Companies Act. Now by incorporating Explanation 3, the Companies governed by Special Acts which come within the ambit of company u/s 2(17) are covered by the provisions of section 115JB. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bangalore Bench of the ITAT in the case of Syndicate Bank vs. DCIT (supra) has decided the issue in favour of the assessee, a banking company. Relevant para Nos. 98 & 99 thereof are being reproduced hereunder: "98. We have considered the rival submissions of the learned counsel for the assessee. We find that this issue was considered by the Mumbai Bench of the Tribunal in the case of Krung Thai Bank PCL (supra) and on the above issue held as follows: "5. Learned counsel for the assessee, however, contends that the provisions of MAT do not apply to the assessee, and, for this reason, very foundation of impugned reassessment proceedings is devoid of legally sustainable merits. His line of reasoning is this. The provisions of MAT can come into play only when the assessee prepares its profit and loss account in accordance with Schedule VI to the Companies Act. It is pointed out that, in terms of the provisions of sec. 115JB(2), every assessee is required to prepare its profit and loss account in terms of the provisions of Part II and III of Schedule VI to the Companies Act. Unless the profit and loss is so prepared, the provisions of Sec. 115JB cannot come into play at all. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and enterprises engaged in developing, maintaining and operating infra-structure facility as a matter of policy, are not brought within the purview of the amendment (115JA) for the reason that such a policy would promote the infra-structural development of the country and that such an understanding of the CBDT is binding on the department, has also been pleased to arrive at a conclusion, relevant paragraphs thereof are being reproduced hereunder: "11. Before we examine the first question a brief survey of the history of section 115JB is necessary. Chapter XII-B was inserted by the Finance Act of 1987 in the Income-tax Act. Section 115J was introduced for the first time by the said Chapter. The relevant portion of the said section reads as follows: "Section 115J. Special provisions relating to certain companies.-(1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee being a company (other than a company engaged in the business of generation or distribution of electricity), the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Explanation, the details of which are not necessary for the purpose of this case. However, the operation of section 115J came to an end with 1991- 92 assessment year onwards. 12. Subsequently, section 115JA came to be inserted in the Income-tax Act by Finance Act 2 of 1996, with effect from 1-4-1997. The scheme of section 115JA is almost similar to the scheme of section 115J. Two major points of difference are that the new section is applicable with reference to the previous year relevant to the assessment year commencing from 1-4-1997 and ending with 1-4-2001. Secondly, the express exclusion of the Companies engaged in the business of either generation or distribution of electricity is absent under section 115JA. The third and most important change is that two provisos are added to sub-section (2) stipulating that : "Provided that while preparing profit and loss account, the depreciation shall be calculated on the same method and rates which have been adopted for calculating the depreciation for the purpose of preparing the profit and loss account laid before the company at its annual general meeting in accordance with the provisions of section 210 of the Companies Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paring such accounts including profit and loss account; (iii)the method and rates adopted for calculating the depreciation, shall correspond to the accounting policies, accounting standards and the method and rates for calculating the depreciation which have been adopted for preparing such accounts including profit and loss account for such financial year or part of such financial year failing within the relevant previous year". The scheme of the section 115JB is similar to section 115J and section 115JA. The difference insofar as it is relevant for the present purpose between section 115JB and its fore-runners (Sections 115J and 115 JA) is as follows: All the 3 sections (Ss.115J, 115JA and 115JB) create legal fictions regarding the 'total income' (a defined expression under section 2(45) of the Act) of the Companies. While the earlier two sections mandate the department to make the assessment on a fictitious amount of 'total income' where the actual amount of total income computed in accordance with the Income-tax Act is less than 30 per cent of the book profits of the Company, section 115JB mandates the department to resort to the fiction in those cases wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised by the Comptroller and Auditor-General of India. The accounts so prepared along with the audit report is required to be laid annually before the State Legislature and also to be published in the prescribed manner and copies of such publication shall be made available for sale at a reasonable price, obviously for the benefit of the general public who wish to scrutinise the accounts. 16. Thus, it can be seen that coming to the maintenance of the accounts, the appellant though is deemed to be a "Company" - both by virtue of operation of section 80 of the Income-tax Act for the purpose of Income-tax Act and by virtue of the definition of the expression "Company" under the Income-tax Act (which is already examined earlier) - the appellant is required to keep and maintain its accounts in a manner specified by the Central Government, but not in the manner specified in the Companies Act. Therefore, the question is whether the legal fiction contemplated under section 115JB can be pressed into service while making the assessment of Income-tax payable by the appellant. 17. It must be remembered that section 115JB creates a legal fiction regarding the total income of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atute at some point of time by a subsequent amendment would indicate that the legislature intended not to give the benefit of such clause any more to those who were getting the benefit of such exclusion clause, in our opinion, it is not an absolute rule. The other attendant circumstances, the context, the history and the mischief sought to be remedied by the amendment are all required to be examined before reaching at definite conclusion. 19. The Circular No. 762 not only is binding on the respondents, but also explains the purpose in introducing section 115JA. The relevant portion reads as follows:- "46.1 In recent times, the number of zero-tax companies and companies paying marginal tax has grown. Studies have shown that in spite of the fact that companies have earned substantial book profits and have paid handsome dividends, no tax has been paid by them to the exchequer. 46.2 The Finance Act has inserted a new section 115JA of the Income tax Act, so as to levy a minimum tax on companies who are having book profits and paying dividends but are not paying any taxes. The scheme envisages the payment of a minimum tax by deeming 30 per cent of the book profits computed under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining and operating infrastructure facilities, as a matter of policy, are not brought within the purview of the amendment (Section 115JA) for the reason that such a policy would promote the infrastructural development of the country. Such an understanding of the CBDT is binding on the department. 20. If that is the background in which section 115JA is introduced into the Income-tax Act, section 115JB, which is substantially similar to section 115JA, in our opinion, cannot have a different purpose and need not be interpreted in a manner different from the understanding of the CBDT of section 115JA." 24.8 Under the above facts and circumstances, we thus hold that even though the assessee, under a misconception of law, had declared income under the deeming provisions of sec. 115JB of the Act, still the Assessing Officer was under its duty bound to make correct assessment of income of the assessee in accordance with the provisions of the Act. As per above discussion and the ratios laid down in the cited decisions, we hold that the provisions of sec. 115JB of the Act were not at all applicable to companies governed by special Acts which also includes power companies, in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts of the Board are required to be audited by the Comptroller and Auditor-General of India or such other person duly authorised by the Comptroller and Auditor-General of India. The accounts so prepared along with the audit report are required to be laid annually before the State Legislature and also to be published in the prescribed manner. At the earliest point of time when section 115J was introduced, the section expressly excluded from its operation bodies like the Electricity Board. Though such express exclusion is absent in section 115JA, the Central Board of Direct Taxes issued Circular No. 762 dated February 18, 1998 excluding bodies like the Electricity Board from the operation of the section. Circular No. 762 not only is binding on the Department, but also explains the purpose in introducing section 115JA which was to tax zero-tax companies. The CBDT understood that companies engaged in the business of generation and distribution of electricity and enterprises engaged in developing, maintaining and operating infrastructure facilities, as a matter of policy, are not brought within the purview of section 115JA for the reason that such a policy would promote the infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X
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