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TMI Blog2021 (11) TMI 1103X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of prior period expenses - HELD THAT:- It is undisputed position that the issue is covered against the department by the judgment of this Court and against which the Revenue had abandoned the appeals before the Supreme Court. In that view of the matter, this question is not entertained without recording independent reasons. Applicability of Section 115JB to the assessee Electricity Company - HELD THAT:- We notice that other High Courts have under similar circumstances come to the conclusion that the said provisions prior to its amendment in the year 2012, would not cover the electricity company. The Kerela High Court in case of Kerela State Electricity Board [ 2010 (11) TMI 127 - KERALA HIGH COURT] had taken such a view in similar circumstances. Thus question No.3 is also not entertained. - D.B. Income Tax Appeal No. 158/2019, 159/2019, 160/2019, 161/2019, 163/2019, 164/2019, 165/2019, 166/2019 - - - Dated:- 17-11-2021 - Hon'ble The Chief Justice Mr. Akil Kureshi And Hon'ble Ms. Justice Rekha Borana For the Appellant(s) : Mr. Nikhil Simlote on behalf of Mr. R.B. Mathur For the Respondent(s) : Mr. Gunjan Pathak with Mr. Aditya Bohra And Ms. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed assets valued at Rs.115.21 crores received through transfer upon financial restructuring plan. It was pointed out that even the statutory auditor for the Financial Year 2002-03 (Assessment Year 2003-04) of the company in the statutory audit report filed along with return of income tax had specified that the fixed assets of Rs.115.21 crores transferred through FDR was physically not available at the Head office station. It was contended that only on such basis the depreciation could not have been disallowed. It was pointed out that the assessee is a Government owned company and the existence of the assets cannot be doubted. The Tribunal while accepting the contentions of the assessee noted that at the time of conversion of the Rajasthan State Electricity Board into five distribution companies including the assessee, some of its fixed assets had been vested in the assessee company. The written down value of the assets was reflected in the block of assets and corresponding shares were issued by the company and the assets of Rs.115.21 crores were transferred through the financial restructure plan. Thus these assets were acquired by the assessee in the process of division and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of determining the book profits for the purpose of payment of dividends. Therefore, the amendment was made to plug the loophole in the law. However, 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 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. 22. Another reason is that the appellant or bodies similar to the appellant, which are totally owned by the Government - either State or Central - have no share holders. Profit, if at all, made by the appellant would be for the benefit of entire body politic of the State of Kera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its accounts in accordance with the provisions of Parts II and III of Schedule VI of the Companies Act, 1956. The accounts of the banking company are prepared as per the provisions contained in Banking Regulation Act, 1949. The counsel for the revenue may still argue that irrespective of such requirements, for the purposes of the said Act and special requirements of Section 115JB of the Act, a banking company is obliged to prepare its profit and loss account as per the provisions of the Companies Act, as mandated by sub-section (2) of Section 115JB of the Act. His contention would be that such legislative mandate is not impermissible. 10. At the first blush, this argument seems attractive. However, when we read sub-section (2) further, certain complications arise in this line of argument. The first proviso to sub-section (2) of Section 115JB provides that while preparing annual accounts including profit and loss account the accounting policies and accounting standards adopted for preparing the account and the method and rules adopted in calculating the depreciation shall be the same as have been adopted for the purpose of preparing such accounts and laid before the company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charging a partnership firm for transfer of a capital asset in the nature of goodwill. The Supreme Court was of the opinion that it would not be possible to envisage a cost of acquisition of goodwill. Since computation of capital gain cannot be done without ascertaining the cost of acquisition, it was held that no capital gain tax can be levied. 12. For the completeness of the discussion, we may note that section 211 of the Companies Act, 1956 pertains to form of contents of balance-sheet and profit and loss account, sub-section (1) of Section 211 provided that every balance sheet of a company shall give true and fair view on the state of affairs of the company at the end of the financial year and would be subject to the provisions of the said section and be in the form set out in the Forms 1 and 2 of schedule VI. This sub-section contained a proviso providing that nothing contained in said sub-section would apply to a banking company or any company engaged in generation or supply of electricity or to any other class of company for which a form of balance sheet shall be specified in or under the Act governing such company. Thus, Companies Act, 1956 excluded the insurance or ban ..... X X X X Extracts X X X X X X X X Extracts X X X X
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