Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: Shri J. Sudhakar Reddy & Shri Aby T. Varkey]
order
: February 19th, 2020 ORDER
Per J. Sudhakar Reddy, AM:
This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-XXIV, Kolkata [‘CIT(A)’ for short] dated 28.12.2012 u/s 250 of the Income Tax Act, 1961 (‘the Act’ for short) for AY 2000-01.
The assessee is a public sector undertaking. The appellant raised the following grounds of appeal:
“1. The orders passed by the lower authorities are arbitrary, erroneous, without proper reasoning, invalid and bad in law.
2. On the facts and in the circumstances of the case, the learned CIT(A) erred in holding that since the appellant company is a construction company, the provisions of the Sick Industrial Companies Act, 1985, are not applicable to it and hence, the appellant company cannot be treated as a sick industrial company u/s 17(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
3. The learned CIT(A) took too narrow a view of the relevant legal provisions without appreciating the scheme of the things and the purpose of legislation.
4. The learned CIT(A) failed to appreciate that the appellant company comes under the purview of the BRPSE (Board for Reconstruction of Public Sector Enterprises), which is similar and pari materia to the BIFR and therefore, should be eligible for all the benefits under the Sick Industrial Companies (Special Provisions) Act,1985, available to companies under BIFR.
5. On the facts and in the circumstances of the case, the learned CIT(A) erred in holding that appellant company is not eligible for any reduction from its book profit under clause (vii) of the Explanation to Section 115JA(2) of the Income-tax Act, 1961, and in that view, in confirming the order of the A.O. determining the book profit at ₹7,59,91,000/- u/s 115JA of the Act.
Assessment Year: 2000-01 M/s. The Braithwaite Burn & Jessop Construction Company Ltd.
6. The appellant craves leave to amend, alter, modify, substitute, add to, abridge and/ or rescind any or all of the above grounds.”
Facts in brief. The assessee is a public sector undertaking. The company was taken over by the Indian Government on 13.08.1987. The company was originally incorporated on 26.01.1935 under the then Indian Companies Act, 1913. It is engaged in the construction mainly of railway bridges etc. During the Financial Year 1999-2000 i.e. AY 2000-01, its net profit as per books amounted to ₹999.90 lakhs which included an amount of ₹1,358.57 lakhs of waiving interest on Government loans received by the assessee through another public sector undertaking M/s. Burns Standard Company Ltd. M/s. Bharat Bhari Uduog Nigam Limited is the holding company of the assessee company. The assessee company had negative net assets and as it was a sick industrial company, under the Government guidelines it was referred to the Board of Reconstruction of Public Sector Enterprises (BRPSE) for its revival through financial reconstructuring.
During the course of assessment for the AY 2000-01, the AO passed an order imposing Minimum Alternative Tax (hereinafter ‘MAT’) on book profits u/s 115JA of the Act by the order dated 25.01.2006. The issue before us, is whether Clause (vii) under Explanation to Section 115JA of the Act would apply to the assessee or not.
Mr. Pratyush Jhunjhunwala, ld. Counsel for the assessee submits that BRPSE is a parallel body performing the same functions as that of BIFR and constituted with the same objects and for the same purposes of reviving sick industrial companies by the Government of India and hence Clause (vii) to Explanation to Section 115JA applies though BRPSE is not BIFR provided under Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) (hereinafter called SICA). The Revenue authorities were of the view that the assessee company was not covered under SICA as it has not produced the requisite certificate from BIFR and hence the benefit of Clause (vii) to Explanation to Section 115JA of the Act cannot be extended.
The ld. DR relies on the language of Clause (vii) to Explanation to Section 115JA of the Act. He submits that the Tribunal cannot supply casus ominous to the language of the Act and for this proposition he relied on the following decisions relied in 246 ITR 1 SC.
Assessment Year: 2000-01 M/s. The Braithwaite Burn & Jessop Construction Company Ltd.
We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows.
Clause (vii) to Explanation to Section 115JA reads as follows: “For the purposes of this clause, "net worth" shall have the meaning assigned to it in clause (ga) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986)”
A plain reading of this Clause demonstrates that it can be applied only when a company becomes a sick industrial company under sub-Section 1 of Section 17 of the Sick Industrial Companies (Special Provision) Act, 1985. This is not the case with the assessee company. The argument of the ld. Counsel for assessee that as parallel provisions made for public sector undertakings same benefit as available to non-public sector undertakings should be extended to public sector undertakings, cannot be accepted. The Tribunal has no power to extend such benefit. Thus we uphold the order of the ld. first appellate authority and dismiss this appeal of the assessee.
In the result, the appeal of the assessee is dismissed. Kolkata, the 19th February, 2020.