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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
These appeals filed by the Revenue and assessee are arising out of the orders of Commissioner of Income Tax (Appeals)-4, Mumbai [in short CIT(A)], Appeal No. CIT(A)-4/IT-98/DCIT-2(1)(1)/2016-17 & CIT(A)-4/IT- 54/DC 2(1)/2014-15 vide order dated 27.11.2017 & 17.11.2017. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle 2(1)(1), Mumbai (in short ‘DCIT/ ITO / AO’) for the A.Y. 2003-04 vide order dated 18.03.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’). For AY 2008-09 the AO passed order giving effect to the CIT(A)’s order dated 28.03.2014 under section 250 of the Act.
The first common issue in these appeals is as regards to the application of the provisions of section 115JB of the Act while computing the tax liability of the assessee bank. For this assessee has raised the following ground No. 1: -
1. On the facts and in the circumstances of the case and in law, the learned Deputy Commissioner of Income-tax - 2(1) [herein after referred to as "DCIT"] has erred in applying the provisions of Section 115JB of the Income-tax Act, 1961 while computing the tax liability of the Appellant Bank. The Appellant Bank prays that the learned EXIT be directed to not apply the provisions of Section 115JB of the Income-tax Act, 1961 and compute the total income and tax provisions of the Income-tax Act, 1961 only.”
The Revenue has raised the following three grounds: - “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that the provisions of section 115JB of the Income Tax Act, 1961 are not applicable to the assessee to whom proviso to sub-section (2) of section 211 of the Companies Act, 1956, applies i.e. companies which are not required to prepare its profit & loss account in accordance with Part II & Ill of Schedule VI of the Companies Act, 1956 without appreciating that under section 115JB(2) of the Income Tax Act, 1961, every company is mandatorily required to prepare profit & loss account in accordance with the provisions of Part II & III of Schedule VI of the Companies Act, 1956, for Income Tax purposes.
2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in holding that the amendment to section 1 15JB of the Income Tax Act, 1961, to bring all the companies (including companies to whom proviso to sub section (2) of section 211 of the Companies Act, 1956, applies) is not applicable in the assessment year under consideration effect.
3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in holding that the AO did not invoked the provisions of 115JB during assessment order passed u/s 143(3) while the tax liability of the assessee always raised under normal provisions of the IT Act.”
We have head rival contentions and gone through the facts and circumstances of the case. We find that for the relevant assessment year 2003-04 & 2008-09, the issue is squarely covered by Tribunal’s decision in assessee’s own case in & 2908/Mum/2017 for AY 2007- 08 & 2009-10 vide order dated 22.11.2018, wherein Tribunal has considered this issue and held that the provisions of section 115JB of the Act shall not be applicable to the assessee bank for the impugned assessment years. The tribunal recorded the reasons vide para 6 as under: - “6. We have considered rival contentions and perused material on record including cited case laws. This issue is a recurring issue in assessee‟s own case and the tribunal was pleased to decide this issue of non-applicability of minimum alternative tax(popularly called as „MAT‟) on book profits u/s 115JB of the 1961 Act in the case of banks in favour of the tribunal in assessee‟s own case in ITA no. 1498/Mum/2011 , vide orders dated 09.04.2014 for AY 2001-02 and orders passed by tribunal in ITA no. 3002/Mum/2014 for AY 2005-06, vide orders dated 03.08.2016. While deciding appeal for AY 2001-02 , the tribunal has also considered the amendment brought in the Section 115JB of the 1961 Act by Finance Act,2012 w.e.f. 01.04.2013 which was held to be not applicable to the assessment year under consideration before the tribunal viz. AY 2001- 02 in ITA no. 1498/Mum/2011. The impugned assessment year before us is AY 2007-08 which is also prior to amendment in Section 115JB by Finance Act, 2012 w.e.f. 01.04.2013. Similar view was taken by the tribunal for AY 2005-06 in ITA no. 3002/Mum/2014 in favour of the assessee vide orders dated 03.08.2016 in assessee‟s own case , wherein tribunal followed its own decision for AY 2006-07. Similar view as to non applicability of minimum alternate tax(MAT) on book profits computed u/s 115JB of the 1961 Act was taken by Kolkatta-tribunal in ITA No. 1768/Kol/2009 for AY 2002-03 in UCO Bank v. DCIT , vide orders dated 27.11.2015, wherein the Kolkatta tribunal concluded that amendment brought in by Finance Act,2012 in Section 115JB read with Explanation 3 thereon from AY 2013-14 onwards in line with Notes to Clauses of Finance Act, 2012. One of us namely Hon’ble Judicial Member was part of the Division Bench who passed the appellate order in the case of UCO Bank(supra).
We have also observed that Hon‟ble Delhi High Court in the case of CIT(LTU) v. Oriental Insurance Company Limited in of 2015 vide orders dated 30.08.2015, held as under:
“Applicability of Section 115JB to insurance companies
Turning now to the question concerns the applicability of Section 115JB of the Act to insurance companies. The ITAT has permitted the Assessee to raise this question since, in a large number of judgments of the ITAT, the question has been answered in favour of the Assessee.
It is plain, from a reading of Section 44 read with the First Schedule of the Act, that insurance companies are required to prepare accounts as per the IA and the regulations of the IRDA and not as per Parts II and III of Schedule VI of the Companies Act. The Assessee prepares its accounts as per the IRDA principles. The IRDA Regulations govern the preparation of the auditor’s report.
Consequently, the question framed in is answered in the affirmative, i.e. in favour of the Assessee and against the Revenue by holding that Section115JB of the Act does not apply to insurance companies.
We are reproducing the order of the tribunal for AY 2005-06 in assessee‟s own case in , as under:
“2. This appeal has been preferred by the assessee before the Ld CIT(A) against the order passed by the AO to give effect to the order passed by the first appellate authority. After giving effect, the total income became a negative figure and hence the AO assessed the total income by adopting book profit computed u/s 115JB of the Act. The Ld CIT(A) confirmed the same by following his order passed in the first round of proceedings. Aggrieved, the assessee has challenged the order passed by Ld CIT(A) on this issue. 3.The Ld. A.R submitted that this issue has been decided in favour of the assessee in AY 2006-07, wherein the Tribunal has followed the decision rendered in the assessee’s own case in relating to AY 2001-02. Accordingly, he prayed that this issue may be decided in accordance with the decision taken by the co-ordinate benches.
4. We heard Ld. D.R and perused the record. Consistent with the view taken in AY 2006-07, we set aside the order passed by Ld. CIT(A) on this issue and hold that the provisions of sec. 115JB shall not be applicable for both the years under consideration.”
Respectfully following the aforesaid decision of Mumbai-tribunal for AY 2005-06 in assessee’s own case which followed the decision of Mumbai-tribunal for AY 2006-07 in assessee’s own case, we hold that provisions of Section 115JB shall not be applicable to the assessee bank for the impugned assessment year under consideration viz. AY 2007-08. The ground no. 1 and 2 are decided in favour of the assessee. The appeal of the Revenue on these ground no. 1 and 2 stood dismissed. We order accordingly.”
Respectfully following the same, we confirm the orders of CIT(A) and dismiss this issue of Revenue’s appeal. Consequently, the assessee’s issue has also been allowed.
The next issue in this appeal of assessee is against the order of CIT(A) in not granting interest under section 244A of the Act on interest portion of refund due. For this assessee has raised the following ground No. 2: -
2. On the facts and in the circumstances of the case and in law, the learned DCIT has erred in non- granting of interest u/s. 244A of the Income-tax Act, 1961 on interest portion of refund due and the Hon'ble CIT(A) has erred in confirming the same. The learned DCII be directed to grant interest u/s. 244A of the Income-tax Act, 1961 on interest portion of refund due and enhance the refund accordingly.”
We have heard rival contentions and gone through the facts and circumstances of the case. We find that this issue is also covered by Tribunal’s decision in assessee’s own case in & 2908/Mum/2017 for AY 2007-08 & 2009-10 vide order dated 22.11.2018, wherein the issue is decided vide Para 7 as under: - “7. The next ground number 3 and 4 raised by Revenue in its appeal for AY 2007-08 relates to computation of grant of interest u/s 244A of the 1961 Act payable to the assessee, on refund passed u/s 154 of the 1961 Act. The identical issue is also recurring issue in assessee’s own case wherein tribunal has restored the issue back to the AO with certain directions. The tribunal order in assessee’s own case for AY 2005-06 in ITA no. 3002/Mum/2014, vide orders dated 03.08.2016 is reproduced hereunder:
“5. The next issue contested by the assessee relates to the granting of interest u/s 244A of the Act. The Ld A.R submitted that the assessee has been receiving refunds upon passing of orders by the appellate authorities or upon passing of orders u/s 154 of the Act. The Ld A.R submitted that the AO has made adjustment of refund (consisting of tax and interest) already granted against the refund of tax due in each of the successive orders. The Ld A.R submitted that the entire amount of refund (both tax and interest) granted should be first adjusted against the interest portion that has become due and then the remaining amount, if any, should be adjusted against the tax portion of the refund that has become due. In support of his contentions, the Ld A.R placed reliance on the decision rendered by the Tribunal in the assessee’s own case in to 5446/Mum/2013 dated 22.12.2014 and also the decision rendered by the Tribunal in the case of Union Bank of India (ITA No.571 & 574/Mum/2013 dated 23.6.2014).
6. We heard the parties on this issue. Since it is matter involving computation of eligible amount of interest u/s 244A of the Act, we are of the view that this issue requires fresh examination at the end of the AO. In the decisions relied upon by the assessee, the Tribunal has followed the decision rendered by Hon’ble Delhi High Court in the case of India Trade Promotion Organisation Vs. CIT (361 ITR 646) and accordingly given direction to the AO to follow the said decision. Consisted with the view taken by the Tribunal, we restore this issue to his file with the direction to examine this issue afresh by following the decision rendered in the case of India Trade Promotion organization (supra).