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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
PER SAKTIJIT DEY, J.M.
Instant appeals by the Revenue are directed against two separate orders by the learned Commissioner (Appeals)–10, for the assessment year 1999–2000 and 2000–01. The common ground raised by the Revenue in both the appeals, is as under:–
“Whether On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) was correct in holding that section 115JB OF THE Act is not applicable to the assessee being banking company?
As could be seen from the ground raised, the only issue arising for consideration is, whether or not the provisions of section 115JB of the Income Tax Act, 1961 (for short "the Act") of the Act are applicable to a banking company.
Brief facts, which are more or less common for both the assessment years under appeal, except the figures are, the assessee a non–resident company is engaged in the business of banking. During the assessment proceedings, the Assessing Officer noticing that assessee had computed its profit in terms with the provisions of double taxation avoidance treaty between India and Germany and not in accordance with the provisions of the Income Tax Act, 1961, called upon the assessee to explain why sections 2(45) and 115JA of the Act
3 Dresdner Bank AG shall not be applicable. In response to the query raised by the Assessing Officer, though, the assessee submitted that provisions of section 115JA would not be applicable to a banking company, however, the Assessing Officer rejected the contention of the assessee and proceeded to compute profit under section 115JA in respect of both the assessment years. Being aggrieved of the assessment order so passed, assessee preferred appeal before the learned Commissioner (Appeals).
As it appears, the learned Commissioner (Appeals) having found that the profits under normal provision is more than the book profit under section 115JA, did not decide the issue relating to applicability of section 115JA to a banking company. Being aggrieved of the aforesaid order of the learned Commissioner (Appeals), assessee preferred appeals before the Tribunal. The Tribunal, set aside the orders of the learned Commissioner (Appeals) with a direction to decide the issue relating to applicability of the provisions of section 115JA to the assessee. In the proceeding taken up by the learned Commissioner (Appeals) in pursuance to the directions of the Tribunal, the assessee made elaborated submissions contending that provisions of section 115JA of the Act, would not be applicable to a banking company as they are not required to prepare their accounts as per Companies Act, 1956. In support of such contention, assessee relied
4 Dresdner Bank AG upon a decision of the Tribunal, Mumbai, in Krung Thai Bank PLC, [2012] 49 SOT 70 (Mum.). The learned Commissioner (Appeals) after considering the submissions of the assessee in the light of the decisions relied upon held that the provisions of section 115JA will not apply to a banking company like assessee. Thus, he decided the issue in favour of the assessee in both the assessment years. Being aggrieved, the Department is in appeal before us.
We have considered the submissions of the parties and perused the material available on record. Learned Counsels appearing for both the parties agreed before us that the issue is squarely covered by a number of decisions of different Benches of the Tribunal. The issue before us is, whether the provisions of section 115JA are applicable to a banking company. The Tribunal, Mumbai Bench, in Krung Thai Bank PLC (supra), while deciding the applicability of provisions of section 115JB, had held that the said provisions could only come into play when the assessee is required to prepare its Profit & Loss account in accordance with the provisions of Part–II and III of Schedule–VI to Companies Act, 1956. The Bench held that the starting point of computation of MAT under section 115JB is the result shown in the Profit & Loss account. The Bench observed, in case of a banking company, the provisions of Schedule–VI of Companies Act, 1956, are not applicable in view of exemption set out under proviso to section 5 Dresdner Bank AG 211(2) of Companies Act. The Bench observed, the final account of the banking companies are required to be prepared in accordance with the provisions of Banking Resolution Act. It was, therefore, held that the provisions of section 115JB will not be applicable to a banking company. Similar view was expressed in number of other decisions of the Tribunal as well. A few of them are referred to herein below:–
i) Indian Bank v/s ACIT, ITA no.469/Mds./2010, dated 3.8.2011; ii) State Bank of Hyderabad v/s DCIT, ITA no.578/Hyd./ 2010 dated 7.9.2012; iii) UCO Bank v/s DCIT, 64 Taxmann.com 51; and iv) Bank of Tokyo Mitsubishi UFJ Ltd. v/s ADIT, ITA no.5364/Del./2010 dated 19.9.2014.
In fact, in assessee’s own case, the Tribunal, while considering the issue of imposition of penalty under section 271(1)(c) in ITA no.2387/Mum./2014, dated 25th January 2012, for assessment year 2007–08, deleted the penalty while observing that the provisions of section 115JB will not apply to the assessee. In view of the proposition laid down in the decisions of the Tribunal referred to above, we do not see any reason to interfere with the order of the learned Commissioner (Appeals). Accordingly, we uphold the order of the learned Commissioner (Appeals) by dismissing the grounds raised.
6 Dresdner Bank AG
In the result, both the appeals are dismissed. Order pronounced in the open Court on 26.08.2016