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2019 Supreme(Bom) 597
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Akil Kureshi, Sarang V Kotwal, JJ.
Commissioner of Income Tax-Ltu – Appellant
Vs.
Union Bank of India – Respondent
Income Tax Appeal No. 1196 of 2013, 1175 of 2013, 59 of 2017, 1567 of 2016, 1309 of 2016, 143 of 2018, 1907 of 2017, 1878 of 2017, 182 of 2015, 1108 of 2015, 27 of 2016
Decided On : 16-04-2019
Suresh Kumar, Adv., Percy Pardiwalla, Adv., Nupur Awasthi, Adv., Usha K Srivastava, Adv., Consulta Juris, Adv., Tejveer Singh, Adv., Madhur Agrawal, Adv., Atul Jsani, Adv., Atul Jasani, Adv., Subhash Shetty, Adv., Sanjiv Shah, Adv.
Headnote:
Companies Act, 2013 – Section 129 – Finance Act, 2012 – Income Tax Act, 1961 – Sections 115, 154 – Jurisdiction – Whether on the facts and in the circumstances of the case and in law, the ITAT is correct is reversing the order of Assessing Officer confirmed by the CIT(A), exercising the jurisdiction u/s.154 of the Income Tax Act, 1961, determining the Book Profits as per the amendment to Section 115JB – Whether on the facts and in the circumstances of the case and in law the ITAT is correct in holding that the provision of Section 115JB are not applicable to the assessee-Bank – Held, It declares that for the purpose of the said section in case of an assessee-company to which second proviso to section 129 (1) of the Companies Act, 2013 is applicable, would have an option for the assessment year commencing on or before 1st April, 2012 to prepare its statement of profit and loss either in accordance with the provisions of schedule III to the Companies Act, 2013 or in accordance with the provisions of the Act governing such company. – To our mind, this is some what curious provision. – In the original form, sub-section (2) of section 115JB of the Act did not offer any such option to a banking company, insurance company or electricity company to prepare its profit and loss account at its choice either in terms of its governing Act or as per terms of Section 115JB of the Act. – Secondly, by virtue of this explanation if an anomaly which court have noticed is sought to be removed, court do not think that the legislature has achieved such purpose. – In plain terms, this is not a case of retrospective legislative amendment. – It is stated to be clarificatory amendment for removal of doubts. – When the plain language of sub-section (2) of Section 115JB did not permit any ambiguity, court do not think the legislature by introducing a clarificatory or declaratory amendment cure a defect without resorting to retrospective amendment, which in the present case has admittedly not been done. – Court hold that sub-section 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company. – Court answer the question No.2 in favour of the assessee and against the revenue. – In view of this, question of correctness of the order of rectification passed by the Assessing Officer becomes unimportant. – Question No.1 is therefore not answered. – Appeals Dismissed.
1. In these appeals common questions of law arise. Some of the appeals have been admitted. Some have been tagged on account of similarity of issues though they are at the admission stage. For convenience, we may record facts from Income Tax Appeal No.1196 of 2013. This appeal was admitted for consideration of following questions of law:-
"(i) Whether on the facts and in the circumstances of the case and in law, the ITAT is correct is reversing the order of Assessing Officer confirmed by the CIT(A), exercising the jurisdiction u/s.154 of the Income Tax Act, 1961, determining the Book Profits as per the amendment to Section 115JB?
(ii) Whether on the facts and in the circumstances of the case and in law the ITAT is correct in holding that the provision of Section 115JB are not applicable to the assessee-Bank?"
2. For all the appeals we would adopt the above quoted questions as substantial questions of law.
3. Respondent-Union Bank of India had filed return of income for the assessment year 2005-06. The Assessing Officer passed order of assessment under Section 143(3) of the Income Tax Act, 1961 ("the Act" for short) on 23rd March, 2007 computing the assessee's taxable income at Rs.412.41 crores (rounded off) under the normal provisions and Rs.431.15 crores as book profit under Section 115JB of the Act. The Assessing Officer thereafter passed an order dated 25th March, 2010 of rectification to give effect to a retrospective amendment in Section 115JB of the Act. He computed the assessee's revised book profit at Rs.374.21 crores.
4. The assessee carried the matter in appeal. In such appeal, the assessee opposed the assessment order on merits, including the order passed by the Assessing Officer exercising rectification powers. CIT (Appeals) granted partial relief by his order dated 27th March, 2012.
5. Against such order of the Commissioner (Appeals), the assessee preferred further appeal before Income Tax Appellate Tribunal ("Tribunal" for short). In such appeal, the assessee contended that the Assessing Officer could not have exercised rectification powers. The assessee raised an additional ground that being a banking company, the provisions of Section 115JB of the Act would not be applicable. The Tribunal allowed such appeal by the impugned judgment dated 22nd March, 2012. The Tribunal was of the opinion that the Assessing Officer wrongly exercised powers of rectification. The Tribunal further noted that the co-ordinate bench in the assessee's own case for the assessment year 2006-07 had held that the provisions of Section 115JB of the Act, were not applicable to the assessee-bank. The Tribunal held as under :-
"7. We have considered the issue. There is no doubt that the assessment orders under section 143(3) were passed in these years under which total income was determined under normal provisions and book provisions of section 115JB were not invoked. The issues which are considered in normal assessment are still pending before the ITAT for adjudication, whereas the Assessing Officer under the guise of section 154 disallowed certain amounts revising the book profits. However, even after making these adjustments, the tax under normal provisions was determined at Rs.328.07 cores, whereas the tax under section 115JB was determined at Rs.72.02 crores for assessment years 2004-05 and tax under normal provisions was determined at Rs.150.91 crores under normal provisions and tax under section 115JB at Rs.28.06 crores under section 115JB. Ultimately the taxes were determined under normal provisions without exercising the provisions of section 115JB. In that view, the entire exercises of modifying the orders is redundant as even after such adjustment, the tax determined under the normal provisions is more than the tax that are being determined by this order under section 154.
8. Be that as it may, just because a retrospective amendment has been carried out on the statue, the assessment cannot be modified without examining whether the
