MAT Under S.115JB Not Applicable To Statutory Corporations Like NDDB Even Post-2012 Amendment; Rectification U/S 154 Invalid: ITAT Ahmedabad - 2025-05-05

MAT Provisions (S.115JB) Not Applicable to Statutory Corporations Like NDDB, Even Post-2012 Amendment: ITAT Ahmedabad Quashes Rectification Orders

Ahmedabad, May 2, 2025: The Income Tax Appellate Tribunal (ITAT) Ahmedabad “B” Bench, comprising Dr. BRR Kumar (Vice President) and Shri T.R. Senthil Kumar (Judicial Member), delivered a significant ruling clarifying the applicability of Minimum Alternate Tax (MAT) under Section 115JB of the Income-tax Act, 1961, to statutory corporations. The Tribunal held that the National Dairy Development Board (NDDB), a body established by a specific Act of Parliament, is not liable for MAT, even after the amendment to Section 115JB by the Finance Act, 2012. Consequently, the ITAT quashed rectification orders passed under Section 154 by the Assessing Officer (AO) seeking to levy MAT for Assessment Years (AY) 2010-11 to 2013-14.

Case Background

The dispute involved multiple appeals filed by the Revenue (ACIT, Anand Circle) and one appeal by the Assessee (NDDB) concerning AYs 2010-11 to 2013-14. The core issue revolved around whether NDDB, a statutory corporation established under the National Dairy Development Board Act, 1987, could be subjected to MAT under Section 115JB. Initially, the AO completed assessments for these years without applying MAT. However, the AO later passed rectification orders under Section 154, treating the non-application of MAT as a "mistake apparent from record" and proceeded to compute MAT liability on NDDB's book profits. The Commissioner of Income Tax (Appeals) [CIT(A)] had initially allowed NDDB's appeals for AY 2010-11 to 2012-13, holding the issue debatable and not rectifiable under Section 154, but upheld the MAT application for AY 2013-14 citing the 2012 amendment.

Key Arguments

Assessee (NDDB): * NDDB is a statutory body, not a company incorporated under the Companies Act. * Section 115JB specifically applies to companies that prepare their Profit & Loss accounts according to the Companies Act (erstwhile Schedule VI, now Schedule III). NDDB prepares its accounts as mandated by the NDDB Act, 1987 (Sections 27 & 28). * The applicability of MAT to statutory corporations is a highly debatable issue, involving interpretation of law, and thus cannot be addressed through rectification under Section 154, which is reserved for obvious errors. * Relied on the Supreme Court's decision confirming the Kerala High Court's ruling in Kerala State Electricity Board (KSEB) , where MAT was held inapplicable to KSEB, another statutory body. * Even post the Finance Act 2012 amendment (effective AY 2013-14), MAT remains inapplicable, citing the Mumbai ITAT Special Bench ruling in Union Bank of India and Delhi High Court in Oriental Insurance Co. Ltd .

Revenue (ACIT): * NDDB is an "Indian Company" as per Section 2(26)(ia) of the IT Act (being a corporation established under a Central Act) and files returns as a "Company". * Failure to levy MAT was a clear mistake apparent from the record, justifying rectification under Section 154. * The Finance Act 2012 amendment broadened the scope of Section 115JB to include entities like NDDB that prepare accounts under their governing statutes.

Tribunal's Analysis and Findings

The ITAT meticulously analyzed the legal provisions, precedents, and the nature of NDDB.

1. Rectification u/s 154 Impermissible (AY 2010-11 to 2012-13): * The Tribunal affirmed that whether MAT applies to a statutory body like NDDB, which doesn't follow Companies Act accounting norms, is inherently debatable. * Quoting the Supreme Court in T.S. Balaram v. Volkart Bros. (1971) , the ITAT reiterated that Section 154 cannot be used for issues requiring "long-drawn reasoning process" or where interpretations differ. * Applying MAT via rectification when it wasn't applied initially constitutes a change of opinion, which is outside the scope of Section 154. * The ITAT cited the KSEB case, stating: "the fiction fixed under section 115JB cannot be pressed into service against the assessee while making the assessment..." * Therefore, the rectification orders for AYs 2010-11, 2011-12, and 2012-13 were deemed "exfacie illegal" and "without jurisdiction".

2. MAT Inapplicable Even Post-Amendment (AY 2013-14): * The ITAT disagreed with the CIT(A)'s view that the Finance Act 2012 amendment made MAT applicable to NDDB. * The Tribunal heavily relied on the Mumbai ITAT Special Bench decision in Union Bank of India [2024] 166 taxmann.com 207 , which held: > "clause (b) to sub section (2) of section 115JB... inserted by Finance Act, 2012... are not applicable to the banks constituted as 'corresponding new bank'... and not registered under Companies Act... therefore, the provision of Section 115JB cannot be applied..." * The ITAT reasoned that the term "company" in Section 115JB refers to entities governed by the Companies Act. While NDDB is deemed an "Indian Company" under Section 2(26)(ia) for general IT Act purposes, this deeming fiction doesn't extend to making it a "company" for the specific requirements of Section 115JB, which are intrinsically linked to Companies Act accounting. * The core principle is that the computation mechanism under Section 115JB fails if the accounts are not prepared as per the Companies Act (or as specified under Section 129(1) for specific classes of Companies Act registered entities like banking, insurance, electricity). * The Tribunal concluded: "MAT is not leviable even under the post amendment by Finance Act 2012 effective from 01.04.2013 by insertion of clause (b) to section 115JB(2) of the Act to a Statutory Corporation created under the Central Act."

Final Decision

Based on the detailed reasoning, the ITAT Ahmedabad Bench:

* Dismissed all appeals filed by the Revenue (ITA Nos: 733, 734, 755, 756, 757, 1059/Ahd/2023) for AYs 2010-11 to 2013-14.

* Allowed the appeal filed by the Assessee, NDDB (ITA No: 1052/Ahd/2023) for AY 2013-14, quashing the rectification order applying MAT.

* Dismissed the Cross Objections filed by NDDB (C.O. Nos: 2 & 3/Ahd/2024) for AY 2012-13 as consequential.

This ruling provides crucial clarity that statutory corporations like NDDB, established and governed by their specific Acts and not registered under the Companies Act, fall outside the purview of MAT provisions under Section 115JB, irrespective of the 2012 amendment.