Section 115JB(1) — the law in short
What the courts have decided on section 115JB(1), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Sobha Developers Ltd v DCIT
High CourtHelps taxpayer
Can the Rule 8D figure be added back to book profit under clause (f) of the Explanation to s.115JB?
The Karnataka High Court held it cannot. A disallowance under s.14A is a notional disallowance, and the amount cannot be added back to book profit under clause (f) by taking recourse to s.14A. Clause (f) can operate only on amounts actually debited to the profit and loss account.
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CIT-LTU v Union Bank of India (Bombay High Court) — section 115JB did not apply to a banking company before the Finance Act 2012, because the machinery in sub-section (2) was unworkable for it
High CourtHelps taxpayerNo later treatment found
The Assessing Officer has raised a MAT demand on my client bank for an assessment year before 2013-14. Can section 115JB apply at all to a company whose accounts are prepared under the Banking Regulation Act?
Not for a year before the Finance Act 2012 amendment. The Bombay High Court held that section 115JB as it stood before that amendment would not be applicable to a banking company, because sub-section (2) required the profit and loss account to be prepared under Parts II and III of Schedule VI to the Companies Act 1956 while its first proviso required the same accounting policies, accounting standards and depreciation method and rates as were used for the accounts laid before the annual general meeting — accounts which a bank necessarily prepares under the Banking Regulation Act 1949. A bank could satisfy one requirement or the other but not both, so the machinery provision failed, and on the principle in B.C. Srinivasa Setty a case in which the computation provision cannot apply was not intended to fall within the charging section. All the Revenue's appeals were dismissed.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
