Glimpses of Supreme Court Rulings

18 Deputy Commissioner of Income-tax vs. Kerala State Electricity Board (2022) 447 ITR 193 (SC)

Company – Minimum Alternate tax – Section 115JB – Provisions not applicable to the Electricity Board or similar entities totally owned by the State or Central Government

Business Expenditure - Section 43B could not be invoked in making the assessment of the liability of the appellant under the Income-tax Act with regards to the amounts collected by the appellant pursuant to the obligation cast on the appellant under section 5 of the Kerala Electricity Duty Act, 1963.

For the A.Y. 2002-03, the appellant filed returns declaring the current loss at Rs. 411,56,63,704. The returns were subsequently revised and loss reduced to Rs. 203,81,27,595. The assessment was made under section 143(3) of the Income-tax Act.

The assessing authority invoked the legal fiction under section 115JB of the Income-tax Act, which enables the Revenue to arrive at a fictitious conclusion regarding the total income of the assessee and assess the tax on such total income. Further, the assessing authority relying upon section 43B of the Income-tax Act rejected the claim of the assessee that the amount collected by the assessee from the consumer under section 5 of the Kerala Electricity Duty Act, was not the income