MAT : S. 115JA and S. 115JB : S. 115JA and S. 115JB are not applicable to State Electricity Board.

[Kerala State Electricity
Board v. Dy. CIT, 329 ITR 91 (Ker.)]

Dealing with the scope of S.
115JA and S. 115JB of the Income-tax Act, 1961, the Kerala High Court has held
as under :

“(i) S. 115JB of the
Income-tax Act, 1961 creates a legal fiction regarding total income of
assessees which are companies. Though the Kerala State Electricity Board, a
statutory corporation constituted by virtue of S. 5 of the Electricity
(Supply) Act, 1948 answers the description of an Indian company and therefore
a company within the meaning of S. 2(17) of the Income-tax Act, 1961, it is
not a company for the purposes of the Companies Act, 1956.

(ii) At the earliest point
of time when S. 115J was introduced, the Section expressly excluded from its
operation bodies like the Electricity Board. Though such express exclusion is
absent in S. 115JA, the CBDT issued Circular No. 762, dated 18-2-1998
excluding bodies like the Electricity Board from operation of the Section.
Such an understanding of the CBDT is binding on the Department. S. 115JB,
which is substantially similar to S. 115JA cannot have a different purpose and
need not be interpreted in a manner different from the understanding of the
CBDT of S. 115JA.

(iii) The Electricity
Board or bodies similar to it, which are totally owned by the Government,
either State or Central, have no share-holders. Profit, if at all, made would
be for the benefit of entire body politic of the State. Therefore the enquiry
as to the mischief sought to be remedied by the amendment becomes irrelevant.
Therefore, the fiction fixed by S. 115JB cannot be pressed into service
against the Electricity Board while making the assessment of tax payable under
the Income-tax Act.”