Case Law Details
DCIT Vs. M/s Reliance Infrastructure Ltd. (ITAT Mumbai)
Where something is not possible then the assessee cannot be forced to do so under specific provisions of law. Those previsions of law cannot be followed because it is impossible to do so. The doctrine of impossibility is squarely applicable on the facts of the present case because it is not possible to prepare the accounts under the Companies Act because the assessee is preparing the accounts as per the policies of Electricity Supply Act.
The Honorable Supreme Court in the case of Kwality Biscuits Ltd in 284 ITR 434 has held that provisions of sec. 234B & 234C are not applicable in respect to computation of deduction u/s 115J because the computation of profit under the provisions of sec. 115J has to be made on the basis of book profit and since the entire exercise of computing the income under section 115J can only be done at the end of the financial year, and the provisions of sec. 207, 208, 209 & 210 cannot be made applicable ‘until and unless the accounts are audited and the balance sheet prepared. The ratio of this decision helps the case of the assessee because it is not possible to prepare the accounts in accordance with part II &III of Schedule VI of the Companies Act for the purpose of provisions of sec. 115JB. Therefore, in view of the ratio of this decision, in our considered view, the provisions of sec. 115JB cannot be attracted of the present case.
As discussed above when it is not possible to prepare the accounts under the Companies Act for the purpose of computation u/s 115JB, therefore, assessee cannot he forced to prepare the accounts when it is not possible. Therefore, we are in agreement with the contentions of in as much as the accounting policies followed in the accounts if followed for the preparation of Companies Act. 1 not disclose true and fair view and will not be in accordance work part II and III of Schedule VI of the Companies Act. The ratio of the decisions of the Hon7ble Supreme Court and the ratio of the decision of the Tribunal discussed above are in support of the contentions of the assessee. We further found that the issue of applicability of sec. 115J came before the Tribunal for AY 88-89. Taking into consideration the preparation of accounts under the Electricity Act and other contentions the assessee including the decisions of the Supreme Court in the case of B.C.Srinivasa Setty (supra), the Tribunal has held that. the provisions of Sec. 115J are not attracted on the facts of the present case.
As discussed above, the assessee is following the accounting policies under the Electricity Supply act and prepared its accounts in view of those very policies. Following those very policies, the accounts in accordance with part II & III of Schedule VI of the Companies Act are not applicable at all. Once there is no possibility for preparing the accounts in accordance with the part II & 11 of Schedule VI of Companies Act then the provisions of sec. 115JB cannot be forced. Therefore, in view of the above facts and circumstances and respectfully following the above decisions of the Honorable Supreme Court and the decision of the Tribunal for AY 88-89, we hold that provisions of sec. 115JB are not applicable on the facts of the present case.
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