Minimum Alternate Tax Provisions u/s 115JB Inapplicable to Nationalised Banks Constituted Under Special Statute: ITAT Deletes ₹268.74 Cr Addition on UCO Bank [Read Order]

The Income Tax Appellate Tribunal (ITAT) Kolkata Bench held that the provisions of MinimumAlternate Tax (MAT) under Section 115JB of the Income Tax Act, 1961 are not applicable to nationalised banks constituted under a special statute thereby deleting an addition of ₹268.74 crore made on UCO Bank.

The UCO Bank, constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 filed its return for Assessment Year 2013-14. While assessing the bank the Assessing Officer (AO) adopted Section 115JB and computed book profits by way of adding provisions worth ₹268.74 crore.

Further,the AO imposed MAT liability upon the bank and raised such additions. The Commissioner of Income Tax (Appeals) [CIT(A)] agreed with the AO’s position.The assessee submitted that it was not a company incorporated under the Companies Act 2013. Instead it was a statutory corporation created by special legislation.

Accordingly, sections contained in the Income Tax Act 1961 were not applicable to it.The Revenue, on the other hand, argued that the bank is deemed to be a company under the Income Tax Act 1961 and thus liable to MAT provisions.

The Tribunal after analyzing the statutory structure of both acts along with the decision in Union Bank of India vs DCIT 2024. passed by the Special Bench the Tribunal ruled that the deeming fiction contained in the Income Tax Act does not apply to treat nationalized banks as companies under the Companies Act.

The Bench comprising Rajesh Kumar (Accountant Member) and Pradip Kumar Choubey (Judicial Member) held that Section 115JB can only be applied to those entities which have to prepare accounts as per the provisions of the Companies Act 2013 but since nationalized banks are subject to Banking Regulation Act, 1949 and Acquisition of Certain Undertakings Bill, 1970, they cannot be deemed companies under the Companies Act.

The Tribunal ruled in favour of the assessee, holding that UCO Bank, being a nationalised bank established under a special statute, cannot be treated as a company under the Companies Act for the purpose of invoking Section 115JB. Consequently, the computation of book profit and MAT liability was held to be unsustainable.

Accordingly, the Bench set aside the orders of the lower authorities and directed deletion of the ₹268.74 crore addition granting substantial relief to UCO Bank.