ITA No.

234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai

IN THE INCOME TAX APPELLATE TRIBUNAL

“A’’ BENCH: BANGALORE

BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

AND
SHRI KESHAV DUBEY, JUDICIAL MEMBER

ITA No.234/Bang/2025
Assessment Year: 2015-16

M/s. Bank of Baroda (Erstwhile

Vijaya Bank)
2nd Floor, Baroda Corporate Centre Addl. CIT
Bandra Kurla Complex LTU
Vs.
Bandra (East) Bangalore
Mumbai 400 051

PAN NO : AAACV4791J
APPELLANT RESPONDENT
Appellant by : Smt. Lalitha Rameshwaran, A.R.
Respondent by : Sri Rajashekhar M., D.R.

Date of Hearing : 03.04.2025

Date of Pronouncement : 04.04.2025
ORDER

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against

the order of ld. CIT(A)/NFAC dated 23.12.2024 vide DIN & Order
No. ITBA/NFAC/S/250/2024-25/1071453089(1) passed u/s 250 of
the Act (in short “The Act”) for the AY 2015-16.
2. The assessee has raised the following grounds of appeal:
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
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3. The brief facts of the case are that the assessee is in the
business of banking filed its return of income for the AY 2015-16 on
28.9.2015 by admitting total income of Rs. Nil. Thereafter the
assessee bank had filed its revised return of income by declaring a
total income of Rs. Nil by way of claiming additional claim of Rs.200
crores u/s 36(1)(vii) of the Act. Subsequently, the case was selected
for scrutiny under CASS and accordingly notices u/s 143(2) as well
as 142(1) of the Act were issued along with the questionnaire calling
for various details in order to verify the claims made by the
assessee in the return of income. The AO finally passed the
assessment order by assessing on the total income of
Rs.1750,77,68,383/- under the regular provisions and also held
that the provisions of section 115JB of the Act was applicable to the
assessee bank and determined the book profit at
Rs.447,95,02,243/-.

3.1 Thereafter, the assessee bank preferred an appeal against the

said original assessment order before the ld. CIT(A). The ld. CIT(A)
vide his appellate order dated 31.12.2018 partly allowed the appeal
of the assessee.

3.2 The aforesaid order of ld. CIT(A) was again challenged before
the ITAT by both the assessee bank and by the revenue. The ITAT
vide its order dated 25.4.2023 for the impugned assessment year
arising out of ITA Nos.321 and 528/Bang/2019 set aside and
restored back the following issues to the file ld. CIT(A) for fresh
adjudication:
i. Applicability of MAT provisions u/s 115JB of the Act (ground
No.7 before the ITAT).
ii. Adjustment made in computation of book profits u/s 115JB
of the Act (ground No.8 before the ITAT).
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
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3.3 Before the ld. CIT(A), the assessee bank made a detailed
submission and also requested for a personal hearing through VC
before adjudicating the appeal. However, the ld. CIT(A)/NFAC vide
the impugned order dated 23.12.2024 upheld the order of AO on
the aforesaid issues and also did not afford any personal hearing
through VC as requested.

4. Aggrieved by the order of ld. CIT(A), the assessee has filed the
present appeal before this Tribunal.

4.1 The solitary issue that is raised whether the ld. CIT(A)/NFAC
is justified in upholding the order of AO with regard to applicability
of the provisions of section 115JB of the Act to the assessee bank?

5. Before us, at the outset the ld. A.R. of the assessee submitted
that the issue in dispute is squarely covered in assessee’s own case
in ITA Nos.1032, 1033 & 1040/Bang/2024 vide order dated
28.11.2024 as well as the order passed by this ITAT in the case of
M/s. Canara Bank in ITA Nos.937 & 938/Bang/2024 vide order
dated 16.10.2024.

6. Ld. D.R. on the other hand, supported the order of ld.

CIT(A)/NFAC more particularly para 4.1 of the ld. CIT(A)’s order.

7. We have heard the rival submissions and perused the

materials available on record. The solitary issue that is raised in
this appeal is the applicability of the provisions of section 115JB of
the Act to the assessee’s bank. We agree with the submissions of
the ld. A.R. that similar issue came for consideration in the case of
M/s. Canara Bank in ITA Nos.937 & 938/Bang/2024 vide order
dated 16.10.2024 wherein the Tribunal held as under:
“8. We have heard both the parties and perused the materials available on
record. We are of the opinion that similar issue came for consideration before this
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 4 of 16
Tribunal in assessee’s own case in ITA Nos.1219/Bang/2019 & ITA
No.186/PAN/2019 dated 8.8.2024, wherein the Tribunal held as under:

“9. After hearing both the parties, we are of the opinion that similar issue came
for consideration in the case of Canara Bank in ITA Nos.391 & 392/Bang/2023 for
the assessment year 2019-20. The Tribunal vide order dated 22.12.2023 held as
under:

“11. Ground No.4 raised by assessee is on applicability of provisions of section

115JB of the Act.

The Ld.AR submitted that, the assessee does not fall within definition of banking
company as defined under Companies Act, 1956 and therefore it is not covered by
proviso to section 211(2) of the Companies Act. The Ld. AR thus submitted that
provisions of s. 115JB are not applicable to assessee. In support of this
submission, he placed reliance on decision of Hon’ble Delhi High Court in the
case of CIT v Punjab National Bank Ltd. (successor of erstwhile Oriental Bank of
Commerce) in ITA 594/2023 by order dated 20/10/2023, wherein the question of
law considered by the court is proposed in question (e) has been dismissed. The
said order of Hon’ble Delhi High Court in the case of CIT v Punjab National Bank
Ltd. (successor of erstwhile Oriental Bank of Commerce) (supra) is placed at page
35-37 of the PB.

The Ld.AR further relied on decision of Hon’ble Delhi Tribunal in the case of
Oriental Bank of Commerce v. ACIT reported in [2022] TIOL 331 ITAT-DEL. The
Ld.AR submitted that, the provisions of section 115JB, as it stood prior to its
amendment by virtue of Finance Act, 2012, would not be applicable to a banking
company. He submitted that coordinate Bench of Delhi Tribunal considered this
issue by observing as under:-

“51. This issue is no longer res-judicata following judgments of the

tribunals and the High Courts wherein it is categorically held that
MAT provision u/s 115JB will not apply to a Banking Company:
- Canara Bank vs JCIT, LTU in ITA No. 530/Bng/2010 & other dtd.
30.03.2016 = 2016-TIOL-1120-HC-P&H-IT
- M/s. Canara Bank vs CIT(LTU) In ITA No. 305/Bang/2011 dtd.
18.06.2012
- Krung Thai Bank PCI vs Joint Director of Income Tax (ITAT)
(Mumbai) in ITA No.3390/Mum/09 dtd. 30.09.2010 reported in
(2010) 45 DTR 218
- Union Bank of India vs ACIT, LTU (ITAT) (Mumbai) in ITA
Nos.4702 to 4706/Mum/2010 dtd. 30.06.2011
- Indian Bank vs Addl. CIT (ITAT) (Chennai) in ITA No.469/Mds/2010
dtd. 03.08.2011
- Union Bank of India (ITAT Mumbai) in ITA Nos. 4155 to4161 of
2011 dtd. 27.03.2012

- Oriental Insurance Co. Ltd. vs. DCIT I ITA No.447/2015 dtd

 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
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30.08.2017 = 2017-TIOL-1714-HC-DEL-IT
- CIT vs Union Bank of India (2019) 308 CTR 797 (Bom) HC

52. In the above referred judgment of the Bombay High Court, at

relevant page 8, para no.11 (paper book page no.13) the court has
held as under:
"This legal dichotomy emerging from the provisions of subsection (2)
of Section 115JB particularly having regard to the first proviso
contained therein in case of banking company, would convince us that
machinery provision provided in sub- section (2) of section 115JB of
the Act, would be rendered wholly unworkable in such a situation. In a
well known judgment the Supreme Court in case of Commissioner of
Income-Tax, Bangalore vs B.C. Shrinivasa Setty, Vo. 128 ITR 294 =
2002-TIOL-587-SC-IT-LB, had observed that in the Income Tax Act, a
charging section and the computing provisions together constitute an
integrated code. In a case where the computation provision cannot
apply, it would be evident that such a case was not intended to fall
within the charging section. It was a case of charging a partnership
firm for transfer of a capital asset in the nature of goodwill. The
Supreme Court was of the opinion that it would not be possible to
envisage a cost of acquisition of goodwill. Since computation of capital
gain cannot be done without ascertaining the cost of acquisition, it was
held that no capital gain tax can be levied. " 53. Concluded at page 12
para 21 as under:
"27. In the result, we hold that sub-section 115JB as it stood prior to
its amendment by virtue of Finance Act, 2012, would not be applicable
to a banking company. We answer the question No. 2 in favour of the
assessee and against the revenue. In view of this, question of
correctness of the order of rectification passed by the Assessing Officer
becomes unimportant. Question No. 1 is therefore not answered. All
the appeals are dismissed."
54. For the AY 2013-14 and onwards, vide ground no. ground no. 3
of ITA no. 1582/Del/2Q17 (AY 13-14), ITA no. 1583/Del/2017 (AY 14-
15) and ground no. 6 of ITA no. 1199/Del/2018 (AY 15-16), the
assessee has contended that provisions of section 115JB (MAT) will
not apply as the assessee is a Nationalized Bank under the Banking
Company (Acquisition and Transfer of Undertaking) Act, 1980.
55. The provisions of section 115JB as amended by the Finance
Act, 2012 w.e.f. 1.4.2013, inserting clause (a) and clause (b) in sub-
section (2) to section 15JB are as under:
"115JB. (1) Notwithstanding anything contained in any other provision
of this Act, where in the case of an assessee, being a company, the
income-tax, payable on the total income as computed under this Act in
respect of any previous year relevant to the assessment year
commencing on or after the 1st day of April, [2012], is less than
[eighteen and one-half per cent] of its book profit, [such book profit
shall be deemed to be the total income of the assessee and the tax
payable by the assessee on such total income shall be the amount of
incometax at the rate of [eighteen and one-half per cent]].
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
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(2) [Every assessee,-
(a) being a company, other than a company referred to in clause
(b), shall, for the purposes of this section, prepare its profit and loss
account for the relevant previous year in accordance with the
provisions of Part II of Schedule VI to the Companies Act, 1956 (1 of
1956); or
(b) being a company, to which the proviso to sub-section (2) of
section 211 of the Companies Act, 1956 (1 of 1956) is applicable,
shall, for the purposes of this section, prepare its profit and loss
account for the relevant previous year in accordance with the
provisions of the Act governing such company:]
Provided that while preparing the annual accounts including profit
and loss account,- (i) the accounting policies;
(ii) the accounting standards adopted for preparing such accounts
including profit and loss account;

(iii) the method and rates adopted for calculating the depreciation,
shall be the same as have been adopted for the purpose of preparing
such accounts including profit and loss account and laid before the
company at its annual general meeting in accordance with the
provisions of section 210 of the Companies Act, 1956 (1 of 1956):
Provided further that where the company has adopted or adopts the
financial year under the Companies Act, 1956 (1 of 1956), which is
different from the previous year under this
Act,-
(i) the accounting policies;
(ii)the accounting standards adopted for preparing such accounts
including profit and loss account;
(iii) the method and rates adopted for calculating the depreciation,
shall correspond to the accounting policies, accounting standards and
the method and rates for calculating the depreciation which have been
adopted for preparing such accounts including profit and loss account
for such financial year or part of such financial year falling within the
relevant previous year. "
56. Thus, the understanding of the above amendment to section
115JB is where a company which are not required u/s 211 (129) of the
Companies Act to prepare their P&L account in accordance with
Schedule - VI of the Companies Act, 1956 profit & loss account
prepared in accordance with the provisions of their Regulatory Acts
shall be taken as a basis for computing the book profit u/s 115JB.
57. The assessee's contentions for non-applicability of 115JB
provisions are:
"(i) It is a case of Nationalized Bank, under the Banking Companies
(Acquisition and Transfer of Undertaking) Act, 1980.

(ii) Assessee is not a company incorporated under the Companies

Act, 1956, nor recognized under section 3 of the Companies Act.
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
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(iii) The second proviso to sub-section (1) of section 129 (earlier
provision 211) of the Companies Act, 2013 is not applicable to the
assessee.
(iv) Under section 11 of the Banking Companies (Acquisition and
Transfer of Undertaking) Act, 1980 provides that "for the purposes of
the Income-tax Act, 1961, every corresponding new bank shall be
deemed to be Indian company and a company in which public is
substantially interested".
(v) It is settled principle of law where deeming fiction is created by
the legislature it has to be confined to the purpose for which it is
created. CIT, Panji vs Dempo Company Limited reported in (2016) 74
TAXMAN.com 15 (SC) = 2016-TIOL-164-SC-IT. Therefore, the
Income-tax Act must recognize such banking company for the purpose
section 115JB in order to make the provisions applicable.
(vi) When the charging section and the computing provision
together would constitute an integrated code. In case charging section
does not apply then the computation section fails. CIT vs B C Shrinivas
Setty 128 ITR 294 = 2002-TIOL-587-SC-IT-
LB."
58. However, the plea of the assessee with respect to
nonapplicability of section 115JB to the Banking Companies was
rejected by the ITAT Mumbai "B" Bench in ITA No. 1767/Mum/2019
for the A.Y. 2015-16 in the case of Bank of India vs ACIT Mumbai vide
order dated 11th December, 2020.
59. There is no jurisdictional High Court decision or for that
matter any other High Court decision against the assessee. In view of
the fact that two use are possible, the view that favour the assessee
may kindly be considered, more so in the case of a Nationalized Bank
as held by the Hon'ble Supreme Court in the case of CIT vs Vegetable
Products Ltd. 88 ITR 192 = 2002TIOL-574-SC-IT-LB.”

12. The Ld. DR though could not controvert the above observation by Hon’ble
Delhi Tribunal in the above own case, placed reliance on the decision of
Ld.CIT(A).

13. We have perused submissions advanced by both sides in light of record

placed before us. We note that decision of Hon’ble Delhi Tribunal in Oriental
Bank(supra) has been upheld by Hon’ble Delhi High Court wherein Hon’ble High
Court has categorically observed that the revenue in case of Punjab National Bank
did not raise this issue which are identical to facts of the present assessee before
us.
In view of the same, Ground No.4 raised by the assessee deserves to be allowed.”

9.1 In view of the above order of the Tribunal cited (supra), taking a consistent
view, we allow this ground taken by the assessee.”
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Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 8 of 16
8.1 Further, similar issue came for consideration recently before the ITAT,
‘Special Bench’ Mumbai in the case of Union Bank of India Vs. DCIT in ITA No.
424/Mum/2020 for the Asst. year 2015-16 and Central Bank of India Vs. ACIT in
ITA No. 3740/Mum/2018 for the Asst year 2013-14, in which the Special Bench of
ITAT vide Order dated 06/09/2024 held as under:

DECISION

39. We have heard both the parties and also perused the relevant
material referred to before us and the various provisions of the relevant
Acts cited which are relevant for adjudication of the issue before us.

40. The question which has been referred to the Special Bench is
whether the requirement of sub-section (2) of 115JB is fulfilled in the
present case of the assessees. Sub-section (1) of Section 115JB
mandates charge of income tax based on book profits subject to
fulfillment of certain conditions and also provides the rate on which
such tax shall be charged. The Section starts with non-obstante clause
and therefore, it is a departure from normal charge of tax on the total
income of the company. Sub-section (2) is the computation provision
dealing with the manner in which such book profits are to be computed.
Upto A.Y.2012-13, subsection (2) of Section 115JB applied only to such
companies which were required to prepare its profit and loss account
in accordance with part II & III of Schedule VI to the Companies Act
ITA No.424/Mum/2020 & 3740/Mum/2018 The Union Bank of India &
Central Bank of India 34 1956. The assessee bank is required to
prepare its profit and loss account in accordance with Section 52 r.w.s.
29 of the Banking Regulation Act and not as per the Companies Act.
Earlier in the case of the assessee it has been settled by the Hon’ble
Jurisdictional High Court that provision of Section 115JB has no
application to its case. Now after the amendment w.e.f. A.Y.2013- 14,
Sub-section (2) has been amended to bring into the ambit of Section
115JB, those companies to which second proviso to subsection (1) of
Section 129 of the Companies Act is applicable, who are required to
prepare its statement of profit and loss account in accordance with
provisions of the Act governing such company. For the sake of ready
reference the amended subsection (2) of Section 115JB is again
reproduced hereunder:- (2) Every assessee,— (a) being a company,
other than a company referred to in clause (b), shall, for the purposes
of this section, prepare its statement of profit and loss for the relevant
previous year in accordance with the provisions of Schedule III to the
Companies Act, 2013 (18 of 2013); or (b) being a company, to which
the second proviso to subsection (1) of section 129 of the Companies
Act, 2013 (18 of 2013) is applicable, shall, for the purposes of this
section, prepare its statement of profit and loss for the relevant
previous year in accordance with the provisions of the Act governing
such company: Provided that while preparing the annual accounts
including statement of profit and loss,— (i) the accounting policies; ITA
No.424/Mum/2020 & 3740/Mum/2018 The Union Bank of India &
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 9 of 16
Central Bank of India 35 (ii) the accounting standards adopted for
preparing such accounts including statement of profit and loss; (iii) the
method and rates adopted for calculating the depreciation, shall be the
same as have been adopted for the purpose of preparing such accounts
including statement of profit and loss and laid before the company at its
annual general meeting in accordance with the provisions of section
129 of the Companies Act, 2013 (18 of 2013): Provided further that
where the company has adopted or adopts the financial year under the
Companies Act, 2013 (18 of 2013), which is different from the previous
year under this Act,— (i) the accounting policies; (ii) the accounting
standards adopted for preparing such accounts including statement of
profit and loss; (iii) the method and rates adopted for calculating the
depreciation, shall correspond to the accounting policies, accounting
standards and the method and rates for calculating the depreciation
which have been adopted for preparing such accounts including
statement of profit and loss for such financial year or part of such
financial year falling within the relevant previous year.

41. In so far as Clause (a), the same applies to a case of a company

other than referred to in Clause (b). According to clause (a), for the
purpose of Section 115JB the company has to prepare its profit and loss
account for the relevant previous year in accordance with the
Companies Act, 2013 and the First proviso to sub-section (2) requires
that while preparing the accounts including the profit and loss account,
the accounting policies, the accounting standards and the method and
rates adopted for the purpose of preparing such accounts ITA
No.424/Mum/2020 & 3740/Mum/2018 The Union Bank of India &
Central Bank of India 36 including the profit and loss account and laid
before the company at its annual general meeting in accordance with
the provisions of Section 129 of the Companies Act, 2013. Since
assessee bank has to prepare its accounts in accordance with the
provisions contained in Section 51 r.w.s. 29 of the BR Act, therefore,
Schedule III of the Companies Act is not applicable. Thus, Clause (a) of
Section 115JB (2), the computation provision, will not apply and this
matter has attained finality in the case of the assessee by the Hon’ble
Jurisdictional High Court in the case of the assessee (cited supra).

42. Now for Clause (b), following conditions need to be satisfied for
applying section 115JB in the case of a company:- i. it applies to a
company to which the second proviso to subsection (1) of section 129 of
the Companies Act, 2013 is applicable; ii. once this condition is
fulfilled, it requires such assessee for the purpose of this section to
prepare its profit and loss account in accordance with the provisions of
the Act governing such company.

43. Since 115JB is applicable to the company to which second proviso

to Section 129(1) applies, therefore, it would be relevant to quote
Section 129 of the Companies Act which reads as under:- "129.
Financial statement-(1) The financial statements shall give a true and
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 10 of 16
fair view of the state of affairs of the company or companies, comply
with the accounting standards notified under section 133 and shall be
in the form or forms as may be ITA No.424/Mum/2020 &
3740/Mum/2018 The Union Bank of India & Central Bank of India 37
provided for different class or classes of companies in Schedule III:
Provided that the items contained in such financial statements shall be
in accordance with the accounting standards. Provided further that
nothing contained in this subsection shall apply to any insurance or
banking company or any company engaged in the generation or supply
of electricity, or to any other class of company for which a form of
financial statement has been specified in or under the Act governing
such class of company Provided also that the financial statements shall
not be treated as not disclosing a true and fair view of the state of
affairs of the company, merely by reason of the fact that they do not
disclose (a) in the case of an insurance company, any matters which
are not required to be disclosed by the Insurance Act, 1938 (4 of 1938),
or the Insurance Regulatory and Development Authority Act, 1999 (41
of 1999), (b) in the case of a banking company, any matters which are
not required to be disclosed by the Banking Regulation Act, 1949 (10 of
1949), (c) in the case of a company engaged in the generation or supply
of electricity, any matters which are not required to be disclosed by the
Electricity Act, 2003 (36 of 2003), (d) in the case of a company
governed by any other law for the time being in force, any matters
which are not required to be disclosed by that law."

44. The second proviso applies to any insurance company, banking

company or any company engaged in the generation or supply of
electricity or to any other class of company for which a form of
financial statement has been specified in or under the Act governing
such class of company. In so far as the present ITA No.424/Mum/2020
& 3740/Mum/2018 The Union Bank of India & Central Bank of India
38 case is concerned, one has to consider whether the assessee could
be regarded as a 'banking company' for the purposes of section 129 of
the Companies Act, 2013).

45. Now whether the assessee bank can be termed as a company within
the meaning of the Companies Act, 2013, first of all, Section 115JB(2)
is applicable to every assessee „being a company‟. The company has
been defined in Section 2(17) of the Income Tax Act which we have
already reproduced in para 22 above. Thus, the company means any
Indian company. Indian company has been defined in Section 2(26)
(incorporated in Para 23 of the order) which defines „Indian
company‟ means company formed and registered under the Companies
Act. Thus, the company for the purpose of the Income Tax Act is a
company which is formed and registered under the Companies Act.
Section 2(9) of the Companies Act, 2013, a banking company has been
defined to mean a banking company as defined in section 5(c) of the BR
Act). Section 5(c) of the BR Act defines a „banking company‟ as under:
"(c) "banking company" means any company which transacts the
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 11 of 16
business of banking in India" Therefore, for an entity to qualify as a
banking company it should first of all, be a company' and secondly the
said company should transact the business of banking in India.

46. The expression "company" has been defined in section 5(d) of the
BR Act as under: ITA No.424/Mum/2020 & 3740/Mum/2018 The Union
Bank of India & Central Bank of India 39 "(d) "company" means any
company as defined in section 3 of the Companies Act, 1956 (1 of
1956); and includes a foreign company within the meaning of section
591 of that Act;"

47. Therefore, in so far as is relevant, the entity has to be a company as

defined in section 3 of the Companies Act, 1956 (Now 2013) to be
regarded as a banking company. Section 3(1)(i) of the Companies Act,
defines a 'company' as under: "(i) "company" means a company formed
and registered under this Act or an existing company as defined in
clause (ii)"

48. Therefore, it is sine-qua-non that for an entity to qualify as a

company it must either be a company formed and registered under the
Companies Act or it should be an existing company as defined in sub-
clause (ii) thereof. Since the Assessee is not formed and registered
under the Companies Act, 1956, albeit came into existence by a
separate Act of Parliament, that is, „Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970‟, therefore, it does not fall in
the first part of the said section.

49. Further, the expression "existing company has been defined in

Section 3(1)(ii) to mean as under: "(ii) "existing company" means a
company formed and registered under any of the previous companies
laws specified below :- (a) any Act or Acts relating to companies in
force before the Indian Companies Act, 1866 (10 of 1866), and
repealed by that Act; ITA No.424/Mum/2020 & 3740/Mum/2018 The
Union Bank of India & Central Bank of India 40 (b) the Indian
Companies Act, 1866 (10 of 1866); (c) the Indian Companies Act, 1882
(6 of 1882); (d) the Indian Companies Act, 1913 (7 of 1913); (e) the
Registration of Transferred Companies Ordinance, 1942 (54 of 1942);
and (f) any law corresponding to any of the Acts or the Ordinance
aforesaid and in force - (1) in the merged territories or in a Part B
States (other than the State of Jammu and Kashmir), or any part
thereof, before the extension thereto of the Indian Companies Act, 1913
(7 of 1913); or (2) in the State of Jammu and Kashmir, or any part
thereof, before the commencement of the Jammu and Kashmir
(Extension of Laws) Act, 1956 (62 of 1956), insofar as banking,
insurance and financial corporations are concerned, and before the
commencement of the Central Laws (Extension to Jammu & Kashmir)
Act, 1968 (25 of 1968), insofar as other corporations are concerned;
and (3) the Portuguese Commercial Code, insofar as it relates to
sociedades anonimas";"
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 12 of 16
50. The assessee bank was neither formed nor registered under the
Companies Act, 1956; nor it is in existing company as per the above
definition. Once it is not a company under the Companies Act, then the
first condition referred to in clause (b) of Section 115JB(2) is not
fulfilled, and consequently second proviso below Section 129(1) of the
Companies Act is also not applicable.

51. The main crux of the department is that since assessee bank has
come into existence by the „Acquisition Act‟ and Section 11 thereof
states that for the purpose of Income Tax Act, ITA No.424/Mum/2020 &
3740/Mum/2018 The Union Bank of India & Central Bank of India 41
every corresponding new bank shall be deemed to be an „Indian
company‟ and the company in which the public are „substantially
interested' and since in Section 2(17) of the Income Tax Act, the
„company‟ has been defined as any Indian company therefore, the
provisions of the Income Tax Act would apply because Section 2(26) of
the Act defines „Indian company‟ means the company formed and
registered under the Companies Act and therefore, it is deemed to be a
company under the Companies Act.

52. Section 11 of the Acquisition Act states that "For the purposes of
Income-tax Act, 1961 (43 of 1961), every corresponding new bank shall
be deemed to be an Indian company and a company in which the public
are substantially interested". Therefore, the said deeming fiction is
created only for the purposes of the Income-tax Act. Further, for the
purposes of the said Act, it treats every corresponding new bank to be
an Indian company and also a company in which the public are
substantially interested.

53. First of all, deeming an entity to be an Indian Company or a

company in which public are substantially interested for the purposes
of the Income-tax Act would not ipso facto make such entity as a
'company' for the purposes of the Companies Act, 2013, unless the
conditions specified in Section 3 thereof are fulfilled. There is no
provision to deem a nationalised bank to be ITA No.424/Mum/2020 &
3740/Mum/2018 The Union Bank of India & Central Bank of India 42 a
company for the purposes of Section 3 of the Companies Act, 1956.

54. As explained in the foregoing paragraphs, Section 2(17) of the

income Tax Act r.w.s. 2(26) which defines „company‟ to mean a
company formed and registered under the Companies Act, 1956, does
not meet the requirement of being a company in the case of assessee
bank, because the Indian company has to be formed and registered
under the Companies Act. Notwithstanding that Section 11 of the
Acquisition Act deems assessee bank to be a company for the purpose
of Income Tax Act, but that does not lead to an inference that merely
regarded as a company for the purpose of the Income Tax Act it is also
Company registered under the Companies Act. The fiction created by
Section 11 of the Acquisition Act, does not imply that the assessee bank
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 13 of 16
would also become a company for the purpose of the Companies Act for
which Clause (b) of Sub-Section 2 of Section 115JB is applicable.

55. In the earlier part of the order, we have already noted that by the
Acquisition Act, the banking business of the existing bank was
transferred from Union Bank of India Ltd to The Union Bank of India.
The earlier entity, i.e., Union Bank of India Ltd. was a company under
the earlier Companies Act, however, that company as a whole was not
taken over or acquired but only banking business was acquired by the
Acquisition Act. That is the reason why Union Bank of India Ltd. still
existed at the point of acquisition and continues till now and the
shareholders of ITA No.424/Mum/2020 & 3740/Mum/2018 The Union
Bank of India & Central Bank of India 43 Union Bank of India Ltd.
were paid compensation as a consideration for acquiring the banking
business. It was by the Acquisition Act that these banks were
nationalized and the banking business was acquired from the erstwhile
banking companies. These new acquiring banks including Union Bank
of India is neither registered under the Companies Act, 2013 nor under
any other previous company law. Already the Hon’ble Supreme Court
in the case of Rustom Cavasjee Cooper v. Union of India (supra) as
noted above, the Hon’ble Supreme Court had held that only
undertaking was acquired for the banking companies acquisition and
transfer of invoking ordinance which was promulgated on 19/06/1969,
which culminated into the Act of Banking Companies (Acquisition and
Transfer of Undertaking) Act,1970. Thus, assessee cannot be treated as
a company under the Companies Act, because it was never registered
under the Companies Act. Ergo, the deeming fiction by way of Section
11 of the Acquisition Act has to be read purely in the context for the
purpose of Income Tax Act where the corresponding new bank have
been deemed to be an Indian Company and a company in which public
are substantially interested. This deeming section cannot be extended to
a company registered under the Companies Act to which alone Section
115JB is applicable.

56. Thus, we hold that Section 11 of the Acquisition Act which deals a
corresponding new bank treated as Indian company for the purpose of
Income Tax, however, Clause (b) in Sub-Section 2 to Section 115JB
does not permit treatment of such bank as a company for the purpose of
the said clause, because it should be ITA No.424/Mum/2020 &
3740/Mum/2018 The Union Bank of India & Central Bank of India 44
company to which second proviso to sub-section (1) to Section 129 of
the Companies Act is applicable. The said proviso has no application to
the corresponding new bank as it is not a banking company for the
purpose of the said provision. The expression “company” used in
section 115JB(2)(b) is to be inferred to be company under the
Companies Act and not to an entity which is deemed by a fiction to be a
company for the purpose of the Income Tax Act. 57. Before us, ld.
Counsel has given various references under the Income Tax Act itself
where the corresponding new bank and a banking company have been
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 14 of 16
treated separate and independent from each other for which our
reference was also drawn to Section 36(1)(viii) & 72A. Apart from that,
it is noticed that, Section 194A(1) of the Act which provides that if any
specified person is responsible for paying to a resident any income by
way of interest is obliged to deduct tax at source, however, Section
194A(3) provides that Section 194A(1) shall not apply if the payment
has been made to certain entities. Clause (iii) of subsection (3) of
section 194A, deals with such entities. The said clause reads as under:-
iii) to such income credited or paid to- (a) any banking company to
which the Banking Regulation Act, 1949 (10 of 1949), applies, or any
co-operative society engaged in carrying on the business of banking
(including a co-operative land mortgage bank), or (b) any financial
corporation established by or under a Central, State or Provincial Act,
or ITA No.424/Mum/2020 & 3740/Mum/2018 The Union Bank of India
& Central Bank of India 45 (c) the Life Insurance Corporation of India
established under the Life Insurance Corporation Act, 1956 (31 of
1956), or (d) the Unit Trust of India established under the Unit Trust of
India Act, 1963 (52 of 1963), or (e) any company or co-operative
society carrying on the business of insurance, or (f) such other
institution, association or body [or class of institutions, associations or
bodies] which the Central Government may, for reasons to be recorded
in writing, notify in this behalf in the Official Gazette: [Provided that
no notification under this sub-clause shall be issued on or after the 1st
day of April, 2020;]

57. The aforesaid clause (f) provides that if Central Government

notifies any such entity then TDS is not to be deducted. It is very
relevant to note that at the time of Acquisition Act was enacted, Central
Government had issued a Notification No. SO 710 dated 16/02/1970
[1970] [Reported in 75 ITR (Stat) 106] which reads as under:-

58. Income-tax Act, 1961: Notification under sec. 194A(3)(iii)(f)

Notification No. S. O. 710, dated February 16, 1970. (1) In pursuance
of sub-clause (f) of clause (iii) of sub-section (3) of section 194A of the
Income-tax Act, 1961 (43 of 1961), the Central Government hereby
notify with effect from the 19th July, 1969, the following banks for the
purposes of the said sub-clause:-

1. Indian Overseas Bank, 151, Mount Road, Madras

2. Indian Bank, Indian Chamber Building, Madras-1. ITA
No.424/Mum/2020 & 3740/Mum/2018 The Union Bank of India &
Central Bank of India 46
3. Allahabad Bank, 14, India Exchange Place, Calcutta-1.
4. Dena Bank, Devkaran Nanjee Building, 17, Horniman Circle,
Fort, Bombay-1.
5. Canara Bank, 112, Jayachamarajendra Road, Bangalore-1.
6. Union Bank of India, 66/80, Apollo Street, Fort, Bombay-1.
7. United Commercial Bank, 10, Brabourne Road, Calcutta-1.
8. Bank of Baroda, 3, Walchand Hirachand Marg, Bombay-1.
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 15 of 16
9. Punjab National Bank, Parliament Street, New Delhi-1.
10. Bank of India, 70/80 Mahatma Gandhi Road, Bombay-1.
11. Central Bank of India, Mahatma Gandhi Road, Bombay-1.
12. United Bank of India, 4, Narendra Chandra Datta Srani (Clive
Ghat Street), Calcutta-1.
13. Bank of Maharashtra, 1177 Peth, Poona-2.
14. Syndicate Bank, Manipal, Mysore State, Mysore

59. Thus, the aforesaid notification read with provision of Section

194A(3), makes it clear that even Government of India considers the
above entities separate and distinct from banking companies. Once
under the Income Tax Act, Legislature itself has made a distinction for
the aforesaid banks including the assessee are not covered as banking
company, then, this further buttresses the point that these banks are
separate and distinct from other banking companies.

60. Accordingly, the question referred to Special Bench is decided in

favour of the assessee banks that clause (b) to sub section (2) of section
115JB of the Income-tax Act inserted by Finance Act, 2012 w.e.f. 1-4-
2013, that is, from assessment year ITA No.424/Mum/2020 &
3740/Mum/2018 The Union Bank of India & Central Bank of India 47
2013-14 onwards, are not applicable to the banks constituted as
'corresponding new bank' in terms of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1970 and therefore, the
provision of Section 115JB cannot be applied and consequently, the tax
on book profits (MAT) are not applicable to such banks.”

8.2 In view of the above orders of the Tribunal cited (supra), taking a
consistent view, we allow this ground taken by the assessee.

9. Ground No.5 is the consequential ground with regard to adjustments to

book profits and computation of income u/s 115JB of the Act.

9.1 Since the ground No.4 of the assessee’s appeal deciding on the issue of
applicability of provisions of section 115JB of the Act is already allowed in favour
of the assessee bank by following the earlier order of this Tribunal cited (supra) as
well as respectfully following the decision of the ITAT, ‘Special Bench’ Mumbai,
the ground no.5 of the assessee’s appeal becomes infructuous.”

7.1 In view of the above order of the Tribunal cited (supra), taking
a consistent view, we held that provisions of section 115JB of the
Act cannot be applied to assessee bank and consequently the tax on
book profits (MAT) are not applicable to assessee’s bank.
 ITA No.234/Bang/2025
Bank of Baroda (Erstwhile Vijaya Bank), Mumbai
Page 16 of 16
7.2 We also make it clear that since the issue of applicability of
the provisions of section 115JB of the Act is already allowed in
favour of the assessee bank, the ground no. 4 of the assessee’s
appeal being consequential becomes infructuous.

8. In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 4th Apr, 2025

Sd/- Sd/-
(Laxmi Prasad Sahu) (Keshav Dubey)
Accountant Member Judicial Member

Bangalore,
Dated 4th Apr, 2025.
VG/SPS

Copy to:

1. The Applicant
2. The Respondent
3. The CIT
4. The DR, ITAT, Bangalore.
5 Guard file
By order

Asst. Registrar,
ITAT, Bangalore.