Statutory Body National Dairy Development Board Exempt From Section 115JB MAT Provisions and Section 14A Book Profit Adjustments

By | September 5, 2026
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Statutory Body National Dairy Development Board Exempt From Section 115JB MAT Provisions and Section 14A Book Profit Adjustments
Issue
Whether Section 115JB (Minimum Alternate Tax) and consequential adjustments under Section 14A to book profits apply to a statutory body established under a specific Act of Parliament.
Facts
  • Assessee Status: The assessee is the National Dairy Development Board (NDDB), a statutory body established by the Central Government under the National Dairy Development Board Act, 1987, to promote, finance, and support dairy and related rural industries.
  • Assessment Years: The dispute pertains to Assessment Years 2010-11 to 2013-14.
  • Core Dispute: The tax authorities sought to apply the Minimum Alternate Tax (MAT) provisions under Section 115JB and make consequential adjustments/additions under Section 14A while computing the assessee’s book profit.
Decision
  • Inapplicability of MAT: Following the binding judicial precedent of the Kerala High Court in Kerala State Electricity Board v. Dy. CIT, the provisions of Section 115JB cannot be pressed into service against a statutory body while making an assessment of tax payable under the Income-tax Act, 1961.
  • Invalidation of Section 14A Adjustments: Since Section 115JB itself does not apply to the assessee, any consequential adjustment made under Section 14A to the computation of book profits does not survive.
  • Relief Granted: The issue was decided entirely in favor of the assessee [Paras 19 and 20].
Key Takeaways
  • Exemption of Statutory Bodies from MAT: Entities created by specific statutes rather than incorporated under the Companies Act are generally outside the scope of Section 115JB MAT provisions.
  • Consequential Adjustments Void: When the foundational applicability of Section 115JB fails, secondary additions—such as disallowances under Section 14A added back to book profits—automatically become infructuous and unsustainable.
HIGH COURT OF GUJARAT
Principal Commissioner of Income-tax
v.
National Dairy Development Board
BHARGAV D. KARIA and Pranav Trivedi, JJ.
R/Tax Appeal Nos. 556, 560, 569, 645, 646 & 656 of 2025†
JULY  13, 2026
Rutvij R. Patel for the Appellant. B.S. Soparkar for the Respondent.
ORDER
Bhargav D. Karia, J. – Heard learned Senior Standing counsel Mr. Rutvij R. Patel for the appellants and learned advocate Mr. B.S. Soparkar for the respondent.
2. These Tax Appeals are filed by the Revenue under section 260A of the Income Tax Act, 1961 (For short “the Act”) against the common judgment and order dated 02.05.2025 passed by the Income Tax Appellate Tribunal, Ahmedabad (For short “the Tribunal”) for the Assessment Years 2010-2011 to 2013-2014.
3. Since common judgment and order for different Assessment years is under challenge and since the issues are common in all the tax appeals, substantial questions of law are recorded from Tax Appeal No.656 of 2025:
“A] “Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal is justified in quashing the rectification order holding that MAT u/s 115JB of the Act is not leviable even under the post amendment by Finance Act, 2012 effective from 01/04/2013, without appreciating the fact that in view of the insertion of clause (b) to Section 115JB(2) of the Income-tax Act, the assessee viz. the National Dairy Development Board (NDDB), being a statutory corporation established under a Central Act and falls within ‘any other class of company” as per the second proviso to Section 129(1) of the Companies Act, 2013, clearly falls within the ambit of the provisions of Section 115JB of the Income-tax Act, 1961?
[B] “Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal is justified in quashing the rectification order holding that MAT u/s 115JB of the Act is not leviable in the case of National Dairy Development Board, without appreciating the fact that the assessee is consistently filing returns of income in the status of company and being assessed to tax in the status of a company and have declared book profit of Rs.27.10 Crores under the MAT Schedule in its return?”
[C] Whether the Appellate Tribunal has erred on facts and in law in deleting disallowance under Section 14A of the Act added in the computation of book profit u/s 115JB of the Act as per clause (f) to Explanation 1 of Section 115JB(2) of the Income-tax Act, 1961 on the ground that MAT provisions are not applicable?”
4. The respondent assessee National Dairy Development Board is a statutory body established under the National Dairy Development Board Act, 1987 by the Central Government with the object of promoting, financing and supporting diary and related rural industries.
5. Section 2(17) of the Act defines “company” as under:
(17) “company” means-
(i) any Indian company, or
(ii) any body corporate incorporated by or under the laws of a country outside India, or
(iii) any institution, association or body which is or was assessable or was assessed as a company for any assessment year under the Indian Income-tax Act, 1922 (11 of 1922) or which is or was assessable or was assessed under this Act as a company for any assessment year commencing on or before the 1st day of April, 1970, or
(iv) any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which is declared by general or special order of the Board to be a company : Provided that such institution, association or body shall be deemed to be a company only for such assessment year or assessment years (whether commencing before the 1st day of April, 1971 or on or after that date) as may be specified in the declaration;]”
6. Section 2(26) of the Act defines “Indian Company” as under:
26) “Indian company” means a company formed and registered under the Companies Act, 1956 (1 of 1956), and includes-
(i) a company formed and registered under any law relating to companies formerly in force in any part of India (other than the State of Jammu and Kashmir [and the Union territories specified in sub-clause (iii) of this clause]);
[(ia) a corporation established by or under a Central, State or Provincial Act;
(ib) any institution, association or body which is declared by the Board to be a company under clause (17);]
(ii) in the case of the State of Jammu and Kashmir, a company formed and registered under any law for the time being in force in that State;
[(iii) in the case of any of the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry, a company formed and registered under any law for the time being in force in that Union territory :]
Provided that the [registered or, as the case may be, principal office of the company, corporation, institution, association or body] in all cases is in India;
7. As per the provisions of section 2(20) of the Companies Act, 2013, “company” is defined as under:
“(20) Company means a company incorporated under this Act or under any previous company law.”
8. Section 115JB of the Act reads as under:
SECTION 115JB : Special provision for payment of tax by certain companies.
(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 income-tax at the rate of [eighteen and one-half per cent]]: [Provided that for the previous year relevant to the assessment year commencing on or after the 1st day of April, 2020, the provisions of this sub-section shall have effect as if for the words “eighteen and one-half per cent” occurring at both the places, the words “fifteen per cent” had been substituted.]
(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;
(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 45[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.”
9. The aforesaid provision of sub-section (2) has been amended with effect from 01.04.2013 by the Finance Act of 2012. Prior to amendment sub-section (2) reads as under:
“(2) Every assessee, being a company, shall, for the purposes of this Section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956).”
10. The Assessing Officer raised the liability under Minimum Alternate Tax (MAT) by computing Book Profit of the respondent assessee.
11. The Assessing Officer also passed the order under section 154 of the Act to rectify the assessment order and order giving effect of CIT(Appeals) in the first round.
12. CIT(Appeals) allowed the appeal filed by the assessee and deleted MAT liability fastened by the Assessing Officer on the ground that assessee is not liable to the provision of section 115JB of the Act.
13. Being aggrieved, the Revenue preferred appeals before the Tribunal. The Tribunal after considering the provisions of the Act, the provisions of the Companies Act, 1956 and the provisions of the Companies Act, 2013 dismissed the appeal of the Revenue. While dismissing the appeal, the Tribunal referred to and relied upon the decision of Kerala High Court in case of Kerala State Electricity Board v. Dy. CIT 329 ITR 91 (Kerala) which is confirmed by the Hon’ble Supreme Court in case of Dy. CIT v. Kerala State Electricity Board 447 ITR 193 (SC).
14. The Hon’ble Kerala High Court while allowing the appeal filed by the assessee held as under:
“14. It may be mentioned here that under Section 166 of the Companies Act every Company is mandated to hold a general meeting in each year. Section 210 mandates that every year the Board of Directors of the Company in the general meeting shall lay before the Company a balance sheet as at the end of the relevant period and also a profit and loss account for the period. Parts II and III of Schedule VI to the Companies Act specify the method and manner of maintaining the profit and loss account.
15. However, the appellant though is by definition a Company under the Income Tax Act and deemed to be a Company for the purpose of Income Tax Act, (by virtue of the declaration under Section 80 of the Electricity Supply Act) it is not a Company for the purpose of Companies Act. Therefore, the appellant is not obliged to either to convene an annual general meeting or place its profit and loss account in such general meeting. As a matter of fact, a general meeting contemplated under Section 166 of the Companies Act is not possible in the case of the appellant as there are no share holders for the appellant Board. On the other hand, under Section 69 of the Electricity Supply Act, the appellant is obliged to keep proper accounts, including the profit and loss account, and prepare an annual statement of accounts, balance sheet, etc. in such form as may be prescribed by the Central Government and notified in the official gazette. The prescription of the rules in this regard is required to be made in consultation with the Comptroller and Auditor-General of India and also the State Governments. Such accounts of the appellant are required to be audited by the Comptroller and AuditorGeneral of India or such other person duly authorised by the Comptroller and Auditor-General of India. The accounts so prepared along with the audit report is required to be laid annually before the State Legislature and also to be published in the prescribed manner and copies of such publication shall be made available for sale at a reasonable price, obviously for the benefit of the general public who wish to scrutinise the accounts.
16. Thus, it can be seen that coming to the maintenance of the accounts, the appellant though is deemed to be a “Company” – both by virtue of operation of Section 80 of the Income Tax Act for the purpose of Income Tax Act and by virtue of the definition of the expression “Company” under the Income Tax Act (which is already examined earlier) – the appellant is required to keep and maintain its accounts in a manner specified by the Central Government, but not in the manner specified in the Companies Act. Therefore, the question is whether the legal fiction contemplated under Section 115JB can be pressed into service while making the assessment of income tax payable by the appellant.
17. It must be remembered that Section 115JB creates a legal fiction regarding the total income of the assessees which are Companies. The book profit of the Company is deemed to be total income of the assessee in the circumstances specified in the said Section, which are already noticed earlier. The expression “book profit” for the purpose of the said Section is explained in the Section itself to mean the net profit as increased or decreased by the various amounts shown in the various sub-clauses of the Section. The “net profit” itself must be the net profit as shown in the profit and loss account of the Company. Sub-section (2) mandates that the profit and loss account of the Company is required to be prepared in the manner specified therein. Though in view of the requirement under Section 69 of the Electricity Supply Act the appellant is required to maintain accounts in a different form than the one contemplated under Section 115JB(2), the prescription under Section 69 is only regarding the general duty of the appellant for the purpose of Electricity Supply Act. Nothing in theory prevents the Parliament from obligating the appellant to prepare another profit and loss account as prescribed under Section 115JB(2) for the purpose of the Income Tax Act. The question is whether such an obligation is created under Section 115JB (2) in so far as the appellant is concerned. In examining the said question, the legislative history and the mischief sought to be cured by the Legislature in making the special deeming provision, in our opinion, would be relevant.
18. Coming to the legislative history of Section 115JB and its fore-runners – Sections 115J and 115JA – we have already noticed that they provided for the determination of the total income of the Companies by a fictitious process. However, at the earliest point of time when such a fictitious process is invented, i.e. when Section 115J was introduced, the Section expressly excluded from its operation bodies like the appellant. Coming to Section 115JA, though such express exclusion is absent, the Central Board of Direct Taxes issued a Circular – No.762 dated 18th February 1998 – (which is binding on the Department, see K.P. Varghese v. I.T.O. [(1981) 131 ITR 597 (SC)]* and Ranadey Micronutrients v. Collector of Central Excise [1996 (97) ELT 19 (SC)] excluding the bodies like the appellant from the operation of the said Section. Though under the normal rules of interpretation of statutes the omission of a clause which existed in the statute at some point of time by a subsequent amendment would indicate that the legislature intended not to give the benefit of such clause any more to those who were getting the benefit of such exclusion clause, in our opinion, it is not an absolute rule. The other attendant circumstances, the context, the history and the mischief sought to be remedied by the amendment are all required to be examined before reaching at definite conclusion.
19. The Circular No.762 not only is binding on the respondents, but also explains the purpose in introducing Section 115JA. The relevant portion reads as follows:-

“46.1 In recent times, the number of zero-tax companies and companies paying marginal tax has grown. Studies have shown that in spite of the fact that companies have earned substantial book profits and have paid handsome dividends, no tax has been paid by them to the exchequer.

46.2 The Finance Act has inserted a new section 115JA of the Incometax Act, so as to levy a minimum tax on companies who are having book profits and paying dividends but are not paying any taxes. The scheme envisages the payment of a minimum tax by deeming 30 per cent of the book profits computed under the Companies Act, as taxable income, in a case where the total income as computed under the provisions of the Income-tax Act, is less than 30 per cent of the book profit. Where the total income as computed under the normal provisions of the Incometax Act, is more than 30 per cent of the book profit, tax shall be charged on the same.

46.3 The effective minimum alternate tax, at the existing rates of taxation works out to 12 percent of the book profits.

46.4 Income arising from free trade zone (FTZ), export oriented undertakings (EOUs), charitable activities, investment by a venture capital company and other exempted incomes (section 10) are excluded from the purview of the alternate tax.

46.5 Since the alternate tax is applicable only where the normal total income computed is less than 30 per cent of the book profits, so long as the enterprises (other than FTZ units and EOUs) earning income from export profits do not have their component of export income higher than 70 per cent of the book profits, the provisions of section 115JA will not be attracted. In other words, the MAT will apply only to such cases where export profits forming part of book profits of an assessee exceed 7- per cent of the total profits.

46.6 Companies engaged in the business of generation and distribution of power and those enterprises engaged in developing, maintaining and operating infrastructure facilities under sub-section (4A) of section 80–IA are exempted from the levy of MAT, so that the incentive given to infrastructure development is not affected”.

It can be seen from the above that the legislature took note of the fact that a number of Companies paying marginal tax and also zerotax has grown. Such Companies earned substantial book profits and paid handsome dividends to the share holders without paying any tax to the exchequer. Such a result was achieved by such Companies by taking advantage of the then existing legal position which permitted the adoption of dual accounting policies and practices, one for the purpose of computation of income tax and another for the purpose of determining the book profits for the purpose of payment of dividends. Therefore, the amendment was made to plug the loophole in the law. However, the CBDT understood that Companies engaged in the business of generation and distribution of electricity and Enterprises engaged in developing, maintaining and operating infrastructure facilities, as a matter of policy, are not brought within the purview of the amendment (Section 115JA) for the reason that such a policy would promote the infrastructural development of the country. Such an understanding of the CBDT is binding on the department.
20. If that is the background in which Section 115JA is introduced into the Income Tax Act, Section 115JB, which is substantially similar to Section 115JA, in our opinion, cannot have a different purpose and need not be interpreted in a manner different from the understanding of the CBDT of Section 115JA.
21. Another submission made by the learned counsel for the appellant is that in view of the judgment of the Supreme Court in C.I.T. v. B.C.Srinivasa Setty [(1981) 128 ITR 294 (SC)] and CIT v. Eli Lilly and Co. (India) P.Ltd. [(2009) 312 ITR 225 (SC)], where the computation provision could not be applied in a particular case, it is indicative of the fact that the charging Section also would not apply. It was held in B.S.Srinivasa Setty’s case (supra) as follows:-

“Section 45 is a charging section. For the purpose of imposing the charge, Parliament has enacted detailed provisions in order to compute the profits or gains under that head. No existing principle or provision at variance with them can be applied for determining the chargeable profits and gains. All transactions encompassed by s.45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by s.45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the I.T.Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise, one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legislative pattern discernible in the Act is against such a conclusion. It must be borne in mind that the legislative intent is presumed to run uniformly through the entire conspectus of provisions pertaining to each head of income. No doubt there is a qualitative difference between the charging provision and a computation provision. And ordinarily the operation of the charging provision cannot be affected by the construction of a particular computation provision. But the question here is whether it is possible to apply the computationprovision. That pertains to the fundamental integrality of the statutory scheme provided for each head”.

In Eli Lilly and Co. (India) P.Ltd. case (supra) also, the apex Court has held as follows:-

On the question as to whether there is any inter-linking of the charging provisions and the machinery provisions under the 1961 Act, we may, at the very outset, point out that in the case of CIT v. B.C.Srinivasa Setty reported in [1981] 128 ITR 294 this court has held that the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section”.

22. Another reason is that the appellant or bodies similar to the appellant, which are totally owned by the Government – either State or Central – have no share holders. Profit, if at all, made by the appellant would be for the benefit of entire body politic of the State of Kerala. In the final analysis, all taxation is meant for the welfare of the people in a Constitutional Republic. Therefore the enquiry as to the mischief sought to be remedied by the amendment becomes irrelevant. Therefore, we are of the opinion that the fiction fixed under Section 115JB cannot be pressed into service against the appellant while making the assessment of the tax payable under the Income Tax Act.”
15. Learned Senior Standing counsel Mr. Rutvij R. Patel for the appellant Revenue submitted that so far as Assessment Year 2013-2014 is concerned in view of amendment brought on statute with effect from 01.04.2013, the assessee will be subjected to MAT liability.
16. Learned Senior Standing Counsel Mr. Patel referring to the provisions of section 115JB(2)(b) which has come into effect by virtue of the Finance Act, 2012 submitted that the second proviso to sub-section (1) of section 129 of the Companies Act,2013 would be applicable to the assessee National Dairy Development Board and therefore, as per the said clause, assessee is required to prepare the accounts in accordance with the provisions of the Act governing it.
17. It was therefore, submitted that so far as Assessment Year 2013-2014 is concerned, it should be held that assessee is subject to MAT liability.
18. On the other hand learned advocate Mr. B.S. Soparkar appearing for the respondent assessee submitted that though respondent assessee is a company as per the provisions of 2(26) of the Act, National Dairy Development Board is not a company under the provisions of the Companies Act, 2013 as same is not registered as company as per the provisions of section 2(20) of the Companies Act, 2013. It was further submitted that as per the decision of Kerala High Court, which is upheld by the Hon’ble Supreme Court, the provisions of section 115JB of the Act would not be applicable to the assessee National Dairy Development Board.
19. Having heard the learned advocates for the parties and having considered the facts of the case, insofar as questions relating to liability of the respondent assessee National Dairy Development Board under section 115JB of the Act is concerned, in view of the decision of Hon’ble Kerala High Court in case of Kerala State Electricity Board (supra) which is reproduced here-in-above, we are of the same view that provision of section 115JB of the Act cannot be pressed into service against the assessee while making assessment of the tax payable under the Act.
20. Since section 115JB of the Act is not applicable to respondent assessee, the issue of disallowance under section 14A of the Act on the basis of applicability of section 115JB would also not give rise to any substantial question of law.
21. We therefore are of the opinion that no interference is called for in the impugned order passed by the Tribunal as no questions of law much-less any substantial questions of law can be said to have arisen from the impugned common order.
22. Appeals are accordingly dismissed.