The Tribunal observed that the 2012 Finance Act amendment clearly extended MAT to nationalized banks, despite their formation under a special statute

In a significant ruling, the Special bench of Income Tax Appellate Tribunal ( ITAT ) of Mumbai held that nationalized banks are liable for Minimum Alternate Tax ( MAT ) following amendments introduced by the Finance Act of 2012. The ruling came in an appeal filed by the appellants/assessees, Union Bank of India and Central Bank of India. The premise of the case arose after the Assessing Officer (AO) assessed Union Bank of India and Central Bank of India for MAT on their book profits for the assessment year 2015-16. Get a Copy of Handbook To Income Tax Rules, Click here Historically, nationalized banks had been exempt from MAT due to their distinct legal status and their financial reporting standards, which are governed by the Banking Regulation Act, 1949, rather than the Companies Act. MAT, under Section 115JB of the Income-tax Act 1961 (ITA) had traditionally applied only to companies incorporated under the Companies Act, thus excluding banks formed through nationalization. However, the Finance Act of 2012 introduced amendments that expanded the scope of MAT to cover companies governed by other laws, including nationalized banks formed under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The Revenue Department argued that these amendments made nationalized banks subject to MAT, and accordingly assessed the banks for the tax. Get a Copy of Handbook To Income Tax Rules, Click here In response, assessee-banks contested the assessments before the Commissioner of Income Tax (Appeals) [CIT(A)], arguing that they were not companies under the Companies Act and should not be treated as such for the purposes of MAT. The banks pointed to previous court rulings, including those from the Bombay High Court, which had exempted them from MAT prior to the 2012 amendment. They also stressed that their financial reporting followed the Banking Regulation Act 1949, which they believed should exclude them from MAT liability. In opposition , the Revenue Department countered by stating that the 2012 amendment had explicitly brought all companies, including those governed by special statutes like the Banking Companies Act, under the MAT regime. According to the department, Section 11 of the Banking Companies Act classified nationalized banks as companies for the purposes of income tax, thereby making them subject to MAT after the legislative change. Get a Copy of Handbook To Income Tax Rules, Click here The CIT(A), after hearing both sides, decided to rule in favour of the Revenue Department. The case was then escalated  to a Special Bench of the ITAT, where the assessee- banks sought relief from the tax assessments. Before the ITAT, both the parties reiterated the same arguments they submitted before the CIT(A). After a detailed review of the arguments, the special bench of Mr CV Bhadang, Mr BR Baskaran and Amit Shukla ruled in favor of the Revenue Department. The tribunal observed that the 2012 amendment clearly extended MAT to nationalized banks, despite their formation under a special statute. Get a Copy of Handbook To Income Tax Rules, Click here The ITAT also dismissed the assessee-banks’ reliance on earlier rulings, stating that those precedents no longer held relevance after the legislative changes brought by the Finance Act of 2012. The tribunal further clarified that even though the banks prepared their financial statements under the Banking Regulation Act, this did not exempt them from MAT. With this ruling, the ITAT confirmed that nationalized banks, including Union Bank of India and Central Bank of India, are liable for MAT from the assessment year 2013-14 onwards.