This amount has been attached towards the recovery of Minimum Alternate Tax (MAT) for the assessment year 1997-98 by the Department.

Delivering a judgement on MSEB plea to stay the attachment of its bank accounts until its appeal is being heard on April 2, the IT Tribunal criticised the I-T department and said that "the departmental authorities are not justified in recovering the amount, in respect of which a stay has been prayed for, by enforcing the orders issued under Section 226 (3) against the bankers."

The IT Tribunal further directed that the recovery of Rs 43.65 crore is stayed till the disposal of the appeal before the Tribunal on condition that "the assessee furnishes security to the satisfaction of the concerned officials within two weeks.

MSEB welcomed the IT Tribunal judgement and said that it is not entitled for the payment of MAT, and as far as "other income" is concerned, as the amount of profits derived by an industrial undertaking from the business of generation or generation and distribution of power is exempted as per the section 115 JA (iv) of the IT Act 1961.

The MSEB has taken a strong objection against the manner in which their bank account has been attached, especially when the hearing is scheduled for April 2 on the related appeal. The IT has already attached funds amounting to Rs 156.66 crore of the total MAT payment of Rs 206.12 crore for the assessment years 1998-99, 1999-00.

The MSEB in its application before the IT Tribunal said that it is not a company within the meaning of section 2(17) read with section 2(26) of the IT Act and that at any rate it is a highly debatable issue whether MSEB formed under the Electricity Supply Act, which does not conform to the requirements relating to the preparation of its accounts as prescribed by the Companies Act, 1956, and is covered by section 115JA of the IT Act.

Furthermore, MSEB said that the amount of profits derived by the industrial undertaking from the business of generation or generation and distribution of power are to be reduced from the book profits and the revenue subsidies and grants amounting to Rs 258.71 crore and "other income" of Rs 243.53 crore ought to have been excluded under the same provisions. If they are excluded, there would be a deficit.

MSEB contended that there exists a strong prima facie case in favour of the assessee-applicant or at any rate a highly arguable case which requires examination and deep consideration by the Tribunal.

The IT Tribunal admitted that it is satisfied that on merits the assessee would appear to have an arguable case and the contentions raised by the MSEB merit serious consideration when its appeal is heard.

"So far as the financial position is concerned, the reference to the paper cuttings produced by the MSEB counsel do show that all is not well because of certain recent developments relating to the Dabhol Power Company, heavy monthly shortfall."

MSEB said that any "coercive" measures taken by the IT authorities are likely to affect the public confidence on the assessee board, "given the reach of the media in the present days." "The interests of the revenue are not going to be prejudiced beyond repair if the IT authorities have chosen to await the outcome of the stay application pending before the Tribunal.

The haste exhibited by these authorities perhaps, shows lack of faith in the judicial process and should be deprecated," MSEB added.