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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI ASHWANI TANEJA
आदेश / O R D E R
PER AMIT SHUKLA, JUDICIAL MEMBER:
The aforesaid appeal has been filed by the assessee against the impugned order dated 25-09-2013, passed by the ld. CIT(Appeals)– 1, Thane for the quantum assessment passed u/s 143(3) of the Income Tax Act, 1961 for the assessment year 2009-10.
In the grounds of appeal, the assessee has raised the following issues:-
ITA 7496/M/13 2 “lA. The learned CIT (A) erred in holding that the appellant was liable to pay tax on Rs. 54,58,717/- being share in the income of the Association of Person (AOP) - M/s. Cosmos Properties. lB. The learned CIT (A) erred in arriving at the conclusion that appellants share in the income of the AOP, M/s. Cosmos Properties was liable to tax in the hands of the appellant not appreciating the provisions of section 67 A, 86 and 167B of the I.T. Act, 1961.
1C. The Id CIT (A) failed to appreciate that the income of the AOP, M/s. Cosmos Properties had been charged to tax in its own hands at maximum marginal rate in the assessments completed for A.Y.2009-1O u/s 143(3) and therefore the rationale advocated by the Id A.O did not hold good.
ID. The action of the Id CIT (A) in upholding the addition has resulted in double taxation of the same income, once in the hands of the AOP and again in the hands of the appellant.
2. The Id CIT (A) erred in arriving at the conclusion that Rs. 54,58,717/- being share of the appellant from the AOP was also chargeable as income u/s 115 JB of the IT. Act 1961.”
Brief facts qua the issue raised in ground No.1A and 1D are that the assessee is a Private Limited Company and a member of two Associations of Persons (AOP) namely, M/s Cosmos Estate and M/s Cosmos Properties. The assessee has received share of income amounting to Rs. 54,58,717/- from AOP, M/s Cosmos properties which was claimed as exempt under section 86 of the Act. The A.O. held that this share of profit is to be taxed in the assessee’s hand on the ground that the total income of M/s Cosmos Properties after claiming deduction u/s 80IB(10) was shown at Nil and total income of other AOP ITA 7496/M/13 3 M/s Cosmos Estate was also shown at Rs. Nil. The assessee had 20% share in the income of both the AOPs and since no tax was chargeable on the total income of AOP, therefore, the profit of the assessee from AOP was chargeable to tax in the hands of the assessee in terms of second proviso to section 86. The A.O. further observed that both the AOPs had shown “Nil” income after claiming deduction u/s 80IB(10), therefore, the assessee’s share in the income of both the AOP is to be computed at ‘Nil’ in terms of proviso to section 67A. Thus, he held that the share amount of Rs. 54,58,717/- received by the assessee from both the AOPs would be brought to tax u/s 86. The A.O. further held that the said income would be chargeable to tax in the hands of the assessee u/s 115JB. The relevant observation of the A.O. while computing the income u/s 115JB is as under:-
It is seen that the assessee company has shown the share of income from AOP and has included the same in its book profit in the P&L account. As per explanation (1) to sec. 115J B, the book profit means the net profit as shown in the P&L account for the relevant previous year. Therefore, the book profit of the assessee is to be computed on the basis of as shown in the P & L account. Further, explanation to sec. 115JB permits certain deductions from the book profits and such deduction are permissible with regard to the amount of income to which provisions of sec. 10. 10A, 10B and 12 applies, if such amount has been credited to the P&L account. Further, various clauses in the same explanation also permit deduction from book profit in respect of deductions available u/s 80HHC, 80HHE and 80 HHF. Deduction available u/s 86 is not mentioned in the said explanation. Consequently, even if the income of Rs. 54,58,717 received by the assessee as share in the income of the AOP is considered as exempt u/s 86, alternatively, such exemption would not be allowed for the purpose of ITA 7496/M/13 4 computation of income u/s 115JB in respect of the above income and thus tax would be chargeable u/s 115JB in the case of the assessee on an income of Rs. 54,58,717.
In the first appeal, the assessee has made detail submission before the ld. CIT(A), however, the ld. CIT(A) rejected the said contention and held that in A.Y. 2008-09, this issue has been decided against the assessee by the ld. CIT(A). Following the same precedence, he confirm the addition under the normal provisions of the Act and also u/s 115JB. The relevant conclusion of the ld. CIT (A) reads as under:- “In this appeal not only the issue involved is the same as in the immediately preceding year, but the appellant's submissions and even the grounds of appeal are the also the same. After having gone through, the A.O's observations in the assessment order and the appellant's detailed submissions on the same as reproduced above, I agree with the findings of my predecessor as reproduced above. Therefore, the amount of Rs. 54,58,717/- has rightly been brought to tax by the A.O. for the following reasons:
(i) Exemption to a member of an AOP that can be allowed is as per section 86 of the Act. As per this section share of a member in the income of an AOP computed in the manner provided in section 67 A shall not be included in the total income of the assessee. In the appellant's case its share in the "total income" of the AOPs as computed u/s 67 A of the Act is Nil. Therefore, Nil is the amount which is entitled for exemption u/s 86 of the Act.
(ii) The contention of the appellant that income has already been taxed in the hands of the AOP on maximum marginal rate of tax and taxing it again in the appellant's hands will amount to double taxation has not been found to be convincing because only Nil income has been taxed in the hands of the AOP. Therefore, taxing ITA 7496/M/13 5 the appellant's share in the profits of the AOP will not amount to double taxation of the same income.
(iii) The appellant's submission on the application of section 115JB to the share of the member is that any amount which is not the share of a member from an AOP cannot be included in the total income for levy of tax u/s 115 JB and the share of a member from the AOP is to be computed as per the provisions of section 67A of the I.T. Act 1961 and not otherwise. Further according to the appellant the share of profit from the AOP does not form part of the results of the company and therefore will not constitute a transaction of the business of the company. Therefore, the share of the appellant in the AOP will not be includable in the "book profit" of the company and therefore the same would not form part of income chargeable to tax u/s 115 JB of the LT. Act 1961. In this regard it is seen that the appellant has included its share in the profits of the AOP in its P&L Account. The book profits of the appellant have to be calculated on the basis of the Net Profit shown in the P&L Account. Only those items can be excluded from the book profits which are specifically so provided. In the case of the share of a member of an AOP no such specific exclusion is available. Therefore, the AO has rightly held that alternatively, the amount was chargeable to tax as per the provisions of section 115JB.”
Before us, the ld. Counsel for the assessee submitted that this precise issue had come up for consideration before the Tribunal in assessee’s own case in the A.Y. 2008-09, wherein the Tribunal has decided this issue in favour of the assessee so far as taxability under the normal provisions of the Act is concerned. However, regarding computation of book profit under section 115JB, this issue was decided against the assessee mainly for the reason that the assessee had itself credited the share of income of AOP in the P&L account. Thus, it was held that, there is no reason to exclude the profit which has been ITA 7496/M/13 6 credited in the P&L account and does not fall in any of the exclusions as illustrated in the Explanation 1 to section 115JB. Another vital fact pointed out by the ld. Counsel before us was that, in the assessment order of the AOP in the case of M/s Cosmos Properties for the A.Y. 2009-10 itself, the income has been determined at Rs. 2,72,93,590/- vide order dated 28-12-2011 disallowing the assessee’s claim for deduction u/s 80IB(10). Thus, the entire basis on which the assessment has been framed gets vitiated.
On the other hand, the ld. D.R. strongly relied upon the order of the ld. CIT(A).
After considering the aforesaid submission of the assessee and on perusal of the impugned order, we find that the ld. CIT(A) as regards the issue raised in ground nos. 1A to 1D, that is, the taxability of assessee’s share of income of Rs. 54,58,717/-, has followed the earlier appellate order of the CIT(A), which stands reversed by the Tribunal. Not only that, as pointed out by ld. Counsel the income of AOP, M/s Cosmos Properties has been charged to tax at a maximum margin rate in the assessment completed u/s 143(3) for the A.Y. 2009-10 vide order dated 28-12-2011, that is, entire income of Rs. 2,72,93,590/- on which the claim of deduction u/s 80IB(10) was made has been taxed. Thus, the entire premise of the taxing the amount in assessee’s hand gets vitiated. In any case, we find that this issue has been decided in favour of the assessee in assessee’s own case for A.Y. 2008-09, wherein the Tribunal has decided this issue after observing and holding as under:-
ITA 7496/M/13 7 “9. Rival contentions have been considered and record perused. From the record, we found that assessee company is a member of two AOPs, income of which was claimed as exempt u/s.10(2A) in the return of income. It was explained before the AO that assessee has wrongly claimed exemption u/s.10 (2A) and it is actually entitled for exemption u/s.86 in respect of share income received from two AOPs. However, the AO did not allow exemption u/s.86 on the plea that the profit of AOPs were eligible for deduction u/s.80IB (10). The AO stated that after claim of deduction u/s.80IB, the income of Cosmos Estate has become nill on which no tax is payable. In respect of Cosmos Properties, the AO stated that entire income was eligible for deduction u/s.80IB (10) except a sum of Rs.24,066/-. Accordingly, it was held by AO that income of Rs.24,066/- will be the amount on which tax will not be chargeable as per provisions of Section 86. Balance amount of Rs.2,18,39,396/- was brought to tax. The CIT (A) confirmed the action of the AO. Income of assessee was also found by the AO to be taxable u/s.115JB with respect to the share of income from two AOPs credited in the P&L account. There is no dispute to the fact that assessee was having share of income from two AOPs. As per 1st proviso of clause (a) to Section 86 of the IT Act, share of member in AOP is not includible in total income when the income of AOP is chargeable to tax in its own hands at a maximum marginal rate. We are not in agreement with the finding of the lower authorities that since both the AOPs have claimed deduction u/s. 80IB(10), the assessee’s share of income in these AOPs will not be eligible for exemption. It may be noted that Section 67A of the Income Tax Act provides “method for computing a member’s share in income of association of persons or body of individuals”. The income of the member company of the AOP is to be computed as per Section 67A of the Income Tax Act and the Income tax authorities cannot go beyond the provisions of Section 67A of the Act. U/s.86, whatever the share of the member company is computed u/s.67A of the Act, is deductible/will not be chargeable to tax, subject to the proviso to Section 86. Further as per Section 167B of the Act, the AOP will be chargeable to maximum marginal rate of tax if the income of the ITA 7496/M/13 8 member of AOP exceeds the maximum amount which is not chargeable to tax. As per second proviso to Section 86, if the total income of the AOP is less than the prescribed limit for taxation, then there will be no application of Section 86 while computing the total income of the member of AOP. So the income of the AOP is to be computed as per the provisions of the Act and the member’s share is to be computed as per the provisions of Section 67A of the Act and not otherwise. We accordingly set aside the order of the lower authorities and restore the matter to the file of the AO to work out the total income of the assessee as per the provisions of Section 67A read with provisions of Section 86 of the I.T. Act. Here, it is pertinent to mention that computation of share of the assessee will be dependent upon the final determination/computation of total income of the AOP. If the AOP will not be allowed deduction u/s.80IB, there will be enhancement in the share of the assessee to be computed u/s.67A of the Act. Hence, it is directed that the AO will also take into consideration the total income computed of the concerned AOPs while computing share of the assessee company.
10. From the record we also found that the AO has also brought to net of tax its book profit which included share of profit in two AOPs as per provisions of Section 115JB. In this regard contention of learned AR was that amount of share of member from an AOP cannot be included in total income for the purpose of Section 115JB, because income of AOPs have already suffered tax in their respective hands. We do not find any merit in the contention of learned AR insofar as the assessee company had credited their share of income from AOP in its book profit in P&L account and book profit has been worked out after taking into account such share of income in AOP. As per Section 115JB, the book profit means the net profit as shown in the P&L account for the relevant previous year. Therefore, book profit is to be computed on the basis of income shown in the P&L account subject to the adjustment as provided under Explanation 1 to Section 115JB. We had carefully gone through the adjustment provided under Explanation 1 and ITA 7496/M/13 9 found that nowhere the explanation provide for exclusion of such share of profit from AOP while computing income u/s.115JB of the Act. The contention of the learned AR to the effect that assessee has wrongly included the share of income from AOP in the P&L account, copy of Board Circular was also placed on record in support of proposition that income tax authority should point out any mistake on the part of assessee and tax should be levied on the correct income of assessee. We do not find any merit in the AR’s contention insofar as Section 115JB has been brought in statute to tax the book profit shown in the books of account as Part II & Part III of Schedule VI of the Companies Act. It is not the case of the assessee that share of income of AOP has not been credited in the P&L account as per Part II & Part III of the Schedule VI of the Companies Act. Since the profit and loss account so prepared has been approved by the Board of Director of Assessee Company, there is no reason to exclude the profit credited in the P&L account in respect of share of assessee’s income in two AOPs while computing book profit u/s.115JB. Accordingly, ground raised by assessee with regard to exclusion of such income while computing book profit u/s.115JB is not tenable.”
Thus, respectfully following the earlier year precedence, we hold that, so far as first issue is concerned as raised in ground No. 1A to 1D, the same is decided in favour of the assessee because in the order giving effect to the Tribunal’s, the A.O. has allowed the assessee’s contention and the Department has not filed any appeal before the Hon’ble High Court as informed by the ld. Counsel for the assessee. Thus, the issue raised vide ground nos. 1A to 1D is decided in favour of the assessee and accordingly, these grounds raised by the assessee are treated as allowed.
ITA 7496/M/13 10
So far as the issue relating to computation of book profit u/s 115JB on this amount is concerned, as noted above the Tribunal has decided this issue against the assessee on the ground that the assessee company itself has treated the share income from AOP in its book profit in the P&L account and once it is part of net profit shown in the P&L account, then it has to be computed as part of the book profit subject to adjustment as provided under Explanation 1 to section 115JB. Before us, the ld. Counsel for the assessee submitted that after the decision of the Tribunal, an amendment has been brought by Finance Act, 2015, whereby clause (ii)(c) have been inserted w.e.f. 01.04.2016 which provides that the amount of income being share of the assessee in the income of AOP on which no income tax is payable in accordance with the provisions of section 85 and any such amount is credited to the P&L account, then same shall be reduced while computing the book profit. He submitted that this amendment is curative in nature and should be applied retrospectively. The provision inserted is only meant for rationalizing the provision of computation of book profit which is evident from the Explanatory notes to Finance Act, 2015 dated 27.11.2015. If an amendment has been brought in the statute to remove the rigors of the law and to remove hardships on the taxpayers then it has to be given effect retrospectively. In the case of the partnership firm, the partner’s share of income was never included in the part of the book profit, therefore, in order to bring at par with the partnership firm, this provision has been extended to AOP also. In support of the proposition that amendment to section 115JB is curative in nature and should be applied retrospectively, he relied upon the following decisions:-
ITA 7496/M/13 11 (i) Allied Motors (P) Ltd. Etc. vs CIT - 224 ITR 0677(SC)(1997) (ii) CIT vs. Alom Extrusions Ltd., - 319 ITR 0306 (SC)(2009) (iii) CIT vs. J.H. Gotla -156 ITR 0323(SC)(1985) (iv) Rajeev Kumar Agarwal v. Addl CIT-34 ITR 0479 (Trib)(Agra)(2014) (v) CIT v. Rajinder Kumar - 362 ITR 0241 (Delhi)(2014) (vi) Dharamshibhai Sonami v. ACIT - Hon. Member SMC Bench, ITAT, Ahmedabad, order dt. 30.09.2016
On the other hand, the ld. D.R. submitted that if the statutory provision has been amended or any provision has been brought in the statute from a particular date, then the said provision shall operate from the said date itself. Therefore, the insertion of clause (ii c) brought in the statute w.e.f. 1.4.2016 will apply from A.Y. 2016-17 only and not retrospectively. Section 115JB are special provision and the case laws which has been relied upon by the ld. Counsel for the assessee are under the normal provisions of the Act and the same will not apply on the provisions contained in 115JB which is a separate code in itself.
We have heard the rival contentions and perused the relevant findings given in the impugned order. The addition of share income of AOP in the book profit has been made on the ground that the assessee itself has credited the share income from AOP in the P&L account and consequently the book profit has to be computed on the basis of amount shown in the P&L account. On a perusal of Explanation to Section 115JB specifically the second part dealing with exclusion/reduction from the book profit it can be seen that clause (ii) permits certain deduction from book profit with regard to the amount of ITA 7496/M/13 12 income to which the provisions of sections 10, 11 or 12 applies if such amount has been credited to the P&L account. The said clause reads as under:- “the amount of income to which any of the provisions of section 10 [other than the provisions contained in clause (38) thereof] or section 11 or section 12 apply, if any such amount is credited to the profit and loss account; or”
Section 10 includes section 10(2A) also which provides for exemption of share income of partner from the partnership firm. Thus, if share income of partner is credited to the profit & loss account, then, Explanation 1 to sec 115JB envisages its exclusion or deduction from book profit. However, there was no such enabling provision for the share income from the AOP which can be excluded from the computation of book profit. In order to extend this benefit and to provide remedial measures in the case of AOP also, a new clause has been inserted by the Finance Act, 2015 w.e.f. 1.4.2016, which reads as under:
(iic) the amount of income, being the share of the assessee in the income of an association of persons or body of individuals, on which no income tax is payable in accordance with the provisions of section 86 if any, such amount is credited to the profit and loss account; or The rationale behind this section has been explained in the Explanatory notes to the Finance Act 2015 in the following manner:-
“Rationalising the provisions of section 115JB The existing provisions contained in section 115JB of the Act provide that in the case of a company, if the tax payable on the ITA 7496/M/13 13 total income as computed under the Act in respect of any previous year relevant to the assessment year commencing on or after 1st day of April, 2012, is less than eighteen and one-half percent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable for the relevant previous year shall be eighteen and one-half percent of book profit. This tax is termed as minimum alternate tax (MAT). Explanation below sub- section (2) of section 115JB provides that the expression "book profit" means net profit as shown in the profit and loss account prepared in accordance with the provisions of the Companies Act, or in accordance with the provisions of the Act governing a company as increased or reduced by certain adjustments, as specified in the section.
Section 86 of the Act provides that no income-tax is payable on the share of a member of an AOP, in the income of the AOP in certain circumstances. However, under the present provisions, a company which is a member of an AOP is liable to MAT on such share also since such income is not excluded from the book profit while computing the MAT liability of the member. In the case of a partner of a firm, the share in the profits of the firm is exempt in the hands of the partner as per section 10(2A) of the Act and no MAT is payable by the partner on such profits.
In view of the above, it is proposed to amend the section 115JB so as to provide that the share of a member of an AOP, in the income of the AOP, on which no income-tax is payable in accordance with the provisions of section 86 of the Act, should be excluded while computing the MAT liability of the member under 115JB of the Act. The expenditures, if any, debited to the profit loss account, corresponding to such income (which is being proposed to be excluded from the MAT liability) are also proposed to be added back to the book profit for the purpose of computation of MAT.” [Emphasis added is ours] ITA 7496/M/13 14 This has been further explained and clarified by the CBDT Circular in the similar manner. From the reading of above clarification it is ostensible that, the background and intention behind for such an insertion of clause was that, in case of a partner of a firm, the share in the profit of the firm which is exempt in the hands of the partner in terms of section 10(2A), there were no liability to pay MAT by the partner on such profit. However, this benefit was lacking in the case of share of a member of an AOP where in certain circumstances was not taxable in hands of member in terms of section 86 were not excluded from the book profit while computing the MAT liability of the member. It was felt by the legislature that the share of member of an AOP on which no income tax is payable in accordance with the provisions of section 86 should be excluded while computing the MAT liability of the member u/s 115JB. It was further provided that expenditure if any debited to the P&L account corresponding to such income which is to be excluded from the MAT liability shall be added back to the book profit for the purpose of computation of MAT. The intention of the legislature which can be gauged by the Explanatory notes to the amending Act, was to provide similar remedy which was applicable to the partners whose share income from the profit of the firm was not liable for MAT. If a provision has been brought to extend the benefit to certain class of assessees which was earlier applicable to other class of assessees on a similar circumstances and is remedial in nature, then, the same has to be reckoned as retrospective. It is quite a trite proposition that explanatory Act which is curative in nature or any remedial statute is brought in the statute either to remedy unintended consequence or to provide benefit which is applicable to particular class of assessee and is ITA 7496/M/13 15 extended to other class of assessee, then, on reasonable interpretation it should be declared as retrospective in operation. In our opinion, if an amendment in law has been brought by the legislature in the statute which is curative in nature, to avoid unintended consequence and to provide similar benefit to other class of assessee, then, it has to be treated as retrospective in nature even though it has not been stated specifically by the amending Act. This proposition find strong support from the judgments of the Hon’ble Supreme Court in the case of Allied Motors (P) Ltd. Etc. v. CIT, 224 ITR 677 and in the case of CIT v. Alom Extrusions Ltd. 319 ITR 306. The Hon’ble Apex Court while interpreting the proviso to section 43B brought in the statute with a particular date was treated as curative and was held to be applicable retrospectively. The relevant observation of the Hon’ble Supreme Court in the case of Alom Extrusions Ltd. following the ratio of in the case of Allied Motors (P) Ltd. (supra) reads as under:-
“Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by the Parliament only w.e.f. 1st April, 2004, would become curative in nature, hence, it would apply retrospectively w.e.f. 1st April, 1988 (i.e. the date on which the related legal provision was introduced). Secondly, it may be noted that, in the case of Allied Motors (P) Ltd. Etc. vs. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC), the scheme of s. 43B of the Act came to be examined. In that case, the question which arose for determination was, whether sales-tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant sales- tax law should be disallowed under s. 43B of the Act while computing the business income of the previous year? That was a case which related to asst yr. 1984-85. The relevant accounting period ended on 30th June, 1983. The ITO disallowed the ITA 7496/M/13 16 deduction claimed by the assessee which was on account of sales- tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under s. 43B which, as stated above, was inserted w.e.f. 1st April, 1984. It is also relevant to note that the first proviso which came into force w.e.f. 1st April, 1988 was not on the statute book when the assessments were made in the case of Allied Motors (P) Ltd. Etc. (supra). However, the assessee contended that even though the first proviso came to be inserted w.e.f. 1st April, 1988, it was entitled to the benefit of that proviso because it operated retrospectively from 1st April, 1984, when s. 43B stood inserted. This is how the question of retrospectivity arose in Allied Motors (P) Ltd. Etc. (supra). This Court, in Allied Motors (P) Ltd. Etc. (supra) held that when a proviso is inserted to remedy unintended consequences and to make the section workable, a proviso which supplies an obvious omission in the section and which proviso is required to be read into the section to give the section a reasonable interpretation, it could be read retrospective in operation, particularly to give effect to the section as a whole. Accordingly, this Court in Allied Motors (P) Ltd. Etc. (supra), held that the first proviso was curative in nature, hence, retrospective in operation w.e.f. 1st April, 1988. It is important to note once again that, by Finance Act 2003 not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we hold that the Finance Act, 2003, is retrospective in operation. Moreover, the judgment in Allied Motors (P) Ltd. Etc. (supra) is delivered by a Bench of three learned Judges, which is binding on us. Accordingly, we hold that Finance Act, 2003, will operate retrospectively w.e.f. 1st April, 1988 (when the first proviso stood inserted). Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that Finance Act, 2003, to the above extent, operated prospectively. Take an example in the present case, the respondents have deposited the ITA 7496/M/13 17 contributions with the R.P.F.C. after 31st March (end of accounting year) but before filing of the Returns under the IT Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under s. 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under s. 43B of the Act. In our view, therefore, Finance Act 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988 when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate w.e.f. 1st April, 2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003.”
Thus, we are of the opinion that the clause (iic) inserted in Explanation 1 to section 115JB by the Finance Act 2015 is remedial and curative in nature as it was brought in the statute to provide similar benefit to the member of the AOP which was earlier applicable to the partner of the firm, therefore, it is to be reckoned as retrospective. This proposition can be viewed from another angle that, the amending Act had sought to bring parity between similar kind of situation faced by two class of assessees, where in one case, statute envisaged that if the income of the assessee is not taxable, that is, in case of partner the share income from the partnership firm, then it cannot be taxed as book profit under MAT liability. Similarly, in second case also, that is, in case of member of an AOP where no income-tax is payable on the ITA 7496/M/13 18 share of a member of an AOP in certain situations in terms of section 86, should also not be brought to tax under MAT liability. The legislature by this amendment has thus removed this imparity between two classes of assessees so that mischief or prejudice caused to other class of assessees should be removed. The mischief which has been sought to be remedied is that the share income of the member of the AOP which was not taxable in terms of section 86 was getting taxed under MAT while computing the book profit. This was also never the purpose of section 115JB to tax any income or receipts which is otherwise not taxable under the Act. If the intention of legislature was always that income which is not taxable under the normal provisions of the Act should not be brought to tax under MAT also, then it has to be interpreted that such a benefit has to be given to all and where the income is otherwise not taxable under the Act cannot be brought to be taxed under MAT. Therefore, any remedy brought by an amendment to remove the disparity and curb the mischief has to be reckoned as curative in nature and hence, is to be held retrospectively. Accordingly, this issue is allowed in favour of the assessee.
In the result, the appeal filed by the assessee company is allowed. Order pronounced in the open court on 19th January, 2017. आदेश क� घोषणा खुले �यायालय म� �दनांकः 19-01-2016 को क� गई । Sd/- sd/- (ASHWANI TANEJA) (AMIT SHUKLA) JUDICIAL MEMBER ACCOUNTANT MEMBER मुंबई Mumbai; �दनांक Dated 19-01-2016 [ ITA 7496/M/13 19 व.�न.स./ R.K. R.K. R.K., Ex. Sr. PS R.K.