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TMI Blog2019 (6) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed. - ITA No. 9090/Mum/2010 - - - Dated:- 22-5-2019 - Shri G.S. Pannu,Vice Presidentand Shri Pawan Singh, Judicial Member For the Appellant : Shri Mayur Kisnadwala (AR) For the Respondent : Shri Ajay Kumar Keshari (DR) ORDER PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee under section 253 of the Income-tax Act ( the Act ) is directed against the order of ld. CIT(A)-39, Mumbai dated 01.11.2010 which arised from assessment order passed under section 143(3) on 29.03.2005 for Assessment Year 2002-03. 2. The assessee has raised the following ground of appeal : 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in confirming the assessment on the appellant of a sum of ₹ 1,98,01,451/- being the amount assessed as income of the AOP styled and named as LGE C-Patel JV. On true reading of section 86, the impugned amount needs to be excluded from the total income of the assessee for computation book profits for MAT purposes u/s 115JB. 3. Brief facts of the case are that the assessee-company is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of Assessing Officer. Thus further aggrieved by the order ld CIT(A), the assessee has filed present appeal before us. 5. This appeal was decided vide order dated 28.08.2017. However, the order was recalled on 13.12.2018 on Miscellaneous Application filed by the assessee vide M.A. No. 182/Mum/2018. Thus, this appeal was fixed for hearing afresh. 6. We have heard the submission of Ld. authorized representative (AR) of the assessee and Ld. departmental representative (DR) for the Revenue and perused the record. The Ld. AR of the assessee submit that so far as the issue relating to the completion of book profit u/s 115JB is concerned, the assessee treated the share of income from AOP in its book in the profit and loss account and once it is a part of net profit shown in the P L account, then it has to be computed part of book profit as to adjustment as provided under Explanation 1 to section 115JB. The Ld. AR submits that the amendment has been brought by Finance Act, 2015 whereby clause (iic) have been inserted w.e.f. 01.04.2016, which provides that amount of income being share of assessee in the income AOP, no tax is payable in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of MAT. [Emphasis added is ours] 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 computa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant salestax 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 deduction claimed by the assessee which was on account of salestax 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 Mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, 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. 11. 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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