22. [2017] 78 taxmann.com 123 (Mumbai – Trib.) Goldberg Finance (P.) Ltd. vs. ACIT ITA No. : 7496 (Mum) of 2013 A.Y.: 2009-10 Date of Order: 19th January, 2017

Section 115JB – Clause (iic) inserted in Explanation 1 to section 115JB by the Finance Act, 2015 is remedial and curative in nature and is to be reckoned as retrospective. It was never the purpose of the Act to tax any income or receipts which is otherwise not taxable under the Act.

FACTS 

During the previous year relevant to AY 2009-10 the assessee company was a member of two AOPs viz. Cosmos Estate and Cosmos Properties. The assessee received share of income amounting to Rs. 54,58,717 from Cosmos Properties. This amount was credited to Profit & Loss Account. Since the amount was credited to P & L Account, the Assessing Officer (AO) charged it to tax u/s. 115JB of the Act. 

Aggrieved, the assessee preferred an appeal to CIT(A) who confirmed the action of the AO by relying on the order of the Tribunal, for earlier year, in case of the assessee.

Aggrieved, the assessee preferred an appeal to the Tribunal where it contended that Clause (iic) inserted by the Finance Act, 2015 w.e.f. 1.4.2016 provides that the amount of income being share of the assessee in the income of the AOP on which no income tax is payable in accordance with the provisions of section 85 and any such amount is credited to P&L account, then same shall be reduced while computing the book profit is curative in nature and should be applied retrospectively. It was also contended that this amendment is subsequent to the decision of the Tribunal, in the case of assessee, for earlier year.

HELD 

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 to MAT. If an amendment in law has been brought by the legislature in the statute which is curative in nature, to avoid unintended consequences 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. 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. 

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. 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.

This ground of appeal filed by the assessee was allowed by the Tribunal.