By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi, Chartered Accountants
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.
