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TMI Blog2019 (5) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the grounds of appeal given above. 2. The only issue arises in these appeals of the revenue is regarding addition made by the AO on account of adjustment made in the book profit computed under section 115JB of the Act in respect of share of the assessee in the income of joint venture. 3. We have heard the ld. D/R as well as the ld. A/R and considered the relevant material on record. At the outset, we note that the ld. CIT (A) has deleted the addition made by the AO by following the decision of this Tribunal in assessee's own case for the assessment year 2014-15. We further note that the Tribunal vide order dated 23rd August, 2018 in ITA No. 759/JP/2018 for the assessment year 2014-15 has considered this issue in para 13 to 15 as under :- "13. We have heard the rival submissions as well as the relevant material on record. The Assessing Officer has rejected the contention of the assessee that the share of profit from AOP/Joint Venture shall be excluded for the computation of book profit U/s 115JB of the Act. The relevant finding of the Assessing Officer are as under: I have carefully considered the submission of the assessee and find the same not acceptable in view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, which has been inserted by the Finance Act, 2015 w.e.f. 01.04.2016. In the assessment order, it has held by the AO that the said clause was applicable w.e.f. 2016- 17 i.e. it was not applicable to the year under consideration and it was not made applicable retrospectively. It would be appropriate to reproduce clause (iic) to Explanation 1 to section 115JB 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 (v) It may be mentioned that the issue under consideration has been considered by the Hon'ble ITAT, Mumbai in the case of Goldgerg Finance (P.) Ltd. Vs ACIT [2017] 78 taxmann.com 123 (Mumbai - Trib.) .............................................. .................................................. (vi) It may be mentioned that in a number of judicial pronouncements, the case of Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273/122 Taxman 562 (SC), has been distinguished. In these judgements, it has been observed that the object of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the benefit of Section 86 shall not be available to the member of association or body. 15. For ready reference, we reproduce the provisions of Section 66, 67A and 86 of the Act as under: "Section 66. In computing the total income of an assessee, there shall be included all income on which no income-tax is payable under Chapter VII 38[* * *]. Section 67A. (1) In computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known [other than a company or a cooperative society or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India], whether the net result of the computation of the total income of such association or body is a profit or a loss, his share (whether a net profit or net loss) shall be computed as follows, namely :- (a) any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of his total income : Provided further that where no income-tax is chargeable on the total income of the association or body, the share of a member computed as aforesaid shall be chargeable to tax as part of his total income and nothing contained in this section shall apply to the case.] The co-joint reading of Section 66, 67A and 86 of the Act reveals that the Income tax shall be payable by the assessee in respect of his share in the income of association of persons or body or individuals computed in the manner provided in Section 67A subject to the condition that the total income of such association or body or person is not exempt from income tax. However, such share of member shall be included while computing the total income for the purpose of average marginal tax. The share of a partner in the total income of the firm is exempt as per provisions of Section 10(2A) of the Act and consequently is excluded from the total income of the partner and therefore, the said share shall be excluded while computing the book profit U/s 115JB of the Act as envisaged in clause (ii) of explanation (1) to the said Section. So far as second proviso to Section 86 of the Act is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uting 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 partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessments were made in the case of Allied Motors (P.) Ltd. (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. (supra). This Court, in Allied Motors (P.) Ltd. (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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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