Assistant Commissioner of Income Tax, Circle-2, Jaipur V. M/s. Om Metal infraproject Limited, Jaipur

ITA 759/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3352 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 31-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: B V MAHESHWARI C A DHK
• Keywords: Business income; Maximum Marginal Rate; Retrospective amendment
• Section: 43B; 14A; 115JB; 10

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 759/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S OM METAL INFRAPROJECT LTD., OM TOWER, M.I. ROAD, CHURCH ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACO 8245 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT-DR) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.V. MAHESHWARI (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/08/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 23/08/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28/03/2018 OF LD. CIT(A)-I, JAIPUR FOR THE A.Y. 201 4-15. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O N ACCOUNT OF EMPLOYEES CONTRIBUTION TO ESI & PF WITHOUT APPRECIA TING THE FACT THE ISSUE IS PENDING BEFORE THE HONBLE APEX COURT IN C IT V/S M/S SBBJ IN SLP (C) NO. 16249/2014? (II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWAN CE OF RS. 44,02,000/- U/S 14A R.W.R 8D OF THE I.T. ACT WHEN T HE ASSESSEE HAS ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 2 NOT SUO MOTO MADE DISALLOWANCE U/S 14A AND THEREFOR E THE CASE IS DISTINGUISHABLE FROM THE CASE OF M/S MAXOPP INVESTM ENT LTD. V/S CIT (SC)? (III) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CT(A) WAS JUSTIFIED IN DELETING THE ADJUSTMENT OF RS. 19,19,91,664/- MADE U/S 115JB WITH REGARD TO THE IN COME OF THE JV? (IV) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN HOLDING THAT CLAUSE (I IC) INSERTED IN EXPLANATION 1 TO SEC. 115JB BY FINANCE ACT, 2015 IS REMEDIAL AND CURATIVE IN NATURE WHEREAS IN THE ACT THIS CLAUSE I S APPLICABLE FROM 01.04.2016 I.E. FOR A.Y. 2016-17? THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR A DD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. 2. GROUND NO. 1 OF THE APPEAL IS REGARDING THE DISA LLOWANCE MADE ON ACCOUNT OF EMPLOYEES CONTRIBUTION TOWARDS ESI AND P F AS THE PAYMENT WAS NOT MADE WITHIN THE PRESCRIBED TIME LIMIT AS PER THE RESPECTIVE ACTS, WHICH WAS DELETED BY THE LD. CIT(A). 3. WE HAVE HEARD THE LD CIT-DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT THIS ISSUE IS COVERED BY THE DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SBBJ (2014) 363 ITR 70. W E FURTHER NOTE THAT AN IDENTICAL ISSUE WAS CONSIDERED AND DECIDED BY THI S TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2009-10, 2010-11 A ND 2012-13. THE ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 3 HONBLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 22/9/2017 HAS CONSIDERED THIS ISSUE IN PARA 4.2 AS UNDER: 4.2 THE ISSUE NO. 2, THE SAME IS NOW COVERED BY THE DECISION OF THIS COURT IN CIT VS STATE BANK OF BIKANER & JAIPUR (2014) 363 ITR 70 AGAINST WHICH SLP IS PREFERRED THEREFORE, IN VIEW OF THE EA RLIER DECISION TAKEN BY THIS COURT, THE ISSUE IS ANSWERED IN FAVOUR OF THE ASSESSEE SUBJECT TO SLP PENDING BEFORE THE SUPREME COURT. ACCORDINGLY IN VIEW OF THE EARLIER DECISION OF THIS TRIBUNAL AS WELL AS THE DECISION OF HON'BLE HIGH COURT IN ASSESSEES OWN CAS E, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) Q UA THIS ISSUE. HENCE, THIS GROUND OF REVENUES APPEAL STANDS DISMISSED. 4. GROUND NO. 2 OF THE APPEALS IS WITH REGARD TO DIS ALLOWANCE MADE U/S 14A OF THE INCOME TAX ACT, 1961 (IN SHORT THE AC T) READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES), WHICH WAS DELETED BY THE LD. CIT(A). DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE INVESTMENT OF RS. 44.02 CRORES IN SHARES AND INCOME FROM SAME IS EXEM PT. ACCORDINGLY, THE ASSESSING OFFICER PROPOSED TO MAKE DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES. THE ASSESSING OFFICER HAS COMPUTED THE DISALLOWANCE AS PER AMENDED RULES 8D AND EQUIVALENT TO 1% OF AVERAGE INVESTMENT AMOUNTING TO RS. 44.02 LACS. ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 4 5. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE INVESTMENT WAS AN OLD INVESTMENT IN THE SISTER CONCERN OF THE ASSESSEE AND NO FRESH INVESTMENT WAS MADE IN THE YEAR UNDER CONSIDERATION. FURTHER THE ASSESS EE HAS NOT USED ANY BORROWED FUND FOR THE PURPOSE OF INVESTMENT IN QUEST ION AND THEREFORE, WHEN THERE IS NO EXPENDITURE INCURRED BY THE ASSESSE E, NO DISALLOWANCE IS CALLED FOR U/S 14A OF THE ACT. THE ASSESSEE HAS ALS O PLEADED THAT THERE IS NO DIVIDEND INCOME EITHER ACCRUED OR RECEIVED BY TH E ASSESSEE, HENCE NO DISALLOWANCE IS CALLED FOR U/S 14A OF THE ACT. THE LD . CIT(A) AFTER CONSIDERING THE FACT THAT AS PER THE ASSESSEES BAL ANCE SHEET AS ON 31/3/2014, THE ASSESSEE WAS HAVING INTEREST FREE FUN D OF RS. 513.45 CRORES, WHICH WAS MUCH MORE THAN THE INVESTMENT. ACCO RDINGLY, FOLLOWING THE VARIOUS DECISIONS ON THE POINT, THE LD. CIT(A) HAS DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 6. BEFORE US, THE LD DR HAS SUBMITTED THAT THE PRED OMINANT PURPOSE OF INVESTMENT IS NOT RELEVANT FOR THE PURPOSE OF DI SALLOWANCE U/S 14A OF THE ACT AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S MAXOPP INVESTMENT LTD. V/S CIT 402 ITR 640. THE LD DR HAS S UBMITTED THAT THE ASSESSING OFFICER HAS COMPUTED DISALLOWANCE AS PER C LAUSE (II) OF RULE 8D, WHICH PROVIDES DISALLOWANCE EQUIVALENT TO 1% OF THE A VERAGE INVESTMENT. ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 5 7. ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEES OWN INTEREST FREE FUND COMPRISING OF SHARE CAPITAL AND RESERVE AND SURPLUS WAS RS. 513.45 CRORES AS ON 31/3 /2014 WHEREAS NO FRESH INVESTMENT WAS MADE BY THE ASSESSEE DURING TH E YEAR UNDER CONSIDERATION FOR WHICH THE PROVISIONS OF SECTION 1 4A OF THE ACT CAN BE APPLIED. THE TOTAL INVESTMENT IS IN THE SUBSIDIARY/S ISTER CONCERNS OF THE ASSESSEE AND THEREFORE, IN ABSENCE OF DIVIDEND ACCR UED OR RECEIVED BY THE ASSESSEE, NO DISALLOWANCE CAN BE MADE U/S 14A OF THE ACT. THE LD AR HAS RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS GUJARAT STATE FERTILIZERS & CHEMICALS LTD. (2013 ) 217 TAXMAN 343 (GUJ) AS WELL AS THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCEE MANUFACTURING CO. LTD. VS. CIT 328 I TR 81, WHICH HAS BEEN UPHELD BY THE HON'BLE SUPREME COURT. THUS, THE LD AR HAS SUBMITTED THAT IT IS SETTLED PROPOSITION OF LAW THAT THERE CANNOT BE ANY DISALLOWANCE U/S 14A OF THE ACT WHEN THE ASSESSEE IS HAVING INTEREST FREE SUFFICIENT FUNDS AND NO EXPENDITURE HAS BEEN INCURR ED BY THE ASSESSEE IN RESPECT OF THE INVESTMENT IN QUESTION. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AS WELL AS TH E RELEVANT MATERIAL ON RECORD. WE NOTE THAT THE ASSESSING OFFI CER HAS GIVEN DETAILS OF INVESTMENT WHICH WAS CONSIDERED AS EXEMPT FOR THE PUR POSE OF ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 6 DISALLOWANCE U/S 14A OF THE ACT. THE ASSESSING OFFIC ER HAS GIVEN THE DETAILS AS OPENING INVESTMENT AND CLOSING INVESTMEN T OF SOME FIGURE OF RS. 44.02 CRORES. THUS, IT IS ADMITTED FACT THAT TH ERE WAS NO FRESH INVESTMENT DURING THE YEAR UNDER CONSIDERATION FALL ING IN THE CATEGORY OF EXEMPT INVESTMENT. IT IS ALSO NOT IN DISPUTE THAT T HE ASSESSEE HAS NEITHER RECEIVED ANY DIVIDEND NOR ANY DIVIDEND ACCRUED OR D UE ON THE INVESTMENT IN QUESTION WHICH IS IN THE SISTER CONCERNS OF THE A SSESSEE. THUS, WHEN NO DIVIDEND WAS RECEIVED BY THE ASSESSEE DURING THE YEA R UNDER CONSIDERATION AND ALSO NO FRESH INVESTMENT WAS MADE DURING THE YEAR THEN NO EXPENDITURE HAS BEEN INCURRED BY THE ASSESS EE DURING THE YEAR UNDER CONSIDERATION EXCEPT THE INTEREST EXPENDITURE IF ANY FOR THE PURPOSE OF INVESTMENT. SINCE THE INVESTMENT IN THE SISTER C ONCERNS ARE OLD ONE, THEREFORE, AN IDENTICAL ISSUE WAS CONSIDERED AND DEC IDED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT Y EARS INCLUDING THE A.Y. 2012-13 WHICH WAS CHALLENGED BY THE REVENUE BEFORE T HE HON'BLE JURISDICTIONAL HIGH COURT. THE HON'BLE HIGH COURT VI DE ORDER DATED 22/8/2017 IN DBIT NO. 202 & 204/2017 HAS CONSIDERED AND DECIDED THIS ISSUE IN PARA 4.3 AND 4.4 AS UNDER: 4.3. THE ISSUE NO.3 IS REGARDING 14A. NOW THE ISS UE IS GOVERNED BY THE DECISION OF SUPREME COURT THE CASE OF GODREJ & BOYC E MANUFACTURING ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 7 COMPANY LIMITED VS. DEPUTY COMMISSIONER OF INCOME T AX, MUMBAI & ANR. REPORTED IN 394 ITR 449 WHEREIN IT HAS BEEN HE LD AS UNDER:- 36. SECTION 14A AS ORIGINALLY ENACTED BY THE FINA NCE ACT OF 2001 WITH EFFECT FROM 1.4.1962 IS IN THE SAME FORM AND LANGUA GE AS CURRENTLY APPEARING IN SUB-SECTION (1) OF SECTION 14A OF THE ACT. SECTIONS 14A (2) AND (3) OF THE ACT WERE INTRODUCED BY THE FINANCE A CT OF 2006 WITH EFFECT FROM 1.4.2007. THE FINDING OF THE BOMBAY HIGH COURT IN THE IMPUGNED ORDER THAT SUBSECTIONS (2) AND (3) OF SECTION 14A I S RETROSPECTIVE HAS BEEN CHALLENGED BY THE REVENUE IN ANOTHER APPEAL WHICH I S PRESENTLY PENDING BEFORE THIS COURT. THE SAID QUESTION, THEREFORE, NE ED NOT AND CANNOT BE GONE INTO. NEVERTHELESS, IRRESPECTIVE OF THE AFORES AID QUESTION, WHAT CANNOT BE DENIED IS THAT THE REQUIREMENT FOR ATTRAC TING THE PROVISIONS OF SECTION 14A(1) OF THE ACT IS PROOF OF THE FACT THAT THE EXPENDITURE SOUGHT TO BE DISALLOWED/DEDUCTED HAD ACTUALLY BEEN INCURRE D IN EARNING THE DIVIDEND INCOME. INSOFAR AS THE APPELLANT-ASSESSEE IS CONCERNED, THE ISSUES STAND CONCLUDED IN ITS FAVOUR IN RESPECT OF THE ASSESSMENT YEARS 1998-1999, 1999-2000 AND 2001-2002. EARLIER TO THE INTRODUCTION OF SUBSECTIONS (2) AND (3) OF SECTION 14A OF THE ACT, SUCH A DETERMINATION WAS REQUIRED TO BE MADE BY THE ASSESSING OFFICER IN HIS BEST JUDGMENT. IN ALL THE AFORESAID ASSESSMENT YEARS REFERRED TO ABOV E IT WAS HELD THAT THE REVENUE HAD FAILED TO ESTABLISH ANY NEXUS BETWEEN T HE EXPENDITURE DISALLOWED AND THE EARNING OF THE DIVIDEND INCOME I N QUESTION. IN THE APPEALS ARISING OUT OF THE ASSESSMENTS MADE FOR SOM E OF THE ASSESSMENT YEARS THE AFORESAID QUESTION WAS SPECIFICALLY LOOKE D INTO FROM THE STANDPOINT OF THE REQUIREMENTS OF THE PROVISIONS OF SUBSECTIONS (2) AND (3) OF SECTION 14A OF THE ACT WHICH HAD BY THEN BEE N BROUGHT INTO FORCE. IT IS ON SUCH CONSIDERATION THAT FINDINGS HAVE BEEN RE CORDED THAT THE EXPENDITURE IN QUESTION BORE NO RELATION TO THE EAR NING OF THE DIVIDEND INCOME AND HENCE THE ASSESSEE WAS ENTITLED TO THE B ENEFIT OF FULL EXEMPTION CLAIMED ON ACCOUNT OF DIVIDEND INCOME. 37. WE DO NOT SEE HOW IN THE AFORESAID FACT SITUAT ION A DIFFERENT VIEW COULD HAVE BEEN TAKEN FOR THE ASSESSMENT YEAR 2002- 2003. SUBSECTIONS (2) AND (3) OF SECTION 14A OF THE ACT READ WITH RUL E 8D OF THE RULES MERELY PRESCRIBE A FORMULA FOR DETERMINATION OF EXPENDITUR E INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INC OME UNDER THE ACT IN A SITUATION WHERE THE ASSESSING OFFICER IS NOT SATISF IED WITH THE CLAIM OF THE ASSESSEE. WHETHER SUCH DETERMINATION IS TO BE MADE ON APPLICATION OF THE FORMULA PRESCRIBED UNDER RULE 8D OR IN THE BEST JUD GMENT OF THE ASSESSING OFFICER, WHAT THE LAW POSTULATES IS THE R EQUIREMENT OF A ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 8 SATISFACTION IN THE ASSESSING OFFICER THAT HAVING R EGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED BEFORE HIM, IT IS NOT POSSI BLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNE SS OF THE CLAIM OF THE ASSESSEE. IT IS ONLY THEREAFTER THAT THE PROVISIONS OF SECTION 14A(2) AND (3) READ WITH RULE 8D OF THE RULES OR A BEST JUDGMENT D ETERMINATION, AS EARLIER PREVAILING, WOULD BECOME APPLICABLE. 38. IN THE PRESENT CASE, WE DO NOT FIND ANY MENTIO N OF THE REASONS WHICH HAD PREVAILED UPON THE ASSESSING OFFICER, WHILE DEA LING WITH THE ASSESSMENT YEAR 2002-2003, TO HOLD THAT THE CLAIMS OF THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED TO EARN THE DIVIDEND IN COME CANNOT BE ACCEPTED AND WHY THE ORDERS OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEARS WERE NOT ACCEPTABLE TO THE ASSESSING OFFICER, PARTICULARLY, IN THE ABSENCE OF ANY NEW FACT OR CHANGE OF CIRCUMSTANCES. NEITHER ANY BASIS HAS BEEN DISCLOSED ESTABLISHING A REASONABLE NEXUS BETW EEN THE EXPENDITURE DISALLOWED AND THE DIVIDEND INCOME RECEIVED. THAT A NY PART OF THE BORROWINGS OF THE ASSESSEE HAD BEEN DIVERTED TO EAR N TAX FREE INCOME DESPITE THE AVAILABILITY OF SURPLUS OR INTEREST FRE E FUNDS AVAILABLE (RS. 270.51 CRORES AS ON 1.4.2001 AND RS. 280.64 CRORES AS ON 31.3.2002) REMAINS UNPROVED BY ANY MATERIAL WHATSOEVER. WHILE IT IS TRUE THAT THE PRINCIPLE OF RES JUDICATA WOULD NOT APPLY TO ASSESS MENT PROCEEDINGS UNDER THE ACT, THE NEED FOR CONSISTENCY AND CERTAINTY AND EXISTENCE OF STRONG AND COMPELLING REASONS FOR A DEPARTURE FROM A SETTL ED POSITION HAS TO BE SPELT OUT WHICH CONSPICUOUSLY IS ABSENT IN THE PRES ENT CASE. IN THIS REGARD WE MAY REMIND OURSELVES OF WHAT HAS BEEN OBSERVED B Y THIS COURT IN RADHASOAMI SATSANG V. COMMISSIONER OF INCOME TAX (1 992) 193 ITR (SC) 321 [AT PAGE 329]. WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RE S JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. AGAIN, EACH ASSESSMENT Y EAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FO LLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERE NT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND P ARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING TH E ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHAN GED IN A SUBSEQUENT YEAR. 4.4. IN THAT VIEW OF THE MATTER, THE ISSUE IS REQUI RED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 9 ACCORDINGLY, WHEN THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER IN THE EARLIER YEAR HAS BEEN DELETED BY THIS TRIBUNAL AND T HE DECISION OF THIS TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE JURISDICT IONAL HIGH COURT THEN IN ABSENCE OF ANY FRESH INVESTMENT OR DIVIDEND RECE IVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THE ISSUE IS C OVERED BY THE DECISION OF THIS TRIBUNAL AS WELL AS THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE. HENCE, WE DO NOT FIND ANY ERR OR OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) QUA THIS ISSUE AND THIS GROU ND OF REVENUES APPEAL SANDS DISMISSED. 9. GROUNDS NO. 3 AND 4 OF THE APPEAL ARE REGARDING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADJUSTMENT MADE IN THE BOOK PROFIT COMPUTED U/S 115JB OF THE ACT IN RESPECT OF SHARE OF THE ASSESSEE IN THE INCOME OF THE JOINT VENTURE. THE ASSESSING O FFICER NOTED THAT THE ASSESSEE DEDUCTED A SUM OF RS. 37,60,20,402/- AS SH ARE OF PROFIT FROM OMIL & JSC (JV) FROM THE PROFITS OF THE ASSESSEE A S PER SCHEDULE VI OF THE I.T. ACT. THE ASSESSING OFFICER WAS OF THE VIEW THA T THE SAID SHARE IN THE PROFIT OF JOINT VENTURE IS NOT DEDUCTIBLE AS PE R THE PROVISIONS OF SECTION 115JB OF THE ACT. THE ASSESSING OFFICER NOT ED THAT AS PER EXPLANATION TO SECTION 115JB, ONLY INCOME WHICH IS E XEMPT AS PER THE PROVISIONS OF SECTION 10 OF THE ACT AND CREDITED TO THE P&L ACCOUNT, SHALL ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 10 BE REDUCED WHILE COMPUTING THE BOOK PROFIT. THOUGH TH E AMENDMENT HAS BEEN BROUGHT TO THE PROVISIONS OF SECTION 115JB UND ER CLAUSE (IIC) OF EXPLANATION (1), HOWEVER, THE SAID AMENDMENT IS INS ERTED BY THE FINANCE ACT, 2015 W.E.F. 01/4/2016 AND THEREFORE, THE SAME I S NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER ACCORDINGLY, MADE AN ADDITION OF THE SAID AMOUNT OF RS. 19.19 CRORES. 10. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESS ING OFFICER BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE AMENDMENT BROU GHT IN THE PROVISIONS OF SECTION 115JB BY INSERTING CLAUSE (II C) TO EXPLANATION (1) IS REMEDIAL IN NATURE AND SHALL HAVE RETROSPECTIVE EFF ECT. THE ASSESSEE RELIED UPON THE DECISION OF MUMBAI BENCHES OF THE TRIBUNAL IN THE CASE OF M/S GOLDGERH FINANCE PVT. LTD. VS ACIT, 78 TAXMANN.COM 1 23. THE LD. CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER IN THE BOOK PROFIT BY FOLLOWING THE DECISION OF MUMBAI BENCHES OF THE TRIBU NAL. 11. BEFORE US, THE LD CIT-DR HAS SUBMITTED THAT WHE N THE AMENDMENT WAS SPECIFICALLY INSERTED W.E.F. 1/4/2016 THEN THE SA ME SHALL NOT HAVE A RETROSPECTIVE EFFECT OR APPLICATION WHICH IS NOT THE INTENTION OF THE LEGISLATURE. HE HAS RELIED UPON THE ORDER OF THE AS SESSING OFFICER AND SUBMITTED THAT THE ASSESSING OFFICER HAS RELIED UPO N THE DECISION OF HYDERABAD BENCHES OF THE TRIBUNAL. HENCE, THE LD CIT -DR HAS CONTENDED ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 11 THAT WHEN THE SHARE IN THE INCOME OF THE JOINT VENTU RE IS NOT EXEMPT AS PER THE PROVISIONS OF SECTION 10 OF THE ACT THEN AS PER EXISTING PROVISIONS OF SECTION 115JB OF THE ACT, THE SAME AMOUNT OF INC OME BEING SHARE IN THE JOINT VENTURE CANNOT BE EXCLUDED FOR THE PURPOS E OF COMPUTING OF BOOK PROFIT AND MAT LIABILITY OF THE ASSESSEE. 12. ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HA S SUBMITTED AS UNDER:- THIS IS MATTER RELATING TO TAX PAYABLE U/S 115JB : THAT IS CALLED MINIMUM ALTERNATIVE TAX ON BOOK PROFIT OF THE COMPANY. FOR THE PURPOSE OF BOOK PROFIT, THE COMPANY HAS TO PREPARE ITS PROFIT & LOS S A/C AS PER SCHEDULE VI OF THE COMPANIES ACT, 1956 AND IF THE TAXABLE INCOM E IS LESS THAN 10% OF ITS BOOK PROFIT SHALL BE DEEMED THE TOTAL INCOME OF ASSESSEE AND TAX PAYABLE BY THE ASSESSEE ON SUCH INCOME SHALL BE AMO UNT OF INCOME TAX @ 18%. IN RELATION TO THE AY 2014 -15, THE COMPANY RE CEIVED SHARE OF PROFIT FROM A JOINT VENTURE FIRM/ JV CALLED OMIL-JSC-JV AN D IN THE CASE OF THAT ENTITY WHICH IS SEPARATELY ASSESSED, THE ENTIRE AMO UNT MADE TAXABLE @ MAXIMUM MARGINAL RATE AND COMPANY GOT SHARE OF PROF IT WAS RECEIVED AFTER DULY TAXED IN THE SAID JV THAT THE SHARE OF PROFIT WHICH IS RECEIVED BY OMIL AND AFFECTED FULL TAX, WAS NOT INCLUDED IN THE CALC ULATION OF BOOK PROFIT OF THE COMPANY NOR MADE A PART OF PROFIT & LOSS ACCOUN T SINCE IT WAS NOT DISTRIBUTED BY THE JV. THAT FROM THE ABOVE AMENDMENT IN SEC. 115JB IT IS C LARIFIED THAT THE SHARE OF AOP WHICH IS SUBJECTED TO TAX U/S 86 AT MAXIMUM MARGINAL RATE, SHALL BE EXCLUDED FROM THE TOTAL INCOME OF THE ASSESSEE FOR MAT U/S 115JB. IT GIVES STRENGTH TO THE VIEW THAT ONCE THE TAX HAS BEEN PAI D AT THE MAXIMUM ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 12 MARGINAL RATE, THEN ON SUCH INCOME THERE WILL BE NO OTHER TAX (I.E. DOUBLE TAX), THUS THIS AMENDMENT HAS CLARIFIED THE PROVISI ONS OF 115JB. WE ALSO DRAW YOUR KIND ATTENTION ON THE OBJECT OF TAXABILIT Y OF INCOME IN INDIA U/S 14(1) OF ACT 22 AND U/S 86 OF ACT, 1961, IT IS SPEC IFICALLY MENTIONED THAT FOR ANY INCOME WHEREVER IT IS FOUND, TAX IS TO BE COLLE CTED AT THE EARLIEST POSSIBLE STAGE. BUT THE TAX IS NOT LEVIED AGAIN ON ONE PASSAGE OF T HE MONEY IN THE FORM OF ONE SORT OF INCOME. THUS, WHEN A GRO UP OF PERSONS IS TAXED AS THE INCOME OF THE GROUP OR OTHERWISE, IT WOULD BE DOUBLE TAXATION. A MEMBER OF FAMILY, FIRM OR ASSOCIATION IS NOT LIABLE TO TAX AGAIN IN RESPECT OF SHARE RECEIVED BY HIM OUT OF THE INCOME OF THE ASSE SSABLE UNIT TO WHICH HE BELONGS TO. THAT IS THE PROVISION MADE BY THIS CLAU SE AND SEC. 86 ARE TO PREVENT THE STATE FROM TAXATION TWICE OVER (CIT VS. BHAGWATI 15 TTR 409. 414; CIT VS. GUAN MANJURI 13 ITR 55, 63; VEDATHANNI VS. CIT 1 IT R 70: KANHAIYALAL VS. CIT 9 ITR 70). AS SUCH WHEN ANY INCOME HAS ALREADY BEEN SUBJECT TO FULL RATE OF TAX, THEN IT CANNOT BE TAXE D TWICE AND, THEREFORE, THE SHARE OF PROFIT FROM THE JV WAS RECEIVED AFTER PAYI NG TAX AT MAXIMUM MARGINAL RATE, THEREFORE, IT WAS NOT CONSIDERED IN INCOME EVEN FOR MAT CALCULATION ALSO. IN THIS CASE WE SUBMIT THAT NO IN COME CAN BE TAXED TWICE AS REFERRED ABOVE AND, THEREFORE, THERE CANNOT BE O F ANY APPLICATION OF SEC. 115JB IN THE CASE OF SHARE OF PROFITS RECEIVED FROM THE JV FIRM. WE ALSO SUBMIT THAT AS PER PROVISIONS OF SEC. 86, T HE SHARE OF A MEMBER OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS IN THE INCOME OF THE ASSOCIATION, INCOME TAX SHALL NOT BE PAYABLE BY THE ASSESSEE IN RESPECT OF HIS SHARE IN THE INCOME OF THE ASSOCIATION OR BODY COMPUTED IN THE MANNER PROVIDED IN SEC. 67A. SEC. 67A, WHICH IS REPRODUCED HERE, STATES THAT IF THE SHARE OF THE AOP MEMBERS IS DETERMINATE THEN THE IN COME IS NOT TAXED IN THE HANDS OF THE APO, THEN IT WILL BE TAXED IN THE HANDS OF AOP MEMBERS ON THEIR SHARE IN ACCORDANCE WITH THE HEADS OF INCOME. ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 13 HE HAS RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VATIKA TOWNSHIP P. LTD. (2014) 367 ITR 466 (SC ) AS WELL AS THE DECISION OF MUMBAI BENCHES OF THE TRIBUNAL IN THE CA SE OF M/S GOLDGERG FINANCE PVT. LTD. VS ACIT (SUPRA). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AS WELL AS T HE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER HAS REJECT ED THE CONTENTION OF THE ASSESSEE THAT THE SHARE OF PROFIT FROM AOP/JOIN T VENTURE SHALL BE EXCLUDED FOR THE COMPUTATION OF BOOK PROFIT U/S 115 JB OF THE ACT. THE RELEVANT FINDING OF THE ASSESSING OFFICER ARE AS UN DER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE A SSESSEE AND FIND THE SAME NOT ACCEPTABLE IN VIEW OF THE FOLLOWING REASONS: 1) IN THE INSTANT CASE THE SHARE OF PROFIT FROM THE JOINT VENTURE COMPANY REPRESENT THE SHARE OF PROFIT FROM AOP. AS PER SECT ION 10(2 A), ONLY THE SHARE OF PROFITS FROM A FIRM GOVERNED BY THE PARTNE RSHIP ACT IS EXCLUDED FROM COMPUTATION OF TOTAL INCOME. IN COMPUTING THE BOOK PROFIT ALSO THE SHARE OF PROFITS FROM THE FIRM WOULD HAVE EXCLUDED IN VIEW OF EXPLANATION (II) TO SEC. 115JB. BUT THE SHARE OF PROFITS FROM A OP WHICH MAY BE EXEMPT FROM TAXATION IN THE HANDS OF THE MEMBERS BY THE VI RTUE OF SECTION 86, CANNOT BE EXCLUDED WHILE THE COMPUTING THE BOOK PRO FITS OF THE MEMBERS OF AOP, UNDER ANY OF THE EXPLANATION UNDER SEC. 115 JB OF THE ACT. 2) HERE, IT IS PERTINENT TO MENTION THAT THE AOP AN D PARTNERSHIP FIRM ARE VERY MUCH DISTINGUISHABLE IN NATURE. ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 14 3) FURTHER, THE ITAT BENCH, HYDERABAD IN THE CASE OF ACIT CIRCLE HYDERABAD V/S SEENAIAH & CO. PROJECTS LTD HYDERABAD HAS HELD THAT THE ADJUSTMENTS HAVE TO BE MADE ONLY ON THE BASIS OF EXPLANATION CO NTAINED UNDER SECTION 115JB OF THE ACT AND THE EXPLANATIONS OF THE PROVIS IONS ARE CLEAR THAT NO SUCH ADJUSTMENT AS MADE BY THE ASSESSEE I.E. REDUCT ION OF PROFIT FROM JV IS ALLOWABLE UNDER EYES OF LAW. 4) MOREOVER, CLAUSE (IIC) HAS BEEN INSERTED IN EXPL ANATION 1 BELOW SUB-SECTION (2) OF SECTION 115JB BY THE FINANCE ACT 2015 W.E.F. 01.04.2016 (I.E. A.Y. 2016- 17). IT IS APPARENT THAT THE AMENDMENT (TO EX CLUDE SHARE OF THE ASSESSEE IN THE INCOME OF AN AOP ON WHICH NO INCOME TAX IS PAYABLE IN ACCORDANCE WITH THE PROVISION OF SECTION 86) HAS NO T BEEN MADE APPLICABLE RETROSPECTIVELY. HENCE RS. 37,60,20,402/- AS PER PROFIT FROM OMIL & JSC (JV) SHALL NOT BE DEDUCTIBLE IN ACCORDANCE WITH AS PER PART II & III OF SCHEDULE VI AND ACCORDINGLY BE ADDED TO THE BOOK PR OFIT. 14. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESS ING OFFICER BEFORE THE LD. CIT(A) AND RELIED UPON THE DECISION OF MUMBA I BENCHES OF THE TRIBUNAL IN THE CASE OF M/S GOLDGERG FINANCE PVT. LT D. VS ACIT (SUPRA). THE LD. CIT(A) HAS DECIDED THE ISSUE BY HOLDING AS UN DER: (IV) I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. THE ISSUE IS RELATING TO COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT VIZ A VIZ PROFIT AND LOSS ACCOUNT PREPARED BY THE APPELLANT AS PER THE PROVIS IONS OF COMPANIES ACT AND THE APPLICABILITY OF CLAUSE (IIC) TO EXPLAN ATION 1 TO SECTION 115JB OF THE 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 N OT APPLICABLE TO THE YEAR ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 15 UNDER CONSIDERATION AND IT WAS NOT MADE APPLICABLE RETROSPECTIVELY. IT WOULD BE APPROPRIATE TO REPRODUCE CLAUSE (IIC) TO E XPLANATION 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 INDI VIDUALS , ON WHICH NO INCOME-TAX IS PAYABLE IN ACCORDANCE WITH T HE PROVISIONS OF SECTION 86, IF ANY SUCH AMOUNT IS CREDITED TO THE P ROFIT AND LOSS ACCOUNT; OR (V) IT MAY BE MENTIONED THAT THE ISSUE UNDER CONSID ERATION 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 JUDICI AL 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 MINIMUM ALTERNATE TAX (MAT) PROVISION S INCORPORATED IN SEC.LL5JB OF THE ACT WAS TO BRING OUT REAL PROFIT O F COMPANIES AND THE THRUST WAS TO FIND OUT REAL WORKING RESULTS OF COMP ANY. IT WAS FURTHER OBSERVED THAT INCLUSION OF RECEIPT WHICH ARE NOT IN THE NATURE OF INCOME IN COMPUTATION OF BOOK PROFITS FOR MAT WOULD DEFEAT TWO FUNDAMENTAL PRINCIPLES, IT WOULD LEVY TAX ON RECEIPT WHICH WAS NOT IN NATURE OF INCOME AT ALL AND SECONDLY IT WOULD NOT RESULT IN ARRIVING AT REAL WORKING RESULTS OF COMPANY. REAL WORKING RESULT COULD BE ARRIVED AT ON LY AFTER EXCLUDING THIS RECEIPT WHICH HAD BEEN CREDITED TO P&L A/C AND NOT OTHERWISE. THE RELIANCE IS PLACED ON THE CASES OF JSW STEEL LTD. V S ACIT [2017] 82 TAXMANN.COM 210 (MUMBAI - TRIB.); SICPA INDIA (P.) LTD. VS DCIT [2017] 80 TAXMANN.COM 87 (KOLKATA - TRIB.), DY. CIT V. BINANI INDUSTRIES LTD. [2016] 178 TTJ 658 AND HONBLE ITAT, JAIPUR IN THE CASE OF ACIT VS SHREE CEMENT LTD. IN ITA NO. 614, 615 & 635/JP/2010 FOR AY 2004- 05, 05-06 & 06-07. ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 16 (VII) IN VIEW OF THE ABOVE DISCUSSION AND LOOKING T O THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT THE ASSE SSING OFFICER WAS NOT JUSTIFIED IN NOT EXCLUDING PROFIT OF SHARE OF THE A PPELLANT FROM ITS AOP WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT AN D THUS, THE AO IS HEREBY DIRECTED TO EXCLUDE THE SAME WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. THUS, IT IS CLEAR THAT THE LD. CIT(A) HAS GIVEN A FIN DING ON THE ISSUE BY FOLLOWING THE DECISIONS OF THIS TRIBUNAL. WE FURTHER NOTE THAT THE PROVISIONS OF SECTION 86 OF THE ACT CONTEMPLATES TH AT NO INCOME TAX SHALL BE PAYABLE BY THE ASSESSEE IN RESPECT OF HIS SHARE IN THE INCOME OF ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS AND S UCH SHARE IN THE ASSOCIATION OR BODY IS COMPUTED IN THE MANNER PROVI DED U/S 67A OF THE ACT. THOUGH, THE SHARE OF PROFIT IN THE ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS AS ENVISAGED U/S 86 AS WELL AS SECTION 6 7A OF THE ACT IS NOT LIABLE TO INCOME TAX, HOWEVER, THE SAME SHALL BE INC LUDED IN THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF DETERMINI NG THE AVERAGE MARGINAL RATE OF TAX IN TERMS OF SECTION 66 OF THE ACT. THE SECOND PROVISO TO SECTION 86 SET OUT THE EXCEPTION IN THE CASE WHER E NO INCOME TAX IS CHARGEABLE ON THE TOTAL INCOME OF THE ASSOCIATION O F PERSONS OR BODY OF INDIVIDUALS THEN THE SHARE OF A MEMBER SHALL BE CHA RGEABLE TO TAX AS PART OF HIS TOTAL INCOME AND THE BENEFIT OF SECTION 86 S HALL NOT BE AVAILABLE TO THE MEMBER OF ASSOCIATION OR BODY. ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 17 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, THER E SHALL BE INCLUDED ALL INCOME ON WHICH NO INCOME-TAX IS PAYABLE UNDER CHAP TER VII 38 [* * *]. SECTION 67A. (1) IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE W HO IS A MEMBER OF AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS WHE REIN THE SHARES OF THE MEMBERS ARE DETERMINATE AND KNOWN [OTHER THAN A COMPANY OR A CO OPERATIVE SOCIETY OR A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 18 60 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF I NDIA], 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 C OMPUTED AS FOLLOWS, NAMELY : ( A ) ANY INTEREST, SALARY, BONUS, COMMISSION OR REMUNERA TION 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 A SCERTAINED AN D APPORTIONED AMONG THE MEMBERS IN THE PROPORTIONS IN WHICH THEY ARE EN TITLED TO SHARE IN THE INCOME OF THE ASSOCIATION OR BODY ; ( B ) WHERE THE AMOUNT APPORTIONED TO A MEMBER UNDER CLAU SE ( A ) IS A PROFIT, ANY INTEREST, SALARY, BONUS, COMMISSION OR REMUN ERATION AFORESAID PAID TO THE MEMBER BY THE ASSOCIATION OR BODY IN RESPECT OF THE PREVIOUS YEAR SHALL BE ADDED TO THAT AMOUNT, AND THE RESULT SHALL BE TREATED AS THE MEMBER'S SHARE I N THE INCOME OF THE ASSOCIATION OR BODY ; ( C ) WHERE THE AMOUNT APPORTIO NED TO A MEMBER UNDER CLAUSE ( A ) IS A LOSS, ANY INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION AFORESAID PAID TO THE MEMBER BY THE ASSOCIATION OR BODY IN RESPECT OF THE PREVIOUS YEAR SHALL BE ADJUSTED AGAINST THAT AMOUNT, AND THE RESULT SHALL BE TREAT ED AS THE MEMBER'S SHARE IN THE INCOME OF THE ASSOCIATION OR BODY. (2) THE SHARE OF A MEMBER IN THE INCOME OR LOSS OF THE ASSOCIATION OR BODY, AS COMPUTED UNDER SUB-SECTION (1), SHALL, FOR THE PURPOSES OF A SSESSMENT, BE APPORTIONED UNDER THE VARIOUS HEADS OF INCOME IN THE SAME MANNER IN WHICH THE INCOME OR LOSS OF THE ASSOCIATION OR BODY HAS BEEN DETERMINED UNDER EACH HEAD OF INCOME. (3) ANY INTEREST PAID BY A MEMBER ON CAPITAL BORROW ED BY HIM FOR THE PURPOSES OF INVESTMENT IN THE ASSOCIATION OR BODY SHALL, IN COM PUTING HIS SHARE CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IN RESPECT OF HIS SHARE IN THE INCOME OF THE ASSOCIATION OR BODY, BE DEDUCTED FROM HIS SHARE . EXPLANATION. IN THIS SECTION, 'PAID' HAS THE SAME MEANING AS IS ASSIGNED TO IT IN CLAUSE ( 2 ) OF SECTION 43 .] ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 18 SECTION 86. WHERE THE ASSESSEE IS A MEMBER OF AN ASSOCIATION O F PERSONS OR BODY OF INDIVIDUALS (OTHER THAN A COMPANY OR A CO-OPERATIVE 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), INCOME-TAX SHAL L NOT BE PAYABLE BY THE ASSESSEE IN RESPECT OF HIS SHARE IN THE INCOME OF THE ASSOCIATI ON OR BODY COMPUTED IN THE MANNER PROVIDED IN SECTION 67A : PROVIDED THAT, ( A ) WHERE THE ASSOCIATION OR BODY IS CHARGEABLE TO TAX ON ITS TOTAL INCOME AT THE MAXIMUM MARGINAL RATE OR ANY HIGHER RATE UNDER ANY OF THE P ROVISIONS OF THIS ACT, THE SHARE OF A MEMBER COMPUTED AS AFORESAID SHALL NOT BE INCLUDED IN HIS TOTAL INCOME; ( B ) IN ANY OTHER CASE, THE SHARE OF A MEMBER COMPUTED AS AFORESAID SHALL FORM PART OF HIS TOTAL INCOME : PROVIDED FURTHER THAT WHERE NO INCOME-TAX IS CHARGEABLE ON THE TOTA L 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 CONTAIN ED IN THIS SECTION SHALL APPLY TO THE CASE.] THE CO-JOINT READING OF SECTION 66, 67A AND 86 OF TH E ACT REVEALS THAT THE INCOME TAX SHALL BE PAYABLE BY THE ASSESSEE IN RESP ECT OF HIS SHARE IN THE INCOME OF ASSOCIATION OF PERSONS OR BODY OR INDIVID UALS COMPUTED IN THE MANNER PROVIDED IN SECTION 67A SUBJECT TO THE CONDI TION 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 MARGINA L TAX. THE SHARE OF A PARTNER IN THE TOTAL INCOME OF THE FIRM IS EXEMPT A S PER PROVISIONS OF SECTION 10(2A) OF THE ACT AND CONSEQUENTLY IS EXCLU DED 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, IT REFERS TO THE ASSOCIATION OF ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 19 PERSONS OR BODY OF INDIVIDUALS WHOSE TOTAL INCOME IS EXEMPT FROM INCOME TAX AND THEREFORE, IN OUR VIEW, THE REFERENCE IN SEC OND PROVISO TO SECTION 86 IS MADE TO THE ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS WHOSE TOTAL INCOME IS EXEMPT U/S 10 OF THE ACT AND NOT OT HERWISE. ONCE THE SHARE IN THE JOINT VENTURE WHICH IS TREATED AS SHARE IN THE ASSOCIATION OF PERSONS IS NOT HIT BY THE SECOND PROVISO TO SECTION 86 THEN THE SAME IS AKIN THE SHARE FROM THE PARTNERSHIP FIRM. THUS TO BR ING IT TO THE PARITY OF SHARE IN PARTNERSHIP FIRM, THE AMENDMENT IN SECTION 115JB OF THE ACT VIDE FINANCE ACT, 2015 WAS BROUGHT BY INSERTING CLAUSE ( IIC) W.E.F. 1/4/2016. THEREFORE, THE PURPOSE AND INTENTION TO BRING THE AM ENDMENT IS TO REMOVE THE MISCHIEF OR HARDSHIP OF THE ASSESSEE ON MAT IN RESPECT OF THE INCOME BEING SHARE IN THE ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS WHICH IS OTHERWISE NOT SUBJECT TO INCOME TAX IN ACCOR DANCE WITH THE PROVISIONS OF SECTION 86 OF THE ACT. THE MUMBAI BENC HES OF THE TRIBUNAL IN THE CASE OF M/S GOLDGERG FINANCE PVT. LTD. VS AC IT (SUPRA) WHILE DEALING WITH THIS ISSUE HAS HELD IN PARA 10 AND 11 A S UNDER: 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E 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 INCOME TO WHICH THE PROVISIONS OF SECTION S 10, 11 OR 12 APPLIES IF SUCH AMOUNT HAS BEEN CREDITED TO THE P&L ACCOUNT. THE SA ID CLAUSE READS AS UNDER: ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 20 'THE AMOUNT OF INCOME TO WHICH ANY OF THE PROVISION S OF SECTION 10 [OTHER THAN THE PROVISIONS CONTAINED IN CLAUSE (38) THEREOF] OR SEC TION 11 OR SECTION 12 APPLY, IF ANY SUCH AMOUNT IS CREDITED TO THE PROFIT AND LOSS ACCO UNT; OR' SECTION 10 INCLUDES SECTION 10(2A) ALSO WHICH PROVI DES FOR EXEMPTION OF SHARE INCOME OF PARTNER FROM THE PARTNERSHIP FIRM. THUS, IF SHAR E 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 S UCH ENABLING PROVISION FOR THE SHARE INCOME FROM THE AOP WHICH CAN BE EXCLUDED FRO M THE COMPUTATION OF BOOK PROFIT. IN ORDER TO EXTEND THIS BENEFIT AND TO PROVIDE REME DIAL 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 ASSE SSEE IN THE INCOME OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS, ON W HICH 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 EXPLAINE D 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 EIGHT EEN 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 SHAL L BE EIGHTEEN AND ONE-HALF PERCENT OF BOOK PROFIT. THIS TAX IS TERMED AS MINIMUM ALTER NATE TAX (MAT). EXPLANATION BELOW SUB-SECTION (2) OF SECTION 115JB PROVIDES TH AT THE EXPRESSION 'BOOK PROFIT' MEANS NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT PREPARED IN ACCORDANCE WITH THE PROVISIONS OF THE C OMPANIES 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 I S PAYABLE ON THE SHARE OF A MEMBER OF AN AOP, IN THE INCOME OF THE AOP IN CERTA IN 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 EXC LUDED 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 T HE 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 S ECTION 115JB SO AS TO PROVIDE THAT THE SHARE OF A MEMBER OF AN AOP, IN THE INCOME OF T HE 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 M EMBER UNDER SECTION 115JB OF THE ACT. THE EXPENDITURES, IF ANY, DEBITED TO THE P ROFIT LOSS ACCOUNT, CORRESPONDING ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 21 TO SUCH INCOME (WHICH IS BEING PROPOSED TO BE EXCLU DED FROM THE MAT LIABILITY) ARE ALSO PROPOSED TO BE ADDED BACK TO THE BOOK PROFIT F OR THE PURPOSE OF COMPUTATION OF MAT .' [EMPHASIS ADDED IS OURS] THIS HAS BEEN FURTHER EXPLAINED AND CLARIFIED BY TH E 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 WA S 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 SH ARE OF A MEMBER OF AN AOP WHERE IN CERTAIN CIRCUMSTANCES WAS NOT TAXABLE IN HANDS OF M EMBER IN TERMS OF SECTION 86 WERE NOT EXCLUDED FROM THE BOOK PROFIT WHILE COMPUTING T HE MAT LIABILITY OF THE MEMBER. IT WAS FELT BY THE LEGISLATURE THAT THE SHARE OF MEMBE R OF AN AOP ON WHICH NO INCOME TAX IS PAYABLE IN ACCORDANCE WITH THE PROVISIONS OF SEC TION 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 CORRE SPONDING TO SUCH INCOME WHICH IS TO BE EXCLUDED FROM THE MAT LIABILITY SHALL BE ADDED B ACK 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 T O 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 CLA SS 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 ST ATUTE EITHER TO REMEDY UNINTENDED CONSEQUENCE OR TO PROVIDE BENEFIT WHICH IS APPLICAB LE TO PARTICULAR CLASS OF ASSESSEE AND IS EXTENDED TO OTHER CLASS OF ASSESSEE, THEN, ON RE ASONABLE INTERPRETATION IT SHOULD BE DECLARED AS RETROSPECTIVE IN OPERATION. IN OUR OPIN ION, 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 H AS 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. ( SUPRA ) AND IN THE CASE OF ALOM EXTRUSIONS LTD. ( SUPRA ). THE HON'BLE APEX COURT WHILE INTERPRETING THE PR OVISO TO SECTION 43B BROUGHT IN THE STATUTE WITH A PARTICULA R 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. V. 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, T HE QUESTION WHICH AROSE FOR DETERMINATION WAS, WHETHER SALES-TAX COLLECTED BY T HE ASSESSEE AND PAID AFTER THE ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 22 END OF THE RELEVANT PREVIOUS YEAR BUT WITHIN THE TI ME 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 CA SE WHICH RELATED TO ASST YR. 1984-85. THE RELEVANT ACCOUNTING PERIOD ENDED ON 30 TH JUNE, 1983. THE ITO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE WH ICH WAS ON ACCOUNT OF SALES-TAX COLLECTED BY THE ASSESSEE FOR THE LAST QUARTER OF T HE RELEVANT ACCOUNTING YEAR. THE DEDUCTION WAS DISALLOWED UNDER S. 43B WHICH, AS STA TED ABOVE, WAS INSERTED W.E.F. 1ST APRIL, 1984. IT IS ALSO RELEVANT TO NOTE THAT T HE 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. ( SUPRA ). HOWEVER, THE ASSESSEE CONTENDED THAT EVEN THOUGH THE FIRST PROVISO CAME T O BE INSERTED W.E.F. 1ST APRIL, 1988, IT WAS ENTITLED TO THE BENEFIT OF THAT PROVIS O BECAUSE IT OPERATED RETROSPECTIVELY FROM 1ST APRIL, 1984, WHEN S. 43B S TOOD 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 WOR KABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION AND WHI CH PROVISO IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE I NTERPRETATION, IT COULD BE READ RETROSPECTIVE IN OPERATION, PARTICULARLY TO GIVE EF FECT 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 OPE RATION 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 HA ND 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 OPE RATION. MOREOVER, THE JUDGMENT IN ALLIED MOTORS (P.) LTD. ( SUPRA ) IS DELIVERED BY A BENCH OF THREE LEARNED JUDGES, WHICH IS BINDING ON US. ACCORDINGLY, WE HOLD THAT F INANCE ACT, 2003, WILL OPERATE RETROSPECTIVELY W.E.F. 1ST APRIL, 1988 (WHEN THE FI RST PROVISO STOOD INSERTED). LASTLY, WE MAY POINT OUT THE HARDSHIP AND THE INVIDIOUS DIS CRIMINATION 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 PR OSPECTIVELY. TAKE AN EXAMPLE IN THE PRESENT CASE, THE RESPONDENTS HAVE DEPOSITED TH E CONTRIBUTIONS WITH THE R.P.F.C. AFTER 31ST MARCH (END OF ACCOUNTING YEAR) BUT BEFOR E 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 F OR 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 UNDE R S. 43B OF THE ACT FOR ALL TIMES. THEY WOULD LOSE THE BENEFIT OF DEDUCTION EVEN IN TH E 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 APR IL, 2004, AND WHO PAYS THE CONTRIBUTION AFTER 1ST APRIL, 2004, WOULD GET THE B ENEFIT OF DEDUCTION UNDER S. 43B OF THE ACT. IN OUR VIEW, THEREFORE, FINANCE ACT, 20 03, TO THE EXTENT INDICATED ABOVE, SHOULD BE READ AS RETROSPECTIVE. IT WOULD, THEREFOR E, OPERATE FROM 1ST APRIL, 1988 WHEN THE FIRST PROVISO WAS INTRODUCED. IT IS TRUE T HAT THE PARLIAMENT HAS EXPLICITLY STATED THAT FINANCE ACT, 2003, WILL OPERATE W.E.F. 1ST APRIL, 2004. HOWEVER, THE ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 23 MATTER BEFORE US INVOLVES THE PRINCIPLE OF CONSTRUC TION 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 CURA TIVE IN NATURE AS IT WAS BROUGHT IN THE STATUTE TO PROVIDE SIMILAR BENEFIT TO THE MEMBE R OF THE AOP WHICH WAS EARLIER APPLICABLE TO THE PARTNER OF THE FIRM, THEREFORE, I T 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 FACE D BY TWO CLASS OF ASSESSEES, WHERE IN ONE CASE, STATUTE ENVISAGED THAT IF THE INCOME OF T HE ASSESSEE IS NOT TAXABLE, THAT IS, IN CASE OF PARTNER THE SHARE INCOME FROM THE PARTNERSH IP FIRM, THEN IT CANNOT BE TAXED AS BOOK PROFIT UNDER MAT LIABILITY. SIMILARLY, IN SECO ND 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, S HOULD ALSO NOT BE BROUGHT TO TAX UNDER MAT LIABILITY. THE LEGISLATURE BY THIS AMENDMENT HA S THUS REMOVED THIS IMPARITY BETWEEN TWO CLASSES OF ASSESSEES SO THAT MISCHIEF O R 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 R ECEIPTS WHICH IS OTHERWISE NOT TAXABLE UNDER THE ACT. IF THE INTENTION OF LEGISLAT URE WAS ALWAYS THAT INCOME WHICH IS NOT TAXABLE UNDER THE NORMAL PROVISIONS OF THE ACT SHOU LD NOT BE BROUGHT TO TAX UNDER MAT ALSO, THEN IT HAS TO BE INTERPRETED THAT SUCH A BEN EFIT HAS TO BE GIVEN TO ALL AND WHERE THE INCOME IS OTHERWISE NOT TAXABLE UNDER THE ACT CANNO T 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. THUS, IT WAS HELD THAT THE AMENDMENT WAS BROUGHT TO RE MOVE THE HARDSHIP AND BRING THE PARITY OF THE INCOME BEING S HARE IN THE ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS, WHICH IS OTHERWISE NOT LIABLE TO TAX AS PER THE PROVISIONS OF SECTION 86 OF THE ACT, THE SA ME SHALL HAVE RETROSPECTIVE APPLICATION. IN ABSENCE OF ANY CONTRA RY PRECEDENT BROUGHT TO OUR NOTICE AND TO MAINTAIN THE RULE OF CONSISTEN CY, WE FOLLOW THE DECISION OF MUMBAI BENCHES OF THE TRIBUNAL IN THE CA SE OF M/S GOLDGERG FINANCE PVT. LTD. VS ACIT (SUPRA). ACCORDINGLY, WE DO NOT FIND ANY ERROR ITA 759/JP/2018_ ACIT VS OM METAL INFRAPROJECT LTD. 24 OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) QUA THI S ISSUE. HENCE, THIS GROUND OF REVENUES APPEAL STANDS DISMISSED. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/08/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23 RD AUGUST, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S OM METAL INFRAPROJECT LTD., JAIP UR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 759/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR