DCIT, New Delhi V. M/s Credential Stock Brokers Ltd., New Delhi

ITA 1535/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77799 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: VENKETESH MOHAN
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income
• Section: 14A; 115JB; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI B.C.MEENA, ACCOUNTANT MEMBER AND SHRI.C.M.GARG, JUDICIAL MEMBER I.T.A .NO.-1535/DEL/2011 (ASSESSMENT YEAR-2007-08) DCIT, CIRCLE-3(1), NEW DELHI (APPELLANT) VS M/S CREDENTIAL STOCK BROKERS LTD. D-20, MANSAROVAR GARDEN, NEW DELHI-110027 P AN-AABCC1868L (RESPONDENT) I.T.A .NO.-938/DEL/2011 (ASSESSMENT YEAR-2007-08) M/S CREDENTIAL STOCK BROKERS LTD. D-20, MANSAROVAR GARDEN, NEW DELHI-110027 P AN-AABCC1868L (APPELLANT) VS ACIT, RANGE-3, NEW DELHI (RESPONDENT) APPELLANT BY: SMT. PARWINDER KAUR, SR. DR RESPONDENT BY: MS. RANO JAIN, CA & MR. VENKETESH MOHAN, CA ORDER PER C.M.GARG, JUDICIAL MEMBER THE ABOVE CAPTIONED APPEALS OF THE REVENUE AS WELL AS OF THE ASSESSEE HAVE AROSE FROM ONE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI, NEW DELHI VIDE ORDER DATED 17.01.2011 IN APPEAL NO-304/09-10 FOR THE AY-2007-08. 2 I.T.A .NOS. 1535 & 938/DEL/2011 2. THE GROUNDS RAISED BY THE REVENUE IN ITA NO-1535 /DEL/2011 READ AS UNDER:- 1. THE LD. CIT(A HAS ERRED ON FACTS AND IN LAW IN DEL ETING ADDITION OF RS.684337/- ON ACCOUNT OF DISALLOWANCES ATTRIBUTABLE TO EXEMPT INCOME U/S 14A OF THE I.T. ACT. THE LD. CIT(A) HAS FAILED TO TAKE COGNIZANCE OF SUB-SECTION (3) OF SEC TION 14A WHICH SPECIFIES THAT EVEN IF THE ASSESSEE MAKES A CLAIM T HAT NO EXPENDITURE HAS BEEN INCURRED IN EARNING THE EXEMPT ED INCOME, SUB-SECTION (2) OF SECTION 14A SHALL APPLY, MEANING THEREBY, DISALLOWANCE U/S 14A(1) IS CALLED FOR. 2. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G ADDITION OF RS.14210/- ON ACCOUNT OF EXTRA DEPRECIATION CLAIMED ON COMPUTER PERIPHERALS IGNORING THAT AS PER THE IT RULES 60% D EPRECIATION IS ALLOWABLE ONLY ON COMPUTER AND COMPUTER SOFTWARE AN D NOT ON COMPUTER PERIPHERALS/ACCESSORIES. 3. THE LD. CIT(A HAS ERRED IN LAW AND ON FACTS IN DELE TING ADDITION OF RS.1863295/- ON ACCOUNT OF NON-DEDUCTION OF TDS ON PAYMENTS MADE BY NSE IGNORING THAT AS PER NSES LET TER DATED 10.5.2007 TO ITS MEMBERS TDS MUST BE DEDUCTED BY AL L MEMBERS U/S 194(J) OF THE I.T. ACT ON CHARGES I.E. MEMBERSH IP FEE, TRANSACTION CHARGES AND V-SATE AND LEASE LINE CHARG ES. 3. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS IN ITA NO -938/DEL/2011 WHEREIN GROUND NO-1 OF THE ASSESSEE IS OF GENERAL IN NATURA L WHICH NEED NOT ADJUDICATION AND REMAINING GROUNDS READ AS UNDER:- 3 I.T.A .NOS. 1535 & 938/DEL/2011 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEAR NED CIT(A HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AC TION OF THE AO IN COMPUTING TAX LIABILITY UNDER SECTION 115JB OF T HE ACT, DESPITE THE FACT THAT THE TAX PAYABLE UNDER NORMAL PROVISIO NS ARE HIGHER THAN THE BOOK PROFITS COMPUTED UNDER SECTION 115JB OF THE ACT. 3. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTER NATIVE, LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN NOT AP PRECIATING THE CONTENTION OF THE ASSESSEE THAT THE CREDIT OF STT P AID UNDER SECTION 88E SHALL ALSO BE AVAILABLE ON THE TAX COMP UTED AS PER PROVISIONS OF SECTION 115JB OF THE ACT. 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE LE ARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACT ION OF THE AO TREATING INCOME OF RS.47,95,399/- BEING RECEIPTS FR OM SHARE BROKING AS NET INCOME NOT ELIGIBLE FOR REBATE UNDER SECTION 88E OF THE ACT. 4(II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, L EARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN NOT APPRECIATING THE CONTENTION OF THE ASSESSEE THAT THE AO WAS NOT RIGHT IN TREATI NG THE ENTIRE GROSS RECEIPTS OF RS.47,95,399/- FROM SHARE BROKING AS NET INCOME IGNORING THE EXPENSES INCURRED TOWARDS EARNI NG SUCH INCOME. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AC TION OF THE AO IN RESTRICTING THE CREDIT ON ACCOUNT OF SECURITY TR ANSACTION TAX (STT) UNDER SECTION 88E TO RS.1,12,64,517/- AS AGAI NST RS.1,19,34,585/- PAID BY THE ASSESSEE AND ALLOWABLE AS PER LAW. 4 I.T.A .NOS. 1535 & 938/DEL/2011 GROUND NO-1 OF THE REVENUE 4. APROPOS GROUND NO-1 OF THE REVENUE, WE HAVE HEAR D THE ARGUMENTS OF BOTH THE PARTIES. LD. ASSESSEES REPRESENTATIVE (AR) SU BMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT E BENCH, DELHI IN ITA NO- 1169/DEL/2012 DATED 25.04.2014. THE LD. DEPARTMENT AL REPRESENTATIVE (DR) FAIRLY ACCEPTED THAT THE ISSUE HAS BEEN COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL DATED 25.04.2014 (SUPRA) WHER EIN THIS ISSUE HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE WITH FOLLOWIN G OBSERVATIONS AND FINDINGS:- 37. SINCE THE ISSUE BEFORE US HAVE NOT BEEN DECID ED BY THE JURISDICTIONAL HIGH COURT AND THE JURISDICTIONAL HI GH COURT IN ALL INDIA LAKSHMI COMMERCIAL BANK OFFICERS UNION VS. UN ION OF INDIA 150 ITR 1 (DEL) HAS HELD THAT, IN CASES WHERE JURIS DICTIONAL HIGH COURTS ORDER IS NOT EXISTING THEN THE TRIBUNAL MAY FOLLOW OTHER HIGH COURTS DECISION ON THE ISSUE AND WE ARE INCLI NED TO FOLLOW THE KARNATAKA HIGH COURTS ORDER ON THE ISSUE IN HAND. THEREFORE WE CONCUR WITH THE KOLKATA BENCH DECISION CITED (SUPRA ) IN THAT IT WAS HELD THAT WHEN THERE IS NO AMOUNT OF EXPENDITURE IS INCURRED DIRECTLY RELATING TO THE EXEMPT INCOME WHICH DOES NOT FORM P ART OF THE TOTAL INCOME, RULE 8D(II) & (III) CANNOT BE APPLIED WHEN THE SHARES ARE HELD AS STOCK-IN-TRADE AND AS PER KARNATAKA HIGH CO URT DECISION (SUPRA), NO NOTIONAL EXPENDITURE COULD BE DEDUCTED FROM THE SAID INCOME. AND THE DIVIDEND INCOME IS INCIDENTAL TO IT S BUSINESS OF SALE OF SHARES WHICH REMAINED UNSOLD BY THE ASSESSEE. TH EREFORE EXPENDITURE ESTIMATED INVOKING RULE 8D ABOVE ARE SE T ASIDE. 5 I.T.A .NOS. 1535 & 938/DEL/2011 5. IN THE PRESENT APPEAL THE REVENUE HAS AGITATED T HE SAME ISSUE PERTAINING TO DISALLOWANCE MADE BY THE AO U/S 14A OF THE INCOME T AX ACT, 1961 (FOR SHORT THE ACT). FROM PERUSAL OF THE IMPUGNED ORDER PARA 2 TO 2.3, WE CLEARLY OBSERVED THAT THE CIT(A) HAS GRANTED RELIEF BY HOLDING THAT THE R ULE 8D OF INCOME TAX RULES 1962 WHICH HAVE BEEN NOTIFIED W.E.F 24.03.2008 SHA LL APPLY ONLY W.E.F AY 2008- 09 WHILE PRESENT APPEAL IS RELATED TO AY 2007-08. WE ARE IN AGREEMENT WITH THE CONCLUSIONS OF THE ITAT E BENCH VIDE DECISION DAT ED 25.04.2014 (SUPRA) WHEREIN IT HAS BEEN HELD WHEN THERE IS NO AMOUNT OF EXPENDITURE IS INCURRED DIRECTLY RELATING TO THE EXEMPT INCOME WHICH DOES N OT FORM PART OF THE TOTAL INCOME THAN IN A PECULIAR FACT WHEN THE SHARES ARE HELD AS STOCK-IN-TRADE, NO NOTIONAL EXPENDITURE COULD BE DEDUCTED FROM THE SAID INCOME AND THE DIVIDEND INCOME IS INCIDENTAL TO ITS BUSINESS OF SALE OF SHARES WHICH REMAINED UNSOLD BY THE ASSESSEE. IN THE PRESET CASE, THE AO RESORTED TO SECTION 14A FOR MAKING DISALLOWANCE WHICH WAS DELETED BY THE CIT(A) BY HOLDING THAT THE GENER AL OBSERVATIONS OF THE AO FOR MAKING DISALLOWANCE ARE NOT SUPPORTED BY ANY SPECIF IC INSTANCES AND THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO LINK UP THE E XPENDITURE WHICH HAS BEEN INCURRED FOR EARNING THE EXEMPT INCOME. UNDER THES E CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL IN ASSESSEES OW N CASE VIDE DATED 25.04.2014 (SUPRA), WE HOLD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND WE 6 I.T.A .NOS. 1535 & 938/DEL/2011 UPHOLD THE CONCLUSION OF THE CIT(A) IN THIS REGARD. ACCORDINGLY GROUND NO-1 OF THE REVENUE IS DISMISSED. GROUND NO-2 OF THE REVENUE 6. WE HAVE HEARD ARGUMENTS OF BOTH THE PARTIES PERT AINING TO THE GROUND NO-2 OF THE REVENUE WHEREIN REVENUE HAS OBJECTED THE DEL ETION OF THE ADDITION MADE BY THE AO ON ACCOUNT OF EXTRA DEPRECIATION CLAIMED ON COMPUTER PERIPHERALS. AT THE OUTSET, THE LD. AR SUBMITTED THAT THIS ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT, DELHI B BENCH IN ASSESS EES OWN CASE IN ITA NO- 4742/DEL/2010 VIDE DATED 26.09.2012 WHEREIN THE SAM E ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND FINDINGS:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT TH E HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. BSES RAJDHANI POWERS LTD. IN ITA NO. 1266/2010 DATED 31.8.2010 HA D HELD THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS, PRINT ERS, SCANNERS AND SERVER ETC. FORM AN INTEGRAL PART OF THE COMPUT ER SYSTEM AS THEY CANNOT BE USED WITHOUT THE COMPUTER. HENCE, SAME AR E THE PART OF THE COMPUTER SYSTEM AND ENTITLED TO DEPRECIATION AT THE HIGHER RATE OF 60%. ACCORDINGLY, CONSIDERING THE AFORESAID PREC EDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSI ONER OF INCOME TAX (A) AND HENCE, WE UPHOLD THE SAME. 7. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS BSES RAJDHANI LTD. (SUPRA) AND T HE DECISION OF THE TRIBUNAL IN 7 I.T.A .NOS. 1535 & 938/DEL/2011 ASSESSEES OWN CASE DATED 26.09.2012 (SUPRA), WE HO LD THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND THE AO DISALL OWED DEPRECIATION IGNORING THE ABOVE DECISION OF THE HONBLE JURISDICTIONAL HIGH C OURT OF DELHI WHICH WAS RIGHTLY CORRECTED BY THE CIT(A) BY DELETING THE IMP UGNED ADDITION OF RS.14,210/-. ACCORDINGLY GROUND NO-2 OF THE REVENUE BEING DEVOI D ON MERITS IS ALSO DISMISSED. GROUND NO-3 OF THE REVENUE 8. APROPOS GROUND NO-3 OF THE REVENUE, WE HAVE HEAR D ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RECORD PLACED BEFOR E US. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006-07 DATED 26.09.2012 (SUPRA) WHEREIN UPHOLDING THE ORDER OF THE CIT(A) T HE ISSUE OF NON REDUCTION OF TDS ON PAYMENTS MADE BY THE NSE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND FINDINGS :- 11. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE SPECIAL BENCH, ITAT, VISHAKAPATNAM BENCH IN THE CASE OF MER ILYN SHIPPING & TRANSPORTS VS. ADDL. C.I.T. (2012) 136 ITD 23 (VI SH) (SB). IN THIS CASE IT WAS HELD THAT THE PROVISION OF SECTION 40(A )(IA) CANNOT BE INVOKED WITH RESPECT TO THE PAYMENTS WHICH ARE ACTU ALLY PAID DURING THE FINANCIAL YEAR, BUT IT CAN BE INVOKED ONLY WITH RESPECT TO THE PAYMENTS NOT ACTUALLY MADE. SINCE ALL THE PAYMENTS WERE MADE 8 I.T.A .NOS. 1535 & 938/DEL/2011 DURING THE YEAR AND NOTHING WAS PAYABLE, NO AMOUNT WAS TO BE DISALLOWED IN THIS REGARD. LD. DEPARTMENTAL REPRESE NTATIVE ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 12. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT LD . COMMISSIONER OF INCOME TAX (A) HAS NOTED THAT AS FAR AS THE ADVI SE OF NSE RELIED UPON BY THE ASSESSING OFFICER IS CONCERNED, IT IS G ENERAL IN NATURE AND THE MEMBERS HAVE BEEN ADVISED TO EVALUATE THE A PPLICABILITY OF TAX PROVISIONS. LD. COMMISSIONER OF INCOME TAX (A) FURTHER FOUND THAT FOR ASCERTAINING THE LIABILITY OF TAX DEDUCTIO N AT SOURCE WITH REGARD TO VARIOUS PAYMENTS, IT WOULD BE NECESSARY T O REFER TO THE RELEVANT STATUTORY PROVISIONS OF SECTION 194C OF TH E ACT. LD. COMMISSIONER OF INCOME TAX (A) OPINED THAT THE SAID SECTION RELATES TO THE PAYMENTS MADE TO A CONTRACTOR IN PURSUANCE O F A CONTRACT BETWEEN THE CONTRACTOR AND THE SPECIFIED PERSON. LD . COMMISSIONER OF INCOME TAX(A) FURTHER OBSERVED THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PAYMENTS ON ACCO UNT OF TRANSACTION CHARGES, V-SAT CHARGES, LEASE LINE CHAR GES AND MISC. CHARGES WERE MADE IN PURSUANCE OF A CONTRACT. THESE PAYMENTS WERE MADE TO NSE IN THE NORMAL COURSE OF BUSINESS AND TH ESE PAYMENTS DO NOT FALL WITHIN THE SCOPE OF SECTION 194C OF THE ACT. 13. OVER AND ABOVE, WE FIND THAT THE ISSUE INVOLVED IS ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPI NG & TRANSPORTS VS. ADDL. C.I.T. (SUPRA). IN THIS CASE IT WAS HELD THAT THE PROVISION OF SECTION 40(A)(IA) CANNOT BE INVOKED WITH RESPECT TO THE PAYMENTS WHICH ARE ACTUALLY PAID DURING THE FINANCIAL YEAR, BUT IT CAN BE 9 I.T.A .NOS. 1535 & 938/DEL/2011 INVOKED ONLY WITH RESPECT TO THE PAYMENTS NOT ACTUA LLY MADE. SINCE IN THIS CASE ALL THE PAYMENTS WERE MADE DURING THE YEAR AND NOTHING WAS PAYABLE AT THE END OF THE YEAR, NO DISALLOWANCE IS CALLED FOR. ACCORDINGLY, IN THE BACKGROUND OF THE AFORESAID DIS CUSSIONS AND PRECEDENT, WE UPHOLD THE ORDER OF THE LD. COMMISSIO NER OF INCOME TAX (A) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSES SEE. 9. THE LD. DR FAIRLY ACCEPTED THAT THE ASSESSEE HAS GOT RELIEF FROM THE CIT(A) FOR AY 2006-07 AND THE ORDER OF THE CIT(A) IN THIS REGARD HAS BEEN UPHELD BY THE TRIBUNAL BY ITS ORDER DATED 26.09.2012 (SUPRA) DECI DING THE ISSUE IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE ABOVE DECISIO N OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE, WE HOLD THAT THE ISSUE IS SQUA RELY COVERED IN FAVOUR OF THE ASSESSEE AND WE FURTHER HOLD THAT THE PAYMENTS MADE BY THE AO ON ACCOUNT OF TRANSACTIONS CHARGES, MEMBERSHIP FEE, V-SAT AND LEA SE LINE CHARGES WERE MADE IN PURSUANCE OF A CONTACT AND THESE PAYMENTS WERE MADE TO NSE IN THE NORMAL COURSE OF BUSINESS AND THE SAME DO NOT FALL WITHIN THE SC OPE OF SECTION 194C OF THE ACT, WE, THEREFORE, ARE OF THE OPINION THAT THE DISALLOW ANCE MADE BY THE AO IS NOT SUSTAINABLE WHICH WAS RIGHTLY DELETED BY THE CIT(A) BY FOLLOWING ITS EARLIER ORDERS. ACCORDINGLY GROUND NO-3 OF THE REVENUE IS DEVOID ON MERIT AND DESERVES TO BE DISMISSED AND WE DISMISS THE SAME. GROUND NOS. 2 & 3 OF THE ASSESSEE:- 10. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND C AREFUL PERUSED THE RECORD PLACED BEFORE US APROPOS GROUND NOS. 2 & 3 OF THE A SSESSEE. THE LD. AR DRAWN 10 I.T.A .NOS. 1535 & 938/DEL/2011 OUR ATTENTION TOWARDS DECISION OF ITAT, DELHI E B ENCH IN ASSESSEES OWN CASE VIDE DATED 25.04.2014 (SUPRA) AND SUBMITTED THAT TH E TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSE RVATIONS AND CONCLUSIONS:- 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RECORDS AND THE CASE LAWS CITED BY BOTH THE PARTIES . FROM A PERUSAL OF THE ASSESSMENT ORDER WE FIND THAT THE ASSESSING OFFICER HAS COMPUTED THE TAXABLE INCOME OF THE ASSESSEE COMPANY UNDER THE NORMAL PROVISIONS OF THE ACT AS WELL AS UNDER THE S PECIAL PROVISIONS OF SECTION 115JB OF THE ACT. WHILE COMPUTING THE BO OK PROFIT U/S 115 JB, THE ASSESSING OFFICER HAS NOT ALLOWED THE REBAT E ON ACCOUNT OF STT U/S 88E OF THE ACT FROM THE BOOK PROFIT OF THE ASSESSEE COMPANY. IN A DECISION IN THE CASE OF M/S HORIZON CAPITAL LI MITED, THE ITAT BANGALORE (2011) 64 DTR (KAR) 306 HAS LAID DOWN THA T TAX REBATE IN RESPECT OF STT U/S 88E IS AVAILABLE EVEN AGAINST TAX LIABILITY U/S 115JB. 22. IT IS FURTHER SEEN THAT A CO-ORDINATE BENCH OF THE TRIBUNAL HAS FOLLOWED THE AFORESAID DECISION IN THE CASE OF MBL SECURITIES PVT. LTD. AND HAS ALLOWED THE REBATE U/S 88E FROM THE BO OK PROFIT OF THE ASSESSEE, WHILE COMPUTING THE BOOK PROFIT. IT IS AL SO SEEN THAT THE DECISION OF ITAT BANGALORE HAS FURTHER BEEN CONFIRM ED BY THE HONBLE HIGH COURT OF KARNATAKA IN ITS ORDER DATED 24.10.2011 IN CIT VS., M/S. HORIZON CAPITAL LTD. ITA 434 OF 2010 WHEREIN THE HONBLE KARNATAKA HIGH COURT HELD THAT: 17. THEREFORE, THE CONTENTION THAT THIS BENEFIT IS NOT AVAILABLE TO THE ASSESSEE WHOSE TOTAL INCOME IS ASS ESSED U/S 115JB HAS NO SUBSTANCE. IN OTHER WORDS, WHEN THE TO TAL 11 I.T.A .NOS. 1535 & 938/DEL/2011 INCOME IS ASSESSED AND THE TAX CHARGEABLE IS COMPUT ED, IT IS FROM THAT TAX WHICH IS CHARGEABLE, IS COMPUTED, IT IS FROM THAT WHICH IS CHARGEABLE, THE TAX PAID U/S 88E IS GIVEN DEDUCTION, BY WAY OF REBATE, U/S 87 OF THE ACT. THIS IS THE LE GISLATIVE INTENT. THAT IS PROMISE TO GIVE DEDUCTION OF THE TA X ALREADY PAID. THIS IS THE MODE IN WHICH TAX ALREADY PAID IS HANDED BACK AT THE TIME OF FINAL COMPUTATION. THEREFORE, T HE JUDGMENT REFERRED BY THE TRIBUNAL IS STRICTLY IN ACCORDANCE WITH LAW AND DOES NOT SUFFER FROM ANY LEGAL INFIRMITY, WHICH CAL LED FOR INTERFERENCE. WE DO NOT SEE ANY SUBSTANTIAL QUESTIO N OF LAW INVOLVED IN THIS APPEAL, WHICH MERITS ADMISSION. TH E APPEAL IS DISMISSED. 23. WE FIND IN THE APPELLATE ORDER IMPUGNED BEFORE US, THE LD CIT(A) HAS RELIED ON THE RATIO IN M/S HORIZON CAPITAL LIMI TED (SUPRA). WE FIND THAT A CO-ORDINATE BENCH OF THIS TRIBUNAL HAS FOLLOWED THIS DECISION IN THE CASE OF MBL SECURITIES PVT. LTD AND HAS ALLOWED THE REBATE U/S 88E FROM THE BOOK PROFIT. IN THE LIGHT O F THE AFORESAID DECISIONS WE FIND NO LEGAL INFIRMITY IN THE ORDER P ASSED BY THE LD CIT(A) AND THEREFORE WE CONFIRM THE SAME AND DISMIS S THIS GROUND OF THE APPEAL OF THE REVENUE. 24. IN THE RESULT THE REVENUES APPEAL IS DISMISSED. 11. FROM CAREFUL PERUSAL OF THE ABOVE ORDER OF THE TRIBUNAL, WE NOTE THAT THE RELIEF HAS BEEN GRANTED TO THE ASSESSEE FOR FOLLOWI NG DECISION OF MBL SECURITIES PVT. LTD. (SUPRA) AND HAS ALLOWED THE REBATE U/S 88 E OF THE ACT FROM THE BOOK PROFIT. 12 I.T.A .NOS. 1535 & 938/DEL/2011 12. IN VIEW OF THE ABOVE AND IN THE LIGHT OF AFORE- SAID DISCUSSION MADE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008-09 ON T HIS ISSUE, WE FIND THAT THE CIT(A) RIGHTLY GRANTED THE RELIEF FOR THE ASSESSEE AND WE ARE UNABLE TO SEE ANY LEGAL INFIRMITY OR PERVERSITY IN THE IMPUGNED ORDER IN TH IS REGARD. HENCE, GROUND NOS. 2 & 3 OF THE ASSESSEE ARE ALLOWED BY FOLLOWING DECISI ON OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE DATED 25.04.20 14 (SUPRA), GROUND NOS. 2 & 3 OF THE ASSESSEE ARE ALLOWED AND THE AO IS DIRECTED TO FOLLOW THE EARLIER DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN AY 2008-09 IN THIS REGARD. GROUND NOS. 4 &5 OF THE ASSESSEE 13. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RECORD INTER ALIA IMPUGNED ORDER AND ASSESSMENT ORDER. THE AR POINT ED OUT THAT THIS GROUND IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006-07 DATED 26.09.201 2 (SUPRA). THE LD. DR POINTED OUT THAT THE ISSUE HAS NOT BEEN DECIDED IN FAVOUR OF THE ASSESSEE BUT RESTORED TO THE FILE OF AO FOR FRESH CONSIDERATION AND ADJUDICATION. 14. ON CAREFUL PERUSAL OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2006-07 DATED 26.09.2012 (SUPRA), WE NOTE THAT T HE ISSUE HAS BEEN RESTORED TO THE FILE OF AO WITH FOLLOWING OBSERVATIONS AND FIND INGS:- 15. IN THIS CASE ASSESSING OFFICER NOTED THAT ASSE SSEE HAS CLAIMED THE REBATE U/S. 88E. A PERUSAL OF THE DETAIL SUBMIT TED BY THE ASSESSEE REVEALS THAT PROFIT AND GAINS FROM TRANSACTIONS CHA RGEABLE TO STT IS 13 I.T.A .NOS. 1535 & 938/DEL/2011 RS.1,96,58,715/-. HOWEVER, THE ASSESSEE HAS CLAIMED REBATE U/S. 88E OF RS.58,97,616/-. ASSESSEE WAS ASKED TO SUBMIT THE COMPUTATION OF REBATE, ASSESSEE SUBMITTED AS UNDER:- AMOUNT OF STT DEDUCTED DURING F.Y. 05-06 64027 84/- TAX ON TRANSACTION LIABLE TO STT 5897616/- (30% OF ` 19658720/-) TAX ON TOTAL INCOME 5902518/- AMOUNT OF REBATE ALLOWED (LOWER OF THE ABOVE THREE) 5897616/- ON PERUSAL OF THE DETAILS SUBMITTED BY THE ASSESSEE , HE ASSESSING OFFICER NOTED SOME DISCREPANCIES. IT WAS NOTED THAT THE ASSESSEE HAS NOT USED THE CORRECT METHOD AS PRESCRI BED U/S 88E FOR CALCULATION OF REBATE. SECONDLY, THE ASSESSEE HAS N OT REDUCED THE EXPENSES FROM THE INCOME ON ACCOUNT OF SELF TRADING SUBJECTED TO STT FOR CALCULATION PURPOSES. FURTHER, ASSESSING OF FICER OBSERVED THAT THE ASSESSEE HAS NOT CONSIDERED ADMINISTRATIVE AND OPERATIVE EXPENSES DEBITED IN THE P&L A/C FOR THE PURPOSE OF CALCULATION OF REBATE U/S 88E. VIDE LETTER DT. 25.11.2008 THE ASSE SSEE SUBMITTED THAT THE RATIO OF TURNOVER ON OWN ACCOUNT AND ON CLIENTS ACCOUNT IS 13:10. HOWEVER, IN THE ABSENCE OF EVIDENCE THE CONT ENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THEREFORE, IN THE ABSENCE OF COMPLETE EVIDENCE THE EXPENSES WERE APPO RTIONED ON THE BASIS OF TURNOVER ON BROKERAGE ACCOUNT AND ON SELF TRADING. THE RATIO OF TURNOVER ON BROKERAGE ACCOUNT AND SELF TRA DING ACCOUNT WAS 17% AND 83% RESPECTIVELY. ACCORDINGLY, REBATE U/S 8 8E WAS RECALCULATED BY THE ASSESSING OFFICER AND WAS RESTR ICTED TO RS. 51,86,074/-. 14 I.T.A .NOS. 1535 & 938/DEL/2011 16. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCO ME TAX (A) AFFIRMED THE ORDER OF THE ASSESSING OFFICER. 17. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AN D PERUSED THE RECORDS. WE FIND THAT ASSESSING OFFICER HAS MADE TH IS DISALLOWANCE BY NOTING THAT PROPER EVIDENCE REGARDING THE CLAIM OF THE ASSESSEE WAS NOT SUBMITTED. LD. COMMISSIONER OF INCOME TAX ( A) HAS ALSO CONFIRMED THIS ORDER. ON THE FACTS AND CIRCUMSTANCE S OF THE CASE, IN OUR CONSIDERED OPINION, INTEREST OF JUSTICE, WILL B E SERVED IF THE ISSUE IS REMITTED TO THE FILE OF THE ASSESSING OFFICER T O CONSIDER THE ISSUE AFRESH. THE ASSESSING OFFICER SHALL CONSIDER THE IS SUE IN LIGHT OF THE SUBMISSION IN THIS REGARD, AFTER GIVING ASSESSEE PR OPER OPPORTUNITY OF BEING HEARD. WE HOLD AND DIRECT ACCORDINGLY. 15. ACCORDINGLY, RESPECTFULLY FOLLOWING THE ABOVE D ECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE, W E ARE IN AGREEMENT WITH THE CONCLUSION OF THE TRIBUNAL THAT THE ISSUE REQUIRES FRESH CONSIDERATION AT THE END OF THE AO IN THE LIGHT OF SUBMISSIONS AND CONTENTIONS RAISED BY THE ASSESSEE IN THIS REGARD. HENCE THE ISSUE IN FAVOUR OF GROUND NOS. 4 & 5 OF THE ASSESSEE ARE RESTORED TO THE FILE OF AO FOR FRESH ADJUDICATION I N THE LIGHT OF CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE AND OTHER RELEVANT PROV ISIONS OF THE ACT. NEEDLESS TO SAY THAT THE AO SHALL AFFORD DUE OPPORTUNITY OF HEA RING OF THE ASSESSEE WHILE ADJUDICATING THE ISSUE. ON THE BASIS OF FOREGOING DISCUSSION AND RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE DATED 15 I.T.A .NOS. 1535 & 938/DEL/2011 26.09.2012 (SUPRA), GROUND NOS. 4 & 5 OF THE ASSESS EE ARE DEEM TO BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED ON GROUND NOS. 2 & 3 AND ON GRO UND NOS. 4 & 5, THE SAME IS DEEM TO BE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11 TH OF JULY 2014. SD/- SD/- (B.C.MEENA) (C.M.GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:- 11/07/2014 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGIS TRAR ITAT NEW DELHI