DCIT 4(1)(1), MUMBAI V. ASIT C.MEHTA INVESTMENT INTERMEDIATES P.LTD, MUMBAI

ITA 1919/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8414 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2015
• Court: TRIBUNAL
• Department Lawyers: SATISH A MODY
• Keywords: Question of law
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI CN PRASAD , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AG G ARWAL, ACCOUNTANT MEMBER ITA NO. 1 919 /MUM/201 5 : (A.Y : 20 0 7 - 0 8 ) DCIT 4(1)(1) R.NO.640, 6 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI 400 020 ( / APPELLANT) VS. SHRI ASIT C MEHTA INVESTMENT INTERMEDIATES P. LTD. 5 TH FLOOR, NUCLEUS HOUSE SAKI VIHAR ROAD ANDHERI (EAST) MUMBAI 400 0 72 PAN : AAACA5009N ( / RESPONDENT) / A PPELLANT BY : SHRI VAIBHAV JAIN REVENUE BY : SHRI SATISH A MODY / DATE OF HEARING : 23 /1 1 /201 6 DATE OF PRONOUNCEMENT : 17 / 02/2017 / O R D E R PER C.N.PRASAD (J.M.) : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT (APPEALS) - 9 , MUMBAI DATED 29 . 0 1 .201 5 FOR THE ASSESSMENT YEAR 200 7 - 0 8 ARISING OUT OF THE ASSESSMENT ORDER U/S 143(3) R.W.S.147 OF THE ACT. 2 M/S ASIT C MEHTA INVESTMENT INTERMEDIATES PVT. LTD. ITA NO . 1 919 /MUM/201 5 2. THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT THE LD.CIT (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW REBATE U/S 88E OF THE ACT WHILE COMPUTING THE TAX LIABILITY U/S 115JB OF THE ACT. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT BY ORDER DATED 09.11.2012 DENIED REBATE U/S 88E WHILE COMPUTING THE BOOK PROFITS U/S 115JB OF THE ACT ON THE GROUND THAT PAYMENT OF SECURITIES TR ANSACTION TAX ALLOWED AS REBATE U/S 88E CANNOT BE EQUATED WITH INCOME TAX. THEREFORE, HE DENIED THE REBATE U/S 88E TO THE ASSESSEE. ON APPEAL, THE LD CIT (APPEALS) FOLLOWING THE DECI SIONS OF KARNATAKA HIGH COURT IN THE CASE OF HORIZON CAPITAL LTD AND THE DELHI HIGH COURT IN THE CASE OF MBL & CO. LTD AND MULTIPLEX CAPITAL LTD. ALLOWED THE CLAIM OF THE ASSESSEE. 4. THE LD. DR SUPPORTED THE ORDE RS OF THE ASSESSING OFFICER IN DENYING REB ATE U/S 88E WHILE COMPUTING BOOKS PROFITS U/S 115JB OF THE ACT TO THE ASSESSEE. 5. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY PLACED RELIANCE ON THE ORDERS OF THE LD. CIT (APPEALS) AND THE DECISIONS OF THE HONBLE KARNATAKA AND DELHI HIGH COURT ON THE ISS UE AND SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE SAID DECISIONS. 3 M/S ASIT C MEHTA INVESTMENT INTERMEDIATES PVT. LTD. ITA NO . 1 919 /MUM/201 5 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAWS RELIED ON. WE FIND FROM THE ASSESSMENT ORDER THAT REBATE U/S 88E WAS DENIED B Y THE ASSESSING OFFICER ON THE GROUND THAT SUCH REBATE U/S 88E CLAIMED ON ACCOUNT OF STT CANNOT BE EQUATED WITH INCOME TAX PAYMENT . WE FIND THAT S IMILAR ISSUE HAS COME UP BEFORE HONBLE K ARNATAKA HIGH COURT AND ALSO THE DELHI HIGH COURT, WHEREIN THE ISSUE WA S DECIDED IN FAVOUR OF THE ASSESSEE AND T HE LD. CIT (APPEALS) FOLLOWING THESE DECISIONS ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER : 3.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, ORDER PASSED AND THE SUBMISSIONS MADE BY THE APPELLAN T. IT IS SEEN THAT IN THIS CASE, THE ONLY DISPUTE IN THE PRESENT APPEAL IS AS TO WHETHER REBATE U/S. 88E OF THE ACT IS ALLOWABLE IN COMPUTING INCOME U/S. 115JB OF THE ACT. THE ISSUE HAS BEEN DECIDED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF HORIZO N CAPITAL LTD. (2011) 64 DTR (KAR) 306. THE HON'BLE KARNATAKA HIGH COURT HAS HELD AS UNDER : - 'UNDER S. 88E, WHERE THE TOTAL INCOME OF AN ASSESSEE IN A PREVIOUS YEAR INCLUDES ANY INCOME, CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFE SSION ', ARISING FROM TAXABLE SECURITIES TRANSACTIONS, HE SHALL BE ENTITLED TO A DEDUCTION, FROM THE AMOUNT OF INCOME TAX ON SUCH INCOME ARISING FROM SUCH TRANSACTION. SECTION ALSO PROVIDES THE LIMIT TO WHICH DEDUCTIONS SHALL BE GIVEN. THEREFORE, IT IS CLE AR THAT THE ASSESSEE IS LIABLE TO PAY ST T WHEN HE ENTERS INTO SECURITIES TRANSACTION. TAX IS PAYABLE SIMULTANEOUSLY AFTER REALIZING THE CONSIDERATION. HOWEVER, IF THAT TRANSACTION IS INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE, WHERE THE TOTAL INCOME IS A SSESSED EITHER UNDER THE PR OVISIONS OF THE ACT OR U/S. 115J B, WHEN TAX CHARGEABLE ON SUCH INCOME IS ARRIVED AT, HE IS GIVEN THE 4 M/S ASIT C MEHTA INVESTMENT INTERMEDIATES PVT. LTD. ITA NO . 1 919 /MUM/201 5 BENEFIT OF TAX DEDUCTIONS OF THE AMOUNT, WHICH HE HAS PAID U/S. 88E BY VIRTUE OF SEC.87. WHEN THE ASSESSEE IS MADE LIABLE TO PAY TAX WITH AN ASSURANCE THAT IT WILL BE DEDUCTED AND SEC.87 GIVES EFFECT TO SUCH PROMISE MADE UNDER THE STATUTE, THAT IS THE REASON, WHY THE WORD USED IS REBATE. THE AMOUNT PAID IS HANDED BACK TO THE ASSESSEE. IN OTHER WORDS, PAYMENT OF TAX TWICE ON THE SAM E INCOME IS AVOIDED. THEREFORE, THE C ONTEN TI ON THAT THIS BENEFIT IS NOT AVAILABLE TO THE ASSESSEE WHOSE TOTAL INCOME IS ASSESSED U/S 115JB HAS NO SUBSTANCE. IN OTHER WORDS, WHEN THE TOTAL INCOME IS ASSESSED AND THE TAX CHAR GEABLE IS COMPUTED, IT IS FROM THAT TAX WHICH IS CHARGEABLE, THE TAX PAID U/S 88E IS GIVEN DED UCTION, BY WAY OF REBATE, U/S. 87. THIS IS THE MODE IN WHICH TAX A LREA DY PAID IS HANDED BACK AT THE TIME FINAL COMPUTATION. NO SUBSTANTIAL QUESTION OF LAW IS INVO LVED IN THIS APPEAL.' 3.3 SIMILARLY, HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. (1) MBL & CO. LTD. (ITA NO. 1181 OF 2011) AND (2) MULTIPLEX CAPITAL LTD. (ITA NO. 573 OF 2012) - [2013] 358 ITR 1 (DELHI) HAS HELD AS UNDER : - 'REBATE U/S. 88E OF THE ACT PROVIDES FOR CERTAIN REBATES AVAILABLE ON THE TAX PAYABLE BY AN ASSESSEE. THERE WOULD BE NO RATIONALES TO LIMIT THE PLAIN WORDS OF SEC.88E OF THE ACT AND HOLD THAT THE REBATE IN PAYMENT OF THE TAX IS ONLY APPLICABLE TO TAX AS DE TER MINED UNDER THE NORMAL PROVISIONS OF THE ACT AND NOT WITH RESPECT TO THE MAT AS COMPUTED U/S. 115J B. THE PURPOSE OF SEC.88E OF THE ACT IS TO GRANT AN ASSESSEE, TO A LIMITED EXTENT, CREDIT IN TAX ON ACCOUNT OF STT ALREADY BORNE BY HIM IN RESPECT OF THE B USINESS CARRIED OUT BY HIM IN DEALING IN SECURITIES. THIS REBATE WOULD BE EQUALLY APPLICABLE TO TAX AS COMPUTED U/S. 115JB OF THE ACT AS UNDER THE NORMAL PROVISIONS OF THE ACT.' 3.4 IT IS SEEN FROM THE ABOVE DECISIONS OF THE HON'BLE KARNATAKA HIGH COURT AND HON'BLE DELHI HIGH COURT THAT REBATE U/S. 88E IS 5 M/S ASIT C MEHTA INVESTMENT INTERMEDIATES PVT. LTD. ITA NO . 1 919 /MUM/201 5 ALLOWABLE TO THE APPELLANT WHILE COMPUTING TAX LIABILITY U/S.115JB OF THE ACT. RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE KARNATAKA HIGH COURT AND HON'BLE DELHI HIGH COURT, THE AO IS DIRECTED TO ALL OW REBATE U/S. 88E OF THE ACT WHILE COMPUTING THE TAX LIABILITY U/S. 115JB OF THE ACT. THE GROUND OF APPEAL, IS THUS TREATED AS ALLOWED. 7. ON GOING THROUGH THE ORDERS OF THE LD.CIT (APPEALS), WE DO NOT FIND ANY VALID REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT (APPEALS) IN ALLOWING THE CLAIM OF THE ASSESSEE. THE REVENUE ALSO COULD NOT BRING ANY CONTRARY DECISION OF THE JURISDICTIONAL HIGH COURT BEFORE US. THEREFORE, RESPECTFULLY, FOLLOWING THE ABOVE DECISIONS, WE UPHOLD THE ORDER OF THE LD. CIT (A PPEALS) AND REJECT THE GROUNDS OF APPEAL OF THE REVENUE . 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THE 17 TH DAY OF FEBRUARY 2017 . SD/ - SD/ - MANOJ KUMAR AG G ARWAL C.N.PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER / MUMBAI; / DATED 17 / 02 / 2017 LR, SPS 6 M/S ASIT C MEHTA INVESTMENT INTERMEDIATES PVT. LTD. ITA NO . 1 919 /MUM/201 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, (ASSTT. REGISTRAR) , / ITAT, MUM 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. // TRUE COPY / /