The ITO, Ward-2, Ahmedabad V. Jhaveri Trading & Investment Pvt.Ltd., Ahmedabad

ITA 2149/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80435 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-10-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 30-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Deemed to accrue or arise in india; Question of law; Speculation loss
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER ITA NO . 2149 /AHD/20 1 1 A. Y. 2006 - 07 ITO, WARD (2), AHMEDABAD. VS JHAVERI TRADING & INVESTMENT P. LTD., 2 1 TAPOVAN SOCIETY, NR. MANEKBAUG JAIN TEMPLE, MANEKBAUG, AMBAWADI, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI V .K. SINGH , SR. D.R. , ASSESSEE(S) BY : SHRI M. K . PATEL, A.R. / DATE OF HEARING : 01 / 10 /201 4 / DATE OF PRONOUNCEMENT: 17/ 10 /201 4 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN A PPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF THE L EARNED CIT (A ) - VIII , AHMEDABAD , DAT ED 1 3 / 0 6 /201 1 FOR A.Y. 2006 - 07 AND THE SOLITORY GROUND IS REPRODUCED BELOW: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF REBATE U/S 88E OF RS. 10,98,761/ - FROM MAT CALCULATE U/S.115JB, W ITHOUT APPRECIATING FACT THAT THE REBATE APPLIES TO CASES WHERE THE TOTAL INCOME OF THE ASSESSEE INCLUDES INCOME CHARGEABLE UNDER THE HEAD ''PR OFIT AND GAIN FROM BUSINESS AND PROFESSION' ARISING FROM TAXABLE SECURITIES TRANSACTION. 2. THE ADMITTED FACTUA L POSITION WAS THAT AN ASSESSMENT U/S.147 R.W.S. 143(3) WAS COMPLETED ON 22.09.2010 ACCORDING TO WHICH THE FINAL INCOME OF THE ASSESSEE WAS ASSESSED AS UNDER: ITA NO. 2149 /AHD/201 1 THE ITO WARD - 2, AHMEDABAD VS. JHAVERI TRADING INVESTMENT P. LTD. FOR A.Y. 2006 - 07 - 2 TOTAL INCOME AS PER STATEMENT OF INCOME RS. 1,,58,47,845/ - LESS: BUSINESS LOS S FOR AY 2001 - 02 RS.12802432/ - SPECULATION LOSS - 2001 - 02 RS.12238/ - BUSINESS LOSS - 2002 - 03 : RS.2691999/ - BUSINESS LOSS - 2003 - 04 : RS.341176/ - RS. 1,58,47,845 / - ASSESSED TOTAL INCOME NIL BOOK PROFIT AS PER THE PROVISIONS OF SECTION 115 JB OF THE ACT (AS PER REPORT IN FORM NO.29B ATTACHED RS. 1,46,50,140 / - COMPUTATION OF MAT U/S 115 JB OF THE ACT TAX ON BOOK PROFIT OF RS 14650140 @ 7.5% RS. 1098760 / - ADD: SURCHARGE @ 10% RS 109876/ - EDUCATION CESS @ 2% RS. 241737 - TOTAL MAT RS. 1232809/ - 3. THE AO WAS OF THE VIEW THAT THE REBATE U/S.88E IS ADMISSIBLE ONLY FROM THE TAX CALCULATED UNDER NORMAL PROVISION OF INCOME, THEREFORE, THE CLAIM OF REBATE OF RS.10,98,76 0 / - U/S. 88E WAS NOT TO BE ALLOWED AGAINST THE TAX CALCULAT ED U/S.115JB. 4. WHEN THIS MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(A) HAS GIVEN THE FINDING , AS UNDER: (ONLY RELEVANT PORTION IS REPRODUCED) 3.2 I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE AO AS WELL AS ARGUMENTS AND SUBMISSIONS OF THE LEARNED AR AND THE DECISION RELIED UPON IN SUPPORT OF THE SAID ARGUMENTS. ON PERUSAL OF THE CHRONOLOGY FOR COMPUTATION OF TAX LIABILITY ON TOTAL INCOME INCLUDING DEEMED INCOME U/S.115JB AS APPEARING IN BOTH FORM NO.1 BEING RETURN FOR COM PANIES APPLICABLE FOR A.Y. 2005 - 06 AS WELL AS SUBSEQUENT RETURN IN FORM ITR - 6 APPLICABLE FOR A.Y. 2006 - 07 ONWARDS, I FIND THAT THE ARGUMENTS OF THE LEANRED AR THAT THE LEGISLATION ITSELF HAS INTENDED TO GRANT REBATE U/S.88E FROM THE TAX PAYABLE U/S.115JB O F THE ACT SINCE ASPER THE CHRONOLY OF THE SAID FORMS, IT IS CLEAR THAT THE TAX ON TOTAL INCOME AND TAX PAYABLE U/S.115JB IS TO BE COMPARED FIRST AND THE NET TAX PAYABLE IS TO BE DETERMINED FROM WHICH THE REBATE U/S.88E IS TO BE CLAIMED FOR ARRIVING AT THE FIGURE OF TAX PAYABLE. THUS, I AGREE WITH THE CONTENTION OF THE LEARNED AR THAT THERE IS NO ANOMLAY IN THE SAME. THAT APART, IT IS SEEN THAT ITA NO. 2149 /AHD/201 1 THE ITO WARD - 2, AHMEDABAD VS. JHAVERI TRADING INVESTMENT P. LTD. FOR A.Y. 2006 - 07 - 3 THE APPELLANT COMPANY IS ENGAGED SOLELY IN THE BUSINESS OF TRADING IN SHARES AND SECURITEIS FROM WHICH THE SECURITI ES TRANSACTION TAX ARISES. THUS, THE ENTIERE BOOK PROFIT OF THE COMPANY COMPRISE OF PROFITS AND GAINS OF BUSINESS AND PROFESSION . IN THE INSTANT CASE, SINCE THE COMPANY HAS COMPUTED THE TAX PAYABLE ON THE BOOK PROFITS UNDER SECTION 115JB, THE BOOK PROFIT S IN CASE OF THE COMPANY COMPRISE ONLY INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION . THUS, THE SAID CONDITION PRECEDENT IN SECTION 88E I.E. THE TOTAL INCOME HAS TO INCLUDE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAIN S OF BUSINESS OR PROFESSION ARISING FROM TAXABLE SECURITIES TRANSACTION IS ALSO MET WITH BY THE APPELLANT AND HENCE CONSIDERIENG THE FACTS OF THE CASE, THE APPELLANT IN MY OPINION, IS RIGHTFULLY ENTITLED TO CLAIM REBATE U/S.88E OF THE ACT AGAINST SUCH INC OME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION AS ENVISAGED IN SECTION 88E OF THE ACT. 5. FURTHER, LEARNED CIT(A) HAS ALSO PLACED RELIANCE UP ON AN ORDER OF RESPECTED ITAT BANGALORE BENCH IN THE CASE OF HORIZON CAPITAL LIMITE D VS. ITO IN ITA NO.592(BNG)/10 DATED 16.10.2010 , WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 87 OF IT ACT DOES NOT DIFFERENTIATE BETWEEN THE TOTAL INCOME COMPUTED UNDER THE REGULAR P ROVISIONS OF IT ACT OR U/S.115JB OF IT ACT. THE REBATE AS CLAIMED IS TO BE GRANTED FROM THE AMOUNT OF TAX CHARGEABLE ; HENCE, THE ASSESSEE IS ENTITLED TO A DEDUCTION OF THE AMOUNT EQUAL TO STT PAID IN RESPECT OF TAXABLE SECURITIES TRANSACTIONS. FURTHER , OUR ATTENTION HAS ALSO BEEN DRAWN THAT THE ASSESSEE COMPANY IS SOLELY ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES. 5.1 IN THE LIGHT OF THE ABOVE FACTS, WE HAVE ALSO S E EN AN ORDER OF ITAT B BENCH AHMEDABAD BEARING ITA NO.1074/AHD/2011, A.Y.2006 - 07 DATED 31 ST OF JANUARY, 2012 IN THE CASE OF SK STOCK BROKING PVT. LIMITED, WHEREIN IT WAS HELD AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE JUDGEMENTS CITED BY BOTH THE SIDES. FIRST WE CONSIDER THE JUDGMENT OF HON'B LE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS HORIZON ITA NO. 2149 /AHD/201 1 THE ITO WARD - 2, AHMEDABAD VS. JHAVERI TRADING INVESTMENT P. LTD. FOR A.Y. 2006 - 07 - 4 CAPITAL LTD. WE FIND THAT PARA 16 & 17 OF THIS JUDGEMENT OF KAMATAKA HIGH COURT ARE RELEVANT AND HENCE, WE REPRODUCE THE SAME HEREIN BELOW: '16. THEREFORE, IT IS CLEAR THAT THE ASSESSEE IS LI ABLE TO PAY SECURITIES TRANSACTION TAX 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 ASSE SSED ETHER UNDER THE PROVISIONS OF THE ACT OR UNDER SECTION 11516 WHEN TAX CHARGEABLE ON SUCH INCOME IS ARRIVED AT, HE IS GIVEN THE BENEFIT OF TAX DEDUCTIONS OF THE AMOUNT, WHICH HE HAS PAID UNDER SECTION 88F BY VIRTUE OF SECTION 87. WHEN UNDER SECTION 82A , THE ASSESSEE IS MADE LIABLE TO PAY TAX WITH AN ASSURANCE THAT IT WILL - BE DEDUCTED AND 87 OF THE ACT 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 ASSESSES. IN OT HER WORDS, PAYMENT OF TAX TWICE ON THE SAME INCOME IS AVOIDED, 17. THEREFORE, THE CONTENTION THAT THIS BENEFIT IS NOT AVAILABLE TO THE ASSESSEE WHOSE TOTAL INCOME IS ASSESSED UNDER SECTION 115JB HAS NO SUBSTANCE, IN OTHER WORDS, WHEN THE TOTAL INCOME IS AS SESSED AND THE TAX CHARGEABLE IS COMPUTED, IT IS FROM THAT TAX WHICH IS CHARGEABLE, THE TAX PAID UNDER SECTION 88E IS GIVEN DEDUCTION, BY WAY OF REBATE, UNDER SECTION 87 OF THE ACT. THIS IS THE LEGISLATIVE INTENT. THAT IS A PROMISE TO GIVE DEDUCTION OF THE TAX ALREADY PAID. THIS IS THE MODE IN WHICH TAX ALREADY PAID IS HANDED BACK AT THE TIME OF FINAL COMPUTATION. THEREFORE, THE JUDGMENT REFERRED BY THE TRIBUNAL IS STRICTLY IN ACCORDANCE WITH LAW AND DOES NOT SUFFER FROM ANY LEGAL INFIRMITY, WHICH CALLED FO R INTERFERENCE. WE DO NOT SEE ANY SUBSTANTIAL QUESTION OF LAW INVOLVED IN HIS APPEAL, WHICH MERITS ADMISSION. THE APPEAL IS DISMISSED.' 6. FROM THE ABOVE DECISION OF HON'BLE KAMATAKA HIGH COURT, WE FIND THAT THIS ISSUE INVOLVED IN THE PRESENT TWO CASE S, IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT AND NO CONTRARY DECISION ON THIS ISSUE HAD BEEN BROUGHT TO OUR NOTICE BY THE LD. D.R. OF THE REVENUE. REGARDING VARIOUS DECISIONS CITED BY LD. D.R., IT IS CO NTENDED THAT THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS NOT CORRECT LAW, BUT IN NONE OF THESE JUDGMENTS CITED BY LD, D.R., THE ISSUE INVOLVED WAS REGARDING REBATE U/S 88E AS IN THE PRESENT CASE AND THE ISSUE BEFORE THE HON'BLE KARNATAKA HIGH COURT WA S THE SAME I.E. ALLOWABILITY OF REBATE U/S 88E AGAINST THE MAT PAYABLE BY THE ASSESSEE U/S 115JB AND HENCE, IN THE PRESENT CASE, THE ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT AND IN THE ABSENCE OF ANY CONTRARY DECISION OF AN Y HIGH COURT OR HON'BLE SUPREME COURT, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE BY RESPECTFULLY / FOLLOWING THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT. 5.2 ONE MORE ORDER OF HON BLE DELHI HIGH COURT HAS ALSO BEEN CITED DATED 17.05.2013 PRONOUNCED IN THE CASE OF CIT VS. M/S. MBL & CO. ITA NO. 2149 /AHD/201 1 THE ITO WARD - 2, AHMEDABAD VS. JHAVERI TRADING INVESTMENT P. LTD. FOR A.Y. 2006 - 07 - 5 LTD. (ITA NO.1181/2011) AND CIT VS. M/S. MULTIPLEX CAPITAL LTD. (ITA NO.573/2012) WHEREIN AS WELL THIS VERY ISSUE WAS HELD IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THESE DECISIONS AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE HEREBY UPHOLD THE VIEW OF LEARNED CIT(A) AND DISMISS THE GROUND OF THE REVENUE. 6. IN THE RESULT, REVENUE S APPEAL IS DISMISSED. SD/ - S D/ - ( ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 17 / 10 / 20 1 4 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD