The ITO, Ward- 4(2), Ahmedabad V. Jhaveri Trading & Investment Pvt.Ltd., Ahmedabad

ITA 2947/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0558 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 12-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• 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 RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA.NO.2947/AHD/2013 / ASSTT. YEAR: 2007-2008 ITO, WARD - 4(2) AHMEDABAD. VS JHAVERI TRADING & INVESTMENT P. LTD. 21, TAPOVAN SOCIETY NR. MANEKBAUG JAIN TEMPLE AMBAWADI AHMEDABAD 380 015. PAN : AAACJ 9256 C ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI JAMES KURIAN, SR.DR ASSESSEE BY : SHRI M.K. PATEL, AR / DATE OF HEARING : 07/09/2016 / DATE OF PRONOUNCEMENT: 08/09/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST TH E ORDER OF THE LD.CIT(A)-VIII DATED 12.9.2013 PASSED FOR THE ASSTT .YEAR 2007-08. 2. GROUNDS OF APPEAL TAKEN BY THE REVENUE READ AS U NDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACT S IN DIRECTING TO ALLOW REBATE U/S. 88E AGAINST TAX PAYABLE ON THE BO OK PROFIT U/S. 115JB OF THE ACT, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND CONTRARY TO THE PROVISIONS OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. ITA NO.2947/AHD/2013 2 3. IT IS, THEREFORE, PRAYED THAT THE ORDER O F THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 3. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET, SUBMITTED THAT SIMILAR CONDITIONS IN THE ASSTT.YEAR 2006-07, THE L D.CIT(A) HAS ALLOWED DEDUCTION UNDER SECTION 88E OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE ON THE PROFIT COMPUTED FOR THE PURPOSE OF MAT. WHEN THIS ISSUE TRAVELLED TO THE TRIBUNAL IN ITA NO.2149/AHD/2011, THE TRIBUNAL HAS UPHELD THE ORDER OF THE LD.CIT(A). THE TRIBUNAL HAS FOLLOWED JUDGMENT OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. M/S.MBL & CO.LTD. ORDE R OF THE TRIBUNAL IN THE ASSTT.YEAR 2006-07 READ AS UNDER: THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF THE LEARNED CIT(A)-VIII, AHMEDABAD, DATED 13/06/2011 FOR A.Y.20 06-07 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/- F ROM MAT CALCULATE U/S.115JB, WITHOUT APPRECIATING FACT THAT THE REBAT E APPLIES TO CASES WHERE THE TOTAL INCOME OF THE ASSESSEE INCLUDES INCOME CH ARGEABLE UNDER THE HEAD ''PROFIT AND GAIN FROM BUSINESS AND PROFESSION' ARI SING FROM TAXABLE SECURITIES TRANSACTION. 2. THE ADMITTED FACTUAL POSITION WAS THAT AN ASSESS MENT U/S.147 R.W.S. 143(3) WAS COMPLETED ON 22.09.2010 ACCORDING TO WHICH THE FINA L INCOME OF THE ASSESSEE WAS ASSESSED AS UNDER: TOTAL INCOME AS PER STATEMENT OF INCOME RS. 1,58,4 7,845/- LESS: BUSINESS LOSS 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 ITA NO.2947/AHD/2013 3 BOOK PROFIT AS PER THE PROVISIONS OF SECTION 115JB 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. 1098 760/- 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 I S ADMISSIBLE ONLY FROM THE TAX CALCULATED UNDER NORMAL PROVISION OF INCOME, THEREF ORE, THE CLAIM OF REBATE OF RS.10,98,760/- U/S. 88E WAS NOT TO BE ALLOWED AGAIN ST THE TAX CALCULATED U/S.115JB. 4. WHEN THIS MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY, LEARNED CIT(A) HAS GIVEN THE FINDING, AS UNDER: (ONLY RELEV ANT PORTION IS REPRODUCED) 3.2 I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS O F 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 INCLUD ING DEEMED INCOME U/S.115JB AS APPEARING IN BOTH FORM NO.1 BEING RETU RN FOR COMPANIES APPLICABLE FOR A.Y. 2005-06 AS WELL AS SUBSEQUENT R ETURN IN FORM ITR-6 APPLICABLE FOR A.Y. 2006- 07 ONWARDS, I FIND THAT T HE ARGUMENTS OF THE LEANRED AR THAT THE LEGISLATION ITSELF HAS INTENDED TO GRANT REBATE U/S.88E FROM THE TAX PAYABLE U/S.115JB OF THE ACT SINCE ASP ER THE CHRONOLY OF THE SAID FORMS, IT IS CLEAR THAT THE TAX ON TOTAL INCOM E 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 ARRIV ING AT THE FIGURE OF TAX PAYABLE. THUS, I AGREE WITH THE CONTENTION OF THE L EARNED AR THAT THERE IS NO ANOMLAY IN THE SAME. THAT APART, IT IS SEEN THAT TH E APPELLANT COMPANY IS ENGAGED SOLELY IN THE BUSINESS OF TRADING IN SHARES AND SECURITEIS FROM WHICH THE SECURITIES TRANSACTION TAX ARISES. THUS, THE ENTIERE BOOK PROFIT OF THE COMPANY COMPRISE OF PROFITS AND GAINS OF BUSIN ESS AND PROFESSION. IN THE INSTANT CASE, SINCE THE COMPANY HAS COMPUTED THE TAX PAYABLE ON THE BOOK PROFITS UNDER SECTION 115JB, THE BOOK PROFITS IN CASE OF THE COMPANY COMPRISE ONLY INCOME CHARGEABLE UNDER THE HEAD PRO FITS AND GAINS OF BUSINESS OR PROFESSION. THUS, THE SAID CONDITION P RECEDENT IN SECTION 88E I.E. THE TOTAL INCOME HAS TO INCLUDE INCOME CHARGEA BLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION ARISI NG FROM TAXABLE SECURITIES TRANSACTION IS ALSO MET WITH BY THE APPE LLANT AND HENCE CONSIDERIENG THE FACTS OF THE CASE, THE APPELLANT I N MY OPINION, IS RIGHTFULLY ENTITLED TO CLAIM REBATE U/S.88E OF THE ACT AGAINST SUCH INCOME CHARGEABLE ITA NO.2947/AHD/2013 4 UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND P ROFESSION AS ENVISAGED IN SECTION 88E OF THE ACT. 5. FURTHER, LEARNED CIT(A) HAS ALSO PLACED RELIANCE UPON AN ORDER OF RESPECTED ITAT BANGALORE BENCH IN THE CASE OF HORIZ ON CAPITAL LIMITED VS. ITO IN ITA NO.592(BNG)/10 DATED 16.10.2010, WHE REIN IT WAS HELD THAT THE PROVISIONS OF SECTION 87 OF IT ACT DOES NOT DIF FERENTIATE BETWEEN THE TOTAL INCOME COMPUTED UNDER THE REGULAR PROVISIONS OF IT ACT OR U/S.115JB OF IT ACT. THE REBATE AS CLAIMED IS TO BE GRANTED F ROM THE AMOUNT OF TAX CHARGEABLE; HENCE, THE ASSESSEE IS ENTITLED TO A DE DUCTION OF THE AMOUNT EQUAL TO STT PAID IN RESPECT OF TAXABLE SECURITIES TRANSACTIONS. FURTHER, OUR ATTENTION HAS ALSO BEEN DRAWN THAT THE ASSESSEE COM PANY 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 EEN AN ORDER OF ITAT B BENCH AHMEDABAD BEARING ITA NO.1074/AHD/2011, A.Y.2 006-07 DATED 31ST OF JANUARY, 2012 IN THE CASE OF SK STOCK BROKING PV T. 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 AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY BOTH THE SIDES. FIRST WE CO NSIDER THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED I N THE CASE OF CIT VS HORIZON CAPITAL LTD. WE FIND THAT PARA 16 & 17 OF THIS JUDGEMENT OF KAMATAKA HIGH COURT ARE RELEVANT AND H ENCE, 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 SECU RITIES TRANSACTION. TAX IS PAYABLE SIMULTANEOUSLY AFTER RE ALIZING THE CONSIDERATION. HOWEVER,, IF THAT TRANSACTION IS INC LUDED IN THE TOTAL INCOME OF THE ASSESSEE WHERE THE TOTAL IN COME IS ASSESSED ETHER UNDER THE PROVISIONS OF THE ACT OR U NDER SECTION 11516 WHEN TAX CHARGEABLE ON SUCH INCOME IS ARRIVED AT, HE IS GIVEN THE BENEFIT OF TAX DEDUCTIO NS OF THE AMOUNT, WHICH HE HAS PAID UNDER SECTION 88F BY VIRT UE 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 RE BATE. THE AMOUNT PAID IS HANDED BACK TO THE ASSESSES. IN OTHE R 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 UNDE R SECTION 115JB HAS NO SUBSTANCE, IN OTHER WORDS, WHEN THE TO TAL INCOME IS ASSESSED AND THE TAX CHARGEABLE IS COMPUT ED, IT IS ITA NO.2947/AHD/2013 5 FROM THAT TAX WHICH IS CHARGEABLE, THE TAX PAID UND ER SECTION 88E IS GIVEN DEDUCTION, BY WAY OF REBATE, UNDER SEC TION 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 O F FINAL COMPUTATION. THEREFORE, THE JUDGMENT REFERRED BY TH E TRIBUNAL IS STRICTLY IN ACCORDANCE WITH LAW AND DOE S NOT SUFFER FROM ANY LEGAL INFIRMITY, WHICH CALLED FOR I NTERFERENCE. WE DO NOT SEE ANY SUBSTANTIAL QUESTION OF LAW INVOL VED IN HIS APPEAL, WHICH MERITS ADMISSION. THE APPEAL IS DISMI SSED.' 6. FROM THE ABOVE DECISION OF HON'BLE KAMATAKA HIGH COURT, WE FIND THAT THIS ISSUE INVOLVED IN THE PRESENT TWO CA SES, IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT AND NO CONTRARY DECISION ON TH IS ISSUE HAD BEEN BROUGHT TO OUR NOTICE BY THE LD. D.R. OF THE R EVENUE. REGARDING VARIOUS DECISIONS CITED BY LD. D.R., IT IS CONTENDE D THAT THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS NOT COR RECT LAW, BUT IN NONE OF THESE JUDGMENTS CITED BY LD, D.R., THE ISSU E INVOLVED WAS REGARDING REBATE U/S 88E AS IN THE PRESENT CASE AND THE ISSUE BEFORE THE HON'BLE KARNATAKA HIGH COURT WAS THE SAME I.E. ALLOWABILITY OF REBATE U/S 88E AGAINST THE MAT PAYABLE BY THE ASSES SEE U/S 115JB AND HENCE, IN THE PRESENT CASE, THE ISSUE IS SQUARE LY COVERED BY THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT AND IN THE ABSENCE OF ANY CONTRARY DECISION OF ANY HIGH COURT OR HON'BLE SUPREME COURT, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE BY R ESPECTFULLY/ FOLLOWING THIS JUDGMENT OF HON'BLE KARNATAKA HIGH C OURT. 5.2 ONE MORE ORDER OF HONBLE DELHI HIGH COURT HAS ALSO BEEN CITED DATED 17.05.2013 PRONOUNCED IN THE CASE OF CIT VS. M/S. M BL & CO. LTD. (ITA NO.1181/2011) AND CIT VS. M/S. MULTIPLEX CAPITAL LT D. (ITA NO.573/2012) WHEREIN AS WELL THIS VERY ISSUE WAS HELD IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THESE DECISIONS AND CONSIDER ING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HEREBY UPHO LD THE VIEW OF LEARNED CIT(A) AND DISMISS THE GROUND OF THE REVENUE. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 4. THERE IS NO DISPARITY OF THE FACTS BETWEEN BOTH THE YEARS. THE ISSUE INVOLVED IN THIS YEAR IS ALSO IDENTICAL I.E. WHETHE R REBATE UNDER SECTION 88E WOULD BE ADMISSIBLE TO THE ASSESSEE ON THE BOOK PRO FIT COMPUTED FOR THE PURPOSE OF SECTION 115JB OR NOT. THE AO WANTS TO R ESTRICT THIS REBATE ONLY TO THE EXTENT OF PROFIT COMPUTED UNDER THE NORMAL PROV ISIONS OF THE ACT. THIS ITA NO.2947/AHD/2013 6 VIEW OF THE AO WAS NOT UPHELD IN THE ASSTT.YEAR 200 6-07. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF CO-ORDINATE BEN CH IN THE ASSESSEES OWN CASE FOR THE ASSTT.YEAR 2006-07, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENUE. IT IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 8 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER