PRAKASH K. SHAH SHARES & SECURITIES P.LTD, MUMBAI V. ASST CIT 4(2), MUMBAI

ITA 3833/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79350 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL K AGARWAL
• Assessee Lawyers: AGARWAL
• Keywords: Opportunity of being heard; Earning of tax free income; Initiation of penalty proceedings; Bad and doubtful debts
• Section: 234B; 14A; 115JB; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.527/M/2012 ( AY: 2008 - 2009) ./I.T.A. NO.3833/M/2012 ( AY: 2009 - 2010) M/S. PRAKASH K SHAH SHARES & SECURITIES PVT LTD., 11/43, RAJA BAHADUR MANSION, TAMARIND LANE, FORT, MUMBAI - 400023. / VS. ACIT - 4(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. ./ PAN : AABCP3900A ( / APPELLANT) .. ( / RESPONDENT ) ./I.T.A. NO.1598/M/2012 ( AY: 2008 - 2009) ACIT - 4(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. / VS. M/S. PRAKASH K SHAH SHARES & SECURITIES PVT LTD., 11/43, RAJA BAHADUR MANSION, TAMARIND LANE, FORT, MUMBAI - 400023. ./ PAN : AABCP3900A ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI M.R. AGARWAL / REVENUE BY : SHRI SUNIL K AGARWAL / DATE OF HEARING : 07.7.2014 / DATE OF PRONOUNCEMENT : 16 .7.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION INVOLVING TWO ASSESSMENT YEARS I.E, 2008 - 09 AND 2009 - 10. OUT OF THREE APPEALS, THERE ARE CROSS APPEALS FOR THE AY 2008 - 2009 AND ITA NO.3833/M/2012 IS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10. SINCE , THE GROUNDS RAISED IN ALL THESE THREE APPEALS ARE CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND 2 DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGR APHS. 2. FIRSTLY, WE SHALL TAKE UP THE CROSS APPEALS FOR THE AY 2008 - 2009. IN CROSS APPEALS, ITA NO.1598/M/2012 IS FILED BY THE REVENUE ON 6.3.2012 IS AGAINST THE ORDER OF THE CIT (A) - 8, MUMBAI DATED 30.12.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE DISALLOWANCE OF BAD DEBTS AMOUNTING TO RS. 31,26,607/ - IN HOLDING THAT IN THE CASE OF SHARE BROKER, AMOUNT RECEIVABLE FROM CLIENTS ON ACCOUNT OF TRANSACTIONS OF PURCHASE ON THEIR BEHALF IS A DEBT & SATISFIES PROVISION OF SECTION 36(2). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE DISALLOWANCE MADE IN RESPECT OF PAYMENTS MADE TO JOBBERS ON ACCOUNT OF SHARING OF INCOME / LOSS U/S 40(A)(IA) HOLDING THAT NO TDS REQUIRES TO BE DEDUCTED ON PAYMENT OF JOBBERS, EVEN WHEN SUCH PAYMENT IS CONTRACTUAL IN NATURE AND COVERED BY PROVISIONS OF SECTION 194C . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE DISALLOWANCE MADE IN RESPECT OF REBATE U/S 88E FROM TAX LIABILITY DETERMINED U /S 115JB. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT REBATE IS ALLOWABLE FROM TAX LIABILITY COMPUTATION U/S 115JB, IGNORING THE FACT THAT SECTION 115JB IS A SELF CONTAINED PROVISION AND NO DEDUCTI ON OTHER THAN PRESCRIBED IN SECTION ITSELF ARE PERMISSIBLE. (B) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT COMPARISON OF TAX LIABILITY UNDER NORMAL PROVISIONS SHOULD BE MADE PRIOR TO GIVING EFFECT TO REBATE WITH TAX LIABILITY U/S 115JB, IGNORING THE FACT THAT COMPARISON OF NORMAL TAX LIABILITY HAS TO BE MADE AFTER GIVING EFFECT TO ALL PROVISIONS OF IT ACT, WITH TAX LIABILITY U/S 115JB. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE IMPUG NED ORDER OF THE LD CIT (A) IS CONTRARY TO LAW AND TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. DURING THE PROCEEDINGS BEFORE, AT THE OUTSET, BOTH THE PARTIES MENTIONED THAT THE ISSUES INVOLVED IN THE ABOVE GROUNDS RELATE TO (I) DIS ALLOWANCE OF BAD DEBTS; (II) DISALLOWANCE OF LOSS INVOKING THE PROVISIONS OF SECTION 40(A)(IA) AND (III) DISALLOWANCE OF REBATE U/S 88E FROM TAX LIABILITY DETERMINING U/S 115JB OF THE ACT. 4. REFERRING TO THE FIRST ISSUE RELATING TO BAD DEBTS, LD COUNSEL F OR THE ASSESSEE BRIEFLY NARRATED THE FACTS THAT DURING THE YEAR, THE ASSESSEE DEBITED AN AMOUNT OF RS. 31,50,941/ - AS BAD DEBTS WRITTEN OFF , OUT OF WHICH THE BROKERAGE PORTION IS RS. 24,334/ - AND THE BALANCE OF RS. 31,26,607/ - AS NON - BROKERAGE PORTION. IN THIS REGARD, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, AO CAME TO THE 3 CONCLUSION THAT THE PROVISIONS OF SECTION 36(1)(VII) AND 36(2) ARE NOT MET BY THE ASSESSEE AND HENCE, HE DISALLOWED THE ASSESSEES CLAIM OF BAD DEBTS. AGGRIEVED, ASSESSEE FI LED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US BY RAISING THE ABOVE MENTIONED GROUND NO.1. 6. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL HEAVILY RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 7. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE ORDER OF THE CIT (A) IN GENERAL AND PARA 6.3 TO 6.5 IN PARTICULAR, WE FIND THE SAME IS RELEVANT HE RE WHICH READ AS UNDER: 6.3. I HAVE CONSIDERED THE CONTENTION OF THE AO S WELL AS OF THE LD AR. THE HONBLE MUMBAI ITAT, SPECIAL BENCH IN THE CASE OF DCIT VS. SHREYAS S. MORAKHIA (2010) 40 SOT 432 (SB) (MUM) FOLLOWING THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF (I) CIT VS. DB (INDIA) SECURITIES LTD (2009) 318 CTR 26 (DEL) AND (II) CIT VS. BONANZA PORTFOLIO LTD (2010) 320 ITR 78 (DEL), HAS HELD THAT 32. KEEPING IN VIEW ALL THE FACTS OF THE CASE AND THE LEGAL POSITION EMANATING FROM THE VARIOUS JUDICIAL PRONOUNCEMENTS AS DISCU SSED ABOVE, WE ARE OF THE VIEW THAT THE AMOUNT RECEIVABLE BY THE ASSESSEE, WHO IS A SHARE BROKER, FROM HIS CLIENTS AGAINST THE TRANSACTIONS OF PURCHASE OF SHARES ON THEIR BEHALF CONSTITUTES DEBT WHICH IS A TRADING DEBT. THE BROKERAGE / COMMISSION INCOME A RISING FROM SUCH TRANSACTIONS VERY MUCH FORMS PART OF THE SAID DEBT AND WHEN THE AMOUNT OF SUCH BROKERAGE / COMMISSION HAS BEEN TAKEN INTO ACCOUNT IN COMPUTATION OF INCOME OF THE AS S ES S EE OF THE RELEVANT PREVIOUS YEAR OR ANY EARLIER YEAR, IT SATISFIES THE CONDITION STIPULATED IN SECTION 36(2)( I) AND THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 36(1)(VII) BY WAY OF BAD DEBTS AFTER HAVING WRITTEN OFF THE SAID DEBS FROM HIS BOOKS OF ACCOUNT AS IRRECOVERABLE. WE, THEREFORE, ANSWER THE QUESTION REFERRED TO THIS SP ECIAL BENCH IN THE AFFIRMATIVE THAT IS IN FAVOUR OF THE ASSESSEE. 6.4. FURTHER, IN THE RECENT CASE OF TRF LTD VS. CIT 230 CTR 14 (SC), THE HONBLE SUPREME COURT HAS HELD THAT AFTER 1 ST APRIL, 1999 IT IS NOT NECESSARY TO THE APPELLANT TO ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE. 6.5. THUS, FROM THE ABOVE DECISIONS, IT IS CLEAR THAT THE AMOUNT RECEIVABLE BY THE ASSESSEE, WHO IS A SHARE BROKER, FROM HIS CLIENTS, ON THEIR BEHALF, CONSTITUTE DEBT WHICH IS A TRADING DEBT. THE BROKERAGE / COMMISSION INCOME ARISING FROM SUCH TRANSACTIONS, VE RY MUCH FORMS THE PART OF THE SAID DEBT AND WHEN THE AMOUNT OF SUCH BROKERAGE / COMMISSION HAS BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OF THE RELEVANT PREVIOUS YEAR OR ANY EARLIER YEARS, IT SATISFIES THE CONDITION STIPULATED IN SECT ION 36(2)(I) AND THE ASSESSEE IS ENTITLED TO 4 DEDUCTION U/S 36(1)(VII) BY WAY OF BAD DEBTS . HENCE, THE BAD DEBT DISALLOWED BY THE AO IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 9. FURTHER, WE HAVE ALSO GONE THROUGH THE JUDGMENT OF THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS. SHREYAS S. MORAKHIA [2012] 342 ITR 285 (BOM), WHICH IS RELEVANT FOR THE PROPOSITION THAT THE VALUE OF THE SHARES TRANSACTED BY THE ASSESSEE IS AS MUCH A PART THE DEBT AS IS THE BROKERAGE CHARGED BY THE ASESSEE. SIN CE, BOTH FROM A COMPONENT PART OF THE DEBT, REQUIREMENTS OF SECTION 36(2)(I) ARE FULFILLED WHERE A PART THEREOF IS TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE AT THE LEVEL OF THE HIGHER JUD ICIARY AS WELL AS THE DECISION OF THE ITAT, SPECIAL BENCH IN THE CASE OF DCIT VS. SHREYAS S. MORAKHIA (SUPRA), WE OF THE OPINION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND N O.1 RAISED BY THE REVENUE IS DISMISSED . 10. GROUND NO.2 RELATES TO DISALLOWANCE OF LOSS INVOKING THE PROVISIONS OF SECTION 40(A)(IA). BRIEFLY STATED RELEVANT FACTS IN THIS REGARD ARE THAT DURING THE YEAR ASSESSEE HAS NOT DEDUCTED TAX TO THE EXTENT OF PART PAYMENT OF RS. 6,09,366/ - MADE TO ARBITRAGERS / JOBBERS. IN THIS REGARD, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, AO CAME TO THE CONCLUSION THAT THE AMOUNT OF RS. 6,09,366/ - ON WHICH TAX HAS NOT BEEN DEDUCTED SHOULD BE DISALLOWED AS THE SAME AT TRACTS THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 11. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) AL LOWED THE ASSESSEES APPEAL VIDE PARA 7.3 OF HIS ORDER. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND NO.2 OF THIS APPEAL. 12. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE ORDERS OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. FURTHER, LD COUNSEL ARGUED THAT THE ADDITION, MADE IN THE EARLIER YEARS ON THE SAME REASONS, WAS DELETED BY THE ITAT VIDE ITS ORDER DATED 30.11.2010. 13. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE 5 PARTIES AND ON PERUSAL OF THE ORDER OF THE CIT (A) IN GE NERAL AND PARA 7.3 IN PARTICULAR, WE FIND THE SAME IS RELEVANT HERE WHICH READS AS UNDER: 7.3. I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE AO AS WELL AS OF THE LD AR. IT IS SEEN THAT SIMILAR ADDITION WAS MADE BY THE AO IN THE HANDS OF THE APPELLANT IN THE PAST FOR THE SAME REASONS WHICH ARE RECORDED DURING THE PREVIOUS YEAR. THE ITAT MUMBAI HAS DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT IN THE AYS 2005 - 06 AND 2006 - 07 VIDE ORDER DATED 30.11.2010. FOLLOWING THE ORDER OF THE HONBLE ITAT, MUMBAI IN THE CASE OF THE APPELLANT, I HEREBY DIRECT THE AO TO DELETE THE ADDITION MADE BY WAY OF DISALLOWING PAYMENTS MADE TO JOBBERS / ARBITRATORS ON ACCOUNT OF SHARING OF INCOME / LOSS U/S 40(A)9IA) ON THE PLEA THAT NO TAX HAS BEEN DEDUCTED AT SOURCE U/S 194C. IN RESULT, THIS GROUND OF APPEAL IS ALLOWED . 15. FURTHER, WE HAVE ALSO PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE OF THE AYS 2005 - 2006 AND 2006 - 2007, DATED 30.11.2010, WHEREIN SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSE SSEE VIDE PARA 10 OF ITS ORDER WHICH READS AS UNDER: 10. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE TRIBUNAL IN THE CASE OF M/S. ASSET ALLIANCE SECURITIES PVT LTD (SUPRA) UPHOLD THE ORDER OF THE CIT (A) AND DISMISS THE RESPECTIVE GROUNDS T AKEN BY THE REVENUE I.E., GROUND NO.8 AND 9 IN THE AY 2005 - 06 AND GROUND NO.2(I) AND 2(II) IN THE AY 2006 - 07. 16. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 17. GROUND NO.3 RELATES TO DISALLOWANCE OF REBATE U/S 88E FROM TAX LIABILITY DETERMINING U/S 115JB OF THE ACT. BRIEF FACTS IN THIS REGARD ARE THAT DURING THE ASSESSMENT PROCEEDINGS AO NOTICED THAT THE ASSESSEE CLAIMED TOTAL REBA TE OF RS. 7,02,89,629/ - U/S 88E, WHICH WAS RESTRICTED TO THE EXTENT OF ACTUAL STT PAID AT RS. 6,87,03,195/ - . IN THIS REGARD, AO WAS NOT SATISFIED WITH THE EXPLANATION TO SUBSTANTIATE THE CLAIM OF REBATE AND DISALLOWED THE DEDUCTION FOR REBATE U/S 88E IN MAKING COMPARISON OF 10% OF BOOK PROFIT U/S 115JB. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 18. DURING THE PROCEEDINGS BEFORE THE FIRST APPEL LATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE VIDE PARA 10.3 OF HIS ORDER. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND NO.3 OF THIS APPEAL. 6 19. DU RING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 20. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 21. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE CIT (A)S ORDER, WE FIND PARA 10.3 IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 10.3. I HAVE CONSIDERED THE CONTENTI ON OF THE AO AS WELL AS OF THE LD. AR. I FIND THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE HON'BLE TRIBUNAL. IN THE CASES OF M/S. HORIZON CAPITAL LTD. AND M/S.MBL & CO. LTD. (SUPRA), UNDER IDENTICAL FACT THAT THE PRESENT ASSESSEE HAD ALSO MADE PAYMENT OF S TT AND IT S TOTAL INCOME INCLUDED INCOME FROM TRANSACTIONS ON WHICH STT WAS PAID. THE ONLY REASONS STATED BY THE AO FOR NOT ALLOWING REBATE U/S. 88E FROM TAX PAYABLE U/S. 115JB OR COMPUTING TAX PAYABLE UNDER NORMAL PROVISIONS AFTER REDUCING THE AMOUNT OF RE BATE U/S. 88E FROM SUCH TAX FOR COMPARING THE TAX PAYABLE NORMALLY OR U/S. 115JB ARE THAT STT WAS NOT INCOME TAX AND PROVISIONS OF SECTION 115JB WERE NON-OBSTANTE DEEMING FICTIONS. FURTHER IDENTICAL TO THE CONTENTIONS RAISED BY THE APPELLANT, IT WAS SUBMIT TED BEFORE THE HON'BLE TRIBUNAL IN THE CASE OF M/S. HORIZON CAPITAL LTD. (SUPRA), THAT FORM NO.6 THE FORMAT OF INCOME TAX RETURN PRESCRIBED BY THE DEPARTMENT OF INCOME TAX PROVIDED FOR REBATE U/S. 88E FROM HIGHER OF INCOME TAX UNDER REGULAR PROVISIONS OF T HE ACT OR UNDER SECTION 115JB OF THE ACT. THUS, I FIND THAT THE RELEVANT FACTS AND CIRCUMSTANCES AS WELL AS THE STATEMENTS AND ARGUMENTS OF BOTH THE ASSESSEE AND THE DEPARTMENT IN THE CASES OF M/S. HORIZON CAPITAL LTD. & M/S.MBL & CO. LTD. (SUPRA), WERE ID ENTICAL TO THOSE IN THE INSTANT CASE OF THE APPELLANT. THE DECISION IN THE CASES OF M/S. HORIZON CAPITAL LTD & M/S.MBL & CO. LTD. (SUPRA) THEREFORE, ARE CLEARLY APPLICABLE IN THE INSTANT CASE WHICH BEING THE DECISION OF A SUPERIOR JUDICIAL AUTHORITY IS BIN DING FOR DECIDING IDENTICAL ISSUE UNDER IDENTICAL FACTS AND CIRCUMSTANCES. FURTHER, IT HAS BEEN POINTED BY THE APPELLANT THAT SAME VIEW HAS BEEN PRONOUNCED IN ORDER DATED 02.7.2010 IN APPEAL NO.CIT(A) - 41/ACCC - 37/1T - 601/09 - 10 IN THE NAME OF NAMAN SECURITIES & FINANCE PVT LTD IN WHICH IT HAS BEEN OBSERVED THAT IT WAS CLEAR FROM ITR 6 THAT WHERE TAX PAYABLE WORKS OUT UNDER NORMAL PROVISIONS OF ACT OR UNDER MAT U/S. 115JB WHICHEVER IS HIGHER, THE REBATE U/S. 88E IS TO BE ALLOWED TO THE APPELLANT THAT THERE WAS NO PROHIBITION IN CLAIMING REBATE IN RESPECT OR SECURITIES TRANSACTION TAX PAID AGAINST INCOME TAX PAYABLE UNDER MAT UNDER PROVISIONS OF SECTION 115J8 THE INCOME TAX. RESPECTFULLY FOLLOWING THE DECISION IN THE CASES OF M/S. HORIZON CAPITAL LTD., & MBL & CO . LTD. (SUPRA), RENDERED BY THE HON'BLE BANGALORE AND DELHI TRIBUNALS RESPECTIVELY, I AM OF THE OPINION THAT COMPARISON BETWEEN TAX DETERMINED UNDER NORMAL PROVISIONS OF THE ACT AND REBATE U/S 88E WOULD ALSO BE AVAILABLE TO THE ASSESSEE AGAINST THE TAX PAY ABLE U/S 115JB OF THE ACT. THE APPELLANT SHALL BE REQUIRED TO MAKE PAYMENT OF HIGHER OF THE TWO AMOUNTS. SUCH POSITION IS INEVITABLE FROM THE FORMAT OF THE RETURN OF INCOME (ITR - 6) AS PRESCRIBED. THE APPEAL ON THIS GROUND IS ALLOWED. 7 22. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE AND ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 23. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO.527/M/2012 (AY 2008 - 2009) (BY ASSESSEE) 24. THIS APPEAL FILED BY THE ASSESSEE ON 25.1.2012 IS AGAINST THE ORDER OF THE CIT (A) - 8, MUMBAI DATED 30.12.2011. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1.A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 11,22,440/ - MADE BY THE AO TO T HE INCOME OF THE APPELLANT BY WAY OF DISALLOWING CERTAIN EXPENDITURE ALLEGED TO HAVE BEEN INCURRED RELATING TO EXEMPT INCOME INVOKING THE PROVISIONS O F SECTION 14A R.W. RULE 8D . B) THE LD CIT (A) FAILE D TO APPRECIATE THAT HAVING REGARD TO THE ACCOUNTS OF A PPELLANT THERE IS NO REASON AND BASIS IN REACHING TO DISSATISFACTION WITH THE CORRECTNESS OF THE CLAIM THAT NO EXPENDITURE WAS INCURRED IN RELATION TO EXEMPT INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. C) IN REACHING TO THE CONCLUSION AND CONFIRMI NG SUCH ADDITION THE LD CIT (A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSIDERATION, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATIONS AND FACTORS. 2. THE LD CIT (A) ERRED IN HOLDING THAT LEVY OF INTE REST U/S 234B OF THE ACT IS NOT APPRECIABLE. THE APPELLANT DENIED ITS LIABILITY FOR SUCH INTEREST. 3. THE LD CIT (A) ERRED IN NOT DISPOSING GROUND NO.11 DISPUTING INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C). THE APPELLANT DENIES ITS LIABILITY FOR SUC H PENALTY. 25. AT THE OUTSET, LD COUNSEL FOR THE ASSESEE MENTIONED THAT THE CIT (A) HAS CONFIRMED THE ADDITION OF RS. 11,22,440/ - WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ON INVESTMENT IN THE YEAR OF INVESTMENT. FURTHER, HE MENTIONED THAT THE STOCK IN TRADE WAS ALSO HELD AS INVESTMENT BY THE AUTHORITIES BELOW WHICH IS AGAINST THE RATIO OF THE ORDER OF THE ITAT, KOLKATA BENCH IN THE CASE OF DCIT VS. GULSHAN INVESTMENT CO LTD [2013] 154 TTJ (KOL) 273. HE FAIRLY MEN TIONED THAT THIS ARGUMENT WAS NOT TAKEN BEFORE THE LOWER AUTHORITIES CONSIDERING THE CHANGE OF REPRESENTATIVES FOR THE ASSESSEE. HE ALSO MENTIONED THAT THE ABSENCE OF ANY EXPENDITURE RELATING TO THE INVESTMENT WAS NOT DISCUSSED IN DETAIL BY THE REVENUE AU THORITIES. 8 26. ON THE OTHER HAND, LD DR HEAVILY RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND MENTIONED THAT THE RULE 8D WAS FOLLOWED IN TRUE SPIRIT AND THEREFORE, THE ORDER OF THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. 27. WE HAVE HEARD BOTH TH E PARTIES ON THE LIMITED ISSUE OF INCURRING OF ANY EXPENDITURE BY THE ASSESSEE RELATING TO INVESTMENT AS WELL AS THE INCLUSION OF STOCK IN TRADE FOR THE PURPOSE OF GROSSING OF THE INVESTMENT. ON PERUSAL OF PARA 3 OF THE CIT (A)S ORDER REVEALS THAT THERE IS NO FINDING OF FACT BY THE AUTHORITIES BELOW ON THE POINTS RAISED ABOVE. CIT (A) CONFIRMED THE ADDITION PARTLY CONSIDERING THE ABSENCE OF DETAILS OF EXPENSES AND THE CONTENTS OF PARA 3.5 OF THE CIT (A) ARE RELEVANT IN THIS REGARD. SINCE, THE ASSESSEE IS NOW CLAIMING THAT NO EXPENDITURE IS INCURRED AND HE IS READY TO DEMONSTRATE THE SAME BEFORE THE LOWER AUTHORITIES, WE ARE OF THE OPINION THAT THE ISSUE MUST REVISIT THE FILES OF THE AO FOR FRESH EXAMINATION. THE ASSESSEE IS FREE TO DEMONSTRATE WITH EVI DENCES THAT THE FACTS RELATING TO THE NON - INCURRING OF ANY EXPENDITURE AND THE INVESTMENTS. AO MAY ALSO ADJUDICATE IF THE STOCK IN TRADE SHOULD BE CONSIDERED FOR INVESTMENT FOR THE PURPOSE OF APPLICATION OF PROVISIONS OF RULE 8D. AO SHALL GRANT A REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 28. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.3833/M/2012 (AY 2009 - 2010) (BY ASSESSEE) 29. THIS APPEAL FILED BY THE ASSESSEE ON 30.5.2012 IS AGAINST THE ORDER OF THE CIT (A) - 8, MUMBAI DATED 9.4.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1.A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 12,72,806/ - MADE BY THE AO TO THE INCOME OF THE APPELLANT BY WAY OF DISALLOWING CERTAIN EXPENDITURE ALLEGED TO HAVE BEEN INCURRED RELATING TO EXEMPT INCOME INVOKING THE PROVISIONS O F SECTION 14A R.W. RULE 8D . B) THE LD CIT (A) FAILED TO APPRECIATE THAT HAVING REGARD TO THE ACCOUNTS OF APPELLANT THERE IS NO REASON AND BASIS IN REACHING TO DISSATISFACTION WITH THE CORRECTNESS OF THE CLAIM THAT NO EXPENDITURE WAS INCURRED IN RELATION TO EXEMPT INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. C) IN REACHING TO THE CON CLUSION AND CONFIRMING SUCH ADDITION THE LD CIT (A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSIDERATION, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATIONS AND FACTORS. 9 2. THE LD CIT (A) ERRED IN HOLDI NG THAT LEVY OF INTEREST U/S 234B AND 234C OF THE ACT IS CONSEQUENTIAL . THE APPELLANT DENIED ITS LIABILITY FOR SUCH INTEREST. 3. THE LD CIT (A) ERRED IN NOT DISPOSING GROUND NO.11 DISPUTING INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) . THE APPELLANT D ENIES ITS LIABILITY FOR SUCH PENALTY. 30. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL RELATES TO THE CONFIRMATION OF ADDITION OF RS. 12,72,806/ - INVOKING THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE ACT. THE FACTS AND CIRCUMSTANCES AN D ARGUMENTS OF THE PARTIES ARE IDENTICAL TO THE ONES ALREADY ADJUDICATED BY US IN CONNECTION WITH THE ISSUE RAISED BY THE ASSESSEE FOR THE AY 2008 - 2009. AFTER HEARING BOTH THE PARTIES, WE HAVE SET ASIDE THE ISSUES TO THE FILES OF THE AO FOR FRESH ADJUDICA TION. PARA OF THIS ORDER IS RELEVANT IN THIS REGARD. WE ACCORDINGLY, REMAND THIS ISSUE TO THE FILES OF AO FOR A FRESH ADJUDICATION AND THE ALLOWED THE GROUNDS RAISED BY THE ASSESSEE FOR STATISTICAL PURPOSES. 31. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONO UNCED IN THE OPEN COURT ON 1 6 T H JULY, 2014. S D / - S D / - ( VIJAY PAL RAO ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 6 /7/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// 10 / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI