DCIT, Circle - 5, Kolkata, Kolkata V. M/s. Shree Haribansh Securities (P) Ltd., Kolkata

ITA 444/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54471 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2011
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: A K GUPTA
• Keywords: Depreciation; Transactions in derivatives; Earning of tax free income
• Section: 14A; 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . . , !' # # # # /AND $# , !' ) [BEFORE HONBLE SHRI S. V. MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM] #% #% #% #% / I.T.A NO. 444/KOL/2011 $&' () $&' () $&' () $&' ()/ // / ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. SHR EE HARIBANSH SECURITIES (P) LTD. CIRCLE-5, KOLKATA. (PAN-AADCS 7237 H) (+, /APPELLANT ) -.+,/ RESPONDENT ) FOR THE APPELLANT: SHRI S. K. ROY FOR THE RESPONDENT: SHRI A. K. GUPTA !/ / ORDER PER MAHAVIR SINGH, JM ( $# $# $# $#, , , , !' !' !' !' ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-VI, KOLKATA IN APPEAL NO 845 /CIT(A)-VI/09-10/CIR-5/KOL DATED 22.12.2010. ASSESS MENT WAS FRAMED BY ACIT, CIRCLE-5, KOLKATA U/S.143(3) R.W.S. 115WE(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORD ER DATED 30.11.2009. 2. FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING DISALLOWANCE U/S. 14A OF THE ACT. FOR THIS, REVENUE RAISED FOLL OWING GROUND NO.1: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A)-VI, KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS BY DELETING THE DISALLOW ANCE U/S. 14A OF RS.12,30,112/- AND COMPUTING DISALLOWANCE @ 1% OF EXEMPT INCOME I.E. R S.1,82,78,697/- WITHOUT ANY BASIS AND LOGIC, WHICH IS MORE SO AS IN THE CASE OF CIT VS. HERO CYCLES, NOVEMBER 4, 2009 (P&H) IT WAS HELD THAT EVEN IF THE FUNDS ARE M ERGED IN A COMMON KITTY, THE DISALLOWANCE U/S. 14A IS JUSTIFIED. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,65,43,878/- U/S. 115JB OF THE ACT ON 25.10.2007. ASSESSMENT WAS COMPLETED ON 30.11.2009 AT AN ASSESSED INCOME OF RS.1,77,73,990/ -. ASSESSEE EARNED DIVIDEND INCOME OF RS.17,88,735/- AND LTCG OF RS.1,64,89,962/- WHICH W ERE CLAIMED EXEMPT U/S. 10(34) AND 10(38) OF THE ACT RESPECTIVELY. ASSESSING OFFICER NOTED THAT EXPENDITURE RELATED TO THESE INCOMES WILL BE DISALLOWABLE U/S. 14A OF THE ACT AS THESE INCOMES ARE NOT INCLUDED IN TOTAL INCOME OF THE ASSESSEE. HE, THEREFORE, APPLIED RUL E 8D OF THE I. T. RULES, 1962 (HEREINAFTER REFERRED AS TO THE RULES) AND CALCULATED DISALLOW ANCE U/S. 14A OF THE ACT VIZ., OUT OF INTEREST EXPENSES RS.2,80,705 AND OUT OF GENERAL EXPENSES RS .9,49,407/- AND MADE DISALLOWANCE OF RS. 2 ITA 444/K/2011 SHREE HARIBANSH SECURITIES (P) LTD. A.Y.07-08 12,30,112/- U/S 14A OF THE ACT. AGGRIEVED, ASSESSE E PREFERRED APPEAL BEFORE CIT(A), WHO DELETED DISALLOWANCE U/S. 14A OF THE ACT OF RS.12,3 0,112/- AND DIRECTED TO COMPUTE THE DISALLOWANCE @ 1% OF EXEMPT INCOME I.E. RS.1,82,78, 697 AND CONSEQUENTLY RESTRICTED THE DISALLOWANCE AT RS.1,82,787/- INSTEAD OF RS.12,30,1 12/- BY OBSERVING AS UNDER: I HAVE CONSIDERED ALL THE FACTS AND CIRCUMSTANCES OF THIS ISSUE. IT APPEARS THAT THE A.O. HAS APPLIED RULE 8D FOR ASSESSMENT YEAR 2007-08 ON THE BASIS OF THE DECISION OF HONBLE ITAT, SPECIAL BENCH, MUMBAI IN THE CASE OF DAGA CAP ITAL MARKETING PVT. LTD. HOWEVER, RECENTLY BY AN ORDER DATED 12.08.2010 HONBLE BOMBA Y HIGH COURT IN THE CASE OF GODREJ & BOYCEE MANUFACTURING CO. HAVE REVERSED THIS DECIS ION OF HONBLE ITAT SPECIAL BENCH, MUMBAI. HONBLE BOMBAY HIGH COURT HAS HELD THAT FO R THE PURPOSE OF MAKING DISALLOWANCE U/S. 14A OF THE I. T. ACT THE FORMULA GIVEN IN RULE 8D WILL BE APPLICABLE FROM ASSTT. YEAR 2008-09 ONWARDS. SINCE HERE THE ASSESS MENT YEAR INVOLVED IS 2007-08, THEREFORE I HOLD THAT RULE 8D WILL NOT BE APPLICABL E IN THE CASE OF THE ASSESSEE. IN THE ABOVE DECISION HONBLE BOMBAY HIGH COURT HAS SAID T HAT THE DISALLOWANCE U/S. 14A SHOULD BE ESTIMATED ON A REASONABLE BASIS. HERE, IN THE CASE OF THE ASSESSEE FROM THE BALANCE SHEET WE FIND THAT THE OWN FUNDS OF THE ASSESSEE IN THE FORM OF SHARE CAPITAL AND RESERVE A ND SURPLUS ARE ABOUT RS.25 CR. AS ON 31.03.2007. THE INVESTMENTS ON WHICH SOME OF THE E XEMPT INCOME MAY HAVE BEEN EARNED BY THE ASSESSEE ARE ABOUT RS.17.6 CRORE. THE UNSEC URED LOANS AS ON 31.03.2007 ARE ABOUT RS.86 LACS ONLY. ON THE BASIS OF THESE FIGURES IT CAN BE SAID THAT PRIMA FACIE THE FUNDS UTILIZED IN INVESTMENTS ARE INTEREST FREE SELF FUND S. THEREFORE, NO INTEREST EXPENSES CAN BE SAID TO BE RELATED TO THE EXEMPT INCOME. THEREFORE , NO DISALLOWANCE IS TO BE MADE U/S. 14A OUT OF THE INTEREST EXPENSES. AS REGARDS DISAL LOWANCE U/S. 14A OUT OF OTHER EXPENSES, FOLLOWING RECENT DECISIONS OF HONBLE ITAT, KOLKAT A, I TREAT ONE PERCENT OF THE EXEMPT INCOMES AS EXPENSES RELATED TO EXEMPT INCOME. THE EXEMPT INCOME CONSISTS OF DIVIDEND OF RS.17,88,735/- AND LTCG OF RS.1,64,89,962/- WHICH T OTAL UPTO RS.1,82,78,697/-. ONE PERCENT OF THIS AMOUNT WOULD BE RS.1,82,787/-. THE REFORE, I HOLD THAT THE DISALLOWANCE U/S. 14A WOULD BE RS.1,82,787/-. IT IS FURTHER SEEN THAT WHILE COMPUTING BOOK PROFIT U/S. 115JB THE A.O. HAS ADDED BACK THE FULL AMOUNT OF RS.12,30,112/- DISALLOWED U/S. 14A. IN MY ABOVE DISCUSSION I HAVE HELD THAT THE AMOUNT OF DISALLOWANCE U/S. 115JB WILL BE RS.1, 82,787/- INSTEAD OF RS.12,30,112/-. THEREFORE, IT IS HELD THAT FOR COMPUTATION OF BOOK PROFIT U/S. 115JB THE AMOUNT OF DISALLOWANCE U/S. 14A TO BE ADDED BACK WILL BE RS.1 ,82,787/-. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT CIT(A) FOLLOWING DECISION OF HONBLE B OMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCEE MANUFACTURING CO. LTD. VS. DCIT [2010] 328 I TR 81 (BOM.) HELD THAT RULE 8D WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE AND I N VIEW OF THE ABOVE DECISION OF HONBLE BOMBAY HIGH COURT AND RECENT DECISIONS OF ITAT, KOL KATA RESTRICTED DISALLOWANCE U/S. 14A OF THE ACT AT 1% OF EXEMPTED INCOME CONSISTS OF DIVIDE ND OF RS.17,88,735/- AND LTCG OF RS.1,64,89,962/- TOTALING TO RS.1,82,78,697/- I.E. RS.1,82,787/-. WE ARE OF THE VIEW THAT AO HAS APPLIED RULE 8D OF THE RULES AND NOT GONE INTO THE ACCOUNTS OF ASSESSEE, HENCE WE SET ASIDE THIS ISSUE TO THE FILE OF AO TO VERIFY ACCOUNT AND DECID E THIS ISSUE IN THE LIGHT OF PRINCIPALS LAID DOWN 3 ITA 444/K/2011 SHREE HARIBANSH SECURITIES (P) LTD. A.Y.07-08 BY HON,BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCEE MANUFACTURING CO. LTD.(SUPRA) THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 5. NEXT ISSUE OF REVENUES APPEAL IS AGAINST ORDER OF CIT(A) IN RESPECT OF COMPUTATION OF REBATE U/S. 88E OF THE ACT. FOR THIS, REVENUE RAIS ED THE FOLLOWING GROUND NO.2: 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A)-VI, KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS BY MAKING WRONG COMPUTATION OF THE REBATE U/S. 88E WHICH IS EVIDENT FROM THE ORDER OF THE LD. CIT(A), ITSELF. 6. FACTS OF THIS ISSUE ARE THAT IN THE COMPUTATION OF INCOME THE ASSESSEE DETERMINED ITS TAX PAYABLE U/S. 115JB AT RS.16,54,388/- AND OUT OF THI S CLAIMED REBATE U/S. 88E AMOUNTING TO RS.18,71,891/-. ASSESSING OFFICER FELT THAT BY CLA IMING REBATE U/S. 88E OUT OF TAX PAYABLE DETERMINED U/S. 115JB, ASSESSEE WAS TAKING DOUBLE B ENEFIT OF STT PAYMENT. FIRST, WHILE COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT STT WAS ALLOWED AS A DEDUCTION AND AFTER THAT THE ASSESSEE CLAIMED DEDUCTION OF STT OUT OF THE INCOME TAX PAYABLE ALSO. ACCORDING TO HIM, SUCH DOUBLE DEDUCTION COULD NOT BE ALLOWED. HE ALSO FEL T THAT IF REBATE U/S. 88E IS ALLOWED AS A TAX PAYMENT THEN ASSESSEE WILL GET CREDIT FOR THIS U/S. 115JAA WHICH WILL BE GIVEN IN SUBSEQUENT 7 ASSESSMENT YEARS WHEN THE ASSESSEE MAY NOT HAVE STT PAID INCOME. THE ASSESSING OFFICER WAS OF THE VIEW THAT BASIC IDEOLOGY BEHIND INCLUSIO N OF BOTH SEC. 88E AND 115JB OF THE ACT WAS TO ALLOW REBATE AND BENEFIT TO THE ASSESSEE AND TO CHARGE TAX ON THOSE ASSESSEES WHO WERE EITHER NOT PAYING TAXES OR WERE SETTING OFF STT WIT H INCOME EARNED FROM NON-STT DEALINGS. IN VIEW OF THESE REASONS A.O. DISALLOWED CREDIT FOR RE BATE U/S. 88E TO THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALLOWE D THE CLAIM OF THE ASSESSEE BY HOLDING AS UNDER: I AGREE WITH THE ABOVE OBSERVATION OF HONBLE ITAT THAT THE NON ABSTANTE CLAUSE AT THE BEGINNING OF SECTION 115JB - NOTWITHSTANDING ANYTH ING CONTAINED IN ANY OTHER PROVISION OF THIS ACT... IS RELATED TO THE COMPUTATION OF T OTAL INCOME AND NOT TO THE TAX PAYABLE. THEREFORE, AS PER SECTION 1I5JB(1) IF INCOME TAX PA YABLE ON TOTAL INCOME COMPUTED UNDER THE I. T. ACT IS LESS THAN 10% OF THE BOOK PROFIT T HEN 10% OF THE BOOK PROFIT IS TO BE DEEMED AS THE TOTAL INCOME AND THE TAX PAYABLE BY THE ASSE SSEE WOULD BE 10% OF THIS TOTAL INCOME. SECTION 115JB(5) CLEARLY PROVIDES THAT ALL OTHER PR OVISIONS OF THE I. T. ACT SHALL APPLY TO THE COMPANIES TO WHOM SECTION 115JB APPLIES. THIS M EANS THAT REBATE U/S. 88E R.W.S. 87 WILL ALSO BE ALLOWABLE TO THE ASSESSEE. THE A O HAS ARGUED THAT BY CLAIMING REBATE ULS.88E THE ASSESSEE CLAIMS DOUBLE DEDUCTION FOR THE STT PA YMENT. THIS ARGUMENT IS NOT ACCEPTABLE BECAUSE CLAIMING STT PAYMENT AS AN EXPEN DITURE OUT OF BOOK PROFIT IS ONE ASPECT AND GETTING REBATE ULS.88E IS A SEPARATE ASP ECT. FROM THE CALCULATION OF REBATE U/S.88E EXPLAINED BELOW IN THIS ORDER IT CAN BE SEE N THAT EVEN IF THE STT PAYMENT IS ADDED BACK FOR THE PURPOSE OF SEC. 115JB IT WILL GET NULL IFIED BECAUSE CORRESPONDINGLY THE REBATE U/S. 88E WILL INCREASE. AS REGARDS THE PURPOSE OF S EC. 115JB, I FEEL THAT IT IS WRONG FOR THE AO TO ASSUME THAT IT WAS MEANT TO DENY REBATE U/S.8 8E TO THE ASSESSEES. SECTION 115JB WAS INTRODUCED TO CHECK THOSE COMPANIES WHO REDUCED THEIR TAXABLE INCOME BY CLAIMING 4 ITA 444/K/2011 SHREE HARIBANSH SECURITIES (P) LTD. A.Y.07-08 VARIOUS DEDUCTIONS AND EXEMPTIONS OUT OF THEIR BOOK PROFIT. IT WAS NOT MEANT TO PUT ANY CHECK ON THE CLAIM OF REBATE U/S.88E. FURTHER IF WE LOOK AT THE I. T. RETURN FORM FOR COM PANIES I.E. ITR-6 WE FIND THAT PART-B-TTI OF THIS FORM DEALS WITH COMPUTATION OF TAX LIABILITY ON TOTAL INCOME. THE FIRST 10 COLUMNS OF THIS PART ARE AS FOLLOWS: 1. TAX PAYABLE ON DEEMED TOTAL INCOME UNDER SECTION 115JB (7 OF SCHEDULE MAT) 2. TAX PAYABLE OH TOTAL INCOME IN ITEM 11 OF PART B -TI A. TAX AT NORMAL RATES 2A B TAX AT SPECIAL RATES (11 OF SCHEDULE-SI) 2B C. TAX PAYABLE ON TOTAL INCOME IN ITEM 11 OF PART B-TI (2A+2B) 3. GROSS TAX PAYABLE (ENTER HIGHER OF 2C AND 1) 4. CREDIT UNDER SECTION 115JAA OF TAX PAID IN EARLI ER YEARS (IF 1 IS MORE THAN 2C) (7 OF SCHEDULE MATC) 5. TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA [ 3-4] 6. REBATE UNDER SECTION 88E (4 OF SCHEDULE-STTR) 7. BALANCE TAX PAYABLE (5-6) 8. SURCHARGE ON 7 9. EDUCATION CESS (7+8) 10. GROSS TAX LIABILITY (7+8+9) THE ABOVE COLUMN NO.6 CLEARLY SHOWS THAT REBATE U/S .88E IS ALLOWABLE AS A DEDUCTION OUT OF THE GROSS TAX PAYABLE CALCULATED IN COL.3 WHICH IS HIGHER OF FIGURES IN COLUMN 2C AND 1. THUS REBATE U/S.88E IS ALLOWABLE EVEN WHEN THE TAX IS COMPUTED AS PER SEC. 115JB. IN VIEW OF THE ABOVE DISCUSSION I HOLD THAT REBATE U/S. 88E WILL BE ALLOWABLE TO THE ASSESSEE WHEN ITS TAX PAYABLE IS COMPUTED AS PER SE CTION 115JB. HAVING HELD THAT REBATE U/S.88E WILL BE ALLOWABLE TO THE ASSESSEE FIND THAT THE REBATE ALLOWABLE TO THE ASSESSEE WILL NOT BE RS.18, 71,891/- AS CLAIMED BY THE ASSESSEE IN THE RETURN. FROM THE FACTS OF THE CASE OF THE ASSES SEE THE REBATE U/S. 88E ALLOWABLE TO THE ASSESSEE WOULD BE CALCULATED IN THE MANNER DISCUSSE D BELOW. 1) REBATE U/S.88E IS CALCULATED BY THE FOLLOWING F ORMULA INCOME ARISING FROM TAX ON TOTAL INCOME TAXABLE SECURITIES TRANSACTIONS. X TOTAL I NCOME 2) IN THIS CASE THE TAX ON TOTAL INCOME IS BEING D ETERMINED ON THE BASIS OF SECTION 115JB THEREFORE ALL THE FIGURES IN THE ABOVE FORMUL A HAVE TO BE TAKEN FROM CALCULATION UNDER THIS SECTION. THE TOTAL INCOME UNDER SECTION 115JB IS COMPUTED AS FOLLOWS: BOOK PROFIT AS PER COMPUTATION RS. 1,65,43,878 /- ADD: DISALLOWANCE U/S.14A RS. 1,82.787/-. RS. 1,67,26,665/- TAX ON THIS TOTAL INCOME WILL BE RS.16,72,666/-. 3) NOW WE HAVE TO CALCULATE THE INCOME OUT OF THE A BOVE TOTAL INCOME WHICH ARISES FROM TAXABLE SECURITIES TRANSACTIONS. FOR THIS PURP OSE WE WILL HAVE TO SEE THE BREAK-UP OF THE DIFFERENT TYPES OF INCOMES EARNED BY THE ASSESS EE. FROM THE P&L ACCOUNT IT IS SEEN THAT OUT OF THE TOTAL OF DIFFERENT TYPES OF INCOME AMOUNTING TO RS.2,67,79,839/- THE INCOME RELATED TO SECURITIES TRANSACTIONS IS RS.62,19,708/ - AND OTHER TYPES OF INCOME ARE RS.2,05,60,131/-. THUS IT CAN BE SEEN THAT STT RELA TED INCOME IS 23.2% OF THE TOTAL GROSS INCOME. 5 ITA 444/K/2011 SHREE HARIBANSH SECURITIES (P) LTD. A.Y.07-08 4) FROM THE EXPENDITURES DEBITED IN THE P&L ACCOU NT IT IS SEEN THAT OUT OF TOTAL EXPENDITURE OF RS.84,07,681/- THE STT PAID IS RS.24 ,58,615/- AND OTHER EXPENSES ARE 59,49,066/-. OUT OF THE TOTAL STT PAYMENT THE STT D IRECTLY RELATED TO DERIVATIVE TRADING (F&O) TRANSACTIONS IS RS.18,71,891/-. THIS STT PAYM ENT CAN BE SAID TO BE DIRECT EXPENSES RELATED TO STT RELATED TRANSACTIONS OF THE ASSESSEE . AS REGARDS OTHER EXPENSES SUCH AS OPERATING AND ADMINISTRATIVE EXPENSES, AUDITORS RE MUNERATION, DEPRECIATION ETC. IT IS SEEN THAT THESE EXPENSES ARE INDIRECTLY RELATED TO ALL T YPES OF INCOME. ON A REASONABLE BASIS SUCH INDIRECT EXPENSES CAN BE ALLOCATED IN PROPORTI ON TO THE QUANTUM OF DIFFERENT TYPES OF INCOME. SINCE STT RELATED INCOME IS 23.2%, THEREFOR E INDIRECT EXPENSES RELATED TO STT RELATED INCOME WOULD BE 23:2% OF RS.59,49,066/- WHI CH WOULD COME TO RS.13,80,183/-. THUS THE TOTAL EXPENSES RELATED TO STT INCOME WOULD BE AS FOLLOWS: DIRECT EXPENSES RS.18,71,891/- INDIRECT EXPENSES RS.13,80,183/- RS.32,52,074/- 5) THUS OUT OF THE NET TOTAL INCOME THE INCOME REL ATED TO SECURITIES TRANSACTION TAX WOULD BE: INCOME FROM STT RELATED TRANSACTIONS RS.62,19,7 08/- LESS: EXPENSES RELATED TO SUCH INCOME RS.32,52, 074/- NET STT RELATED INCOME RS.29,67,6341- 6) IN VIEW OF THE ABOVE CALCULATION THE REBATE U/S . 88E WILL BE COMPUTED AS FOLLOWS: RS.29,67,634/- X RS. L6,72666/-. = RS.2,96,763/- RS. 1,67,26,665/- THUS REBATE U/S. 88EL ALLOWABLE TO THE ASSESSEE WO ULD BE RS.2,96,783/- AS COMPARED TO RS.18,71,891/- CLAIMED BY THE ASSESSEE. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE TRIBUNAL. 7. WE FIND THAT ONLY ISSUE BEFORE US IS THAT WHETHE R REBATE WILL BE ALLOWED U/S. 88E OF THE ACT WHILE COMPUTING TOTAL INCOME U/S. 115JB OF THE ACT. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF I TAT BANGALORE A BENCH IN THE CASE OF M/S. HORIZON CAPITAL LIMITED VS. ITO IN ITA NO.592( BNG)/10 DATED 16.7.2010, WHEREIN IT IS HELD AS UNDER: 6. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE ONLY DISPUTE IS WHETHER THE REBATE OF STT PAID BY THE ASSESSEE IS ALLOWABLE FROM THE INCOME TAX COMPUTED AGAINST THE TOTAL INCOME CO MPUTED UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961. THE TERM TOTAL INCOME HAS B EEN DEFINED UNDER THE INCOME TAX ACT, 1961 AS THE TOTAL AMOUNT OF INCOME REFERRED T O IN SECTION 5, COMPUTED IN THE MANNER LAID DOWN IN THIS ACT. SECTION 5 OF THE INC OME TAX ACT, 1961 DEFINES THE SCOPE OF THE TOTAL INCOME OF A RESIDENT OR A NON-RESIDENT PERSON. THE TOTAL INCOME OF THE ASSESSEE HAS TO BE COMPUTED UNDER THE REGULAR PROVI SIONS OF THE INCOME TAX ACT, 1961 AND IN THE CASE OF A COMPANY IT CAN BE ARRIVED AT B OTH UNDER THE REGULAR PROVISIONS OF THE INCOME TAX ACT AND UNDER THE DEEMING PROVISION UNDER SECTION 1 15JB OF THE ACT. IT HAS BEEN PROVIDED THAT WHERE THE INCOME TAX PAYABLE BY THE ASSESSEE ON THE TOTAL INCOME COMPUTED UNDER REGULAR PROVISIONS OF THE ACT IS LES S THAN 7 % OF THE BOOK PROFIT PREPARED IN ACCORDANCE WITH THE COMPANIES ACT, THE HIGHER OF THE TAX I.E. THE BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSES SEE AND TAX PAYABLE BY THE ASSESSEE SHALL BE THE AMOUNT OF INCOME TAX AT THE SPECIFIED RATE. WHEN WE LOOK AT THE PROVISIONS OF SECTION 87 OF THE INCOME TAX ACT, 1961, WE FIND THAT THE REBATE IS TO BE GRANTED FROM 6 ITA 444/K/2011 SHREE HARIBANSH SECURITIES (P) LTD. A.Y.07-08 THE AMOUNT OF INCOME TAX CHARGEABLE ON THE TOTAL IN COME OF THE ASSESSEE. THE INCOME TAX IS COMPUTED AFTER ARRIVING AT THE TOTAL INCOME OF T HE ASSESSEE AND SECTION 87 OF THE INCOME TAX ACT, 1961 DOES NOT DIFFERENTIATE BETWEEN THE TOTAL INCOME COMPUTED UNDER THE REGULAR PROVISIONS OF THE ACT OR UNDER SECTION 11 5JB OF THE INCOME TAX ACT, 1961. EVEN THOUGH THE SUB SECTION (1) OF SECTION 115JB ST ARTS WITH THE NON-ABSTANTE CLAUSE, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, WE FIND THAT IT IS ONLY FOR THE COMPUTATION OF THE TOTAL INCOME AND THE SUB SECTION (5) OF SECTION 115JB PROVIDES FOR A SAVING CLAUSE THAT THE REST OF THE P ROVISIONS OF THE INCOME TAX ACT RELATING TO DEDUCTIONS, REBATE, ETC THE OTHER PROVISIONS OF THE INCOME TAX ACT SHALL APPLY. THEREFORE IT IS CLEAR THAT THE PROVISION OF SECTION S 87 AND 88A TO 88E ALSO APPLY AFTER THE TOTAL INCOME IS COMPUTED UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 AND SINCE THE ASSESSEES TOTAL INCOME INCLUDES THE INCOME FROM TH E TAXABLE SECURITIES TRANSACTIONS, THE ASSESSEE IS ENTITLED TO A DEDUCTION OF THE AMOU NT EQUAL TO THE SIT PAID BY HIM IN RESPECT OF THE TAXABLE SECURITIES TRANSACTIONS ENTE RED INTO IN THE COURSE OF BUSINESS DURING THE PREVIOUS YEAR. THE ASSESSEES APPEAL IS THUS ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO GIVE REBATE UNDER SECTION 88 E FOR THE STT PAID BY THE ASSESSEE. IN VIEW OF THE ABOVE, WE FIND THAT REBATE U/S. 88E IS TO BE ALLOWED FROM THE TOTAL INCOME, WHETHER THAT IS COMPUTED U/S. 115JB OF THE ACT OR U NDER NORMAL PROVISIONS OF THE ACT. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF C IT(A) AND THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. 9. ORDER PRONOUNCED IN OPEN COURT ON 19.8.2011. SD/- SD/- . . !' $# $# $# $# , !' (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0 ) )) ) DATED : 19TH AUGUST, 2011 12 $&34 $5 JD.(SR.P.S.) !/ 6 -$$ 7(8- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT DCIT, CIRCLE-5, KOLKATA. 2 -.+, / RESPONDENT, M/S. SHREE HARIBANSH SECURITIES (P) L TD., 22, BRABOURNE ROAD, KOLKATA-700 001. 3 . $/& ( )/ THE CIT(A), KOLKATA 4. $/& / CIT, KOLKATA 5 . $> -$& / DR, KOLKATA BENCHES, KOLKATA . -$/ TRUE COPY, !/&?/ BY ORDER, #4 /ASSTT. REGISTRAR .