ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI V. DCIT RG 3(2), MUMBAI

ITA 4502/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3809 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 30-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHANWAR SINGH RATNOO
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 4502/MUM/2014 (ASSESSMENT YEAR : 2007-08) ICICI SECURITIES PRIMARY DEALERSHIP LTD. (FORMERLY KNOWN AS ICICI SECURITIES LTD.) ICICI CENTRE, H.T. PAREKH MARG, CHURCHGATE, MUMBAI 400 020 ... APPELLANT PAN:AAACI 0995H VS. THE DCIT, RANGE 3(2), MUMBAI .... RESPONDENT APPELLANT BY : MS. RITU PUNJABI RESPONDENT BY : SHRI BHANWAR SINGH RATN OO DATE OF HEARING : 18/03/2016 DATE OF PRONOUNCEMENT : 06/05/2016 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTA INING TO THE A.Y. 2007-08 IS DIRECTED AGAINST AN ORDER PASSED B Y LD. CIT(A)-4, MUMBAI DATED 22/04/2014, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY ASSESSING OFFICER UNDER SECTION 147 R.W.S. 143 (3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29/11/2012. 2. IN THIS APPEAL, ALTHOUGH ASSESSEE HAS RAISED M ULTIPLE GROUNDS OF APPEAL, BUT THE SUBSTANTIVE GRIEVANCE ARISES FROM A N ADDITION OF 2 ITA NO. 4502/MUM/2014 (ASSESSMENT YEAR : 2007-08) RS.2,33,32,727/- MADE BY THE ASSESSING OFFICER TO T HE RETURNED INCOME ON ACCOUNT OF DISALLOWANCE UNDER SECTION 88E OF THE ACT. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN SECURITIES AN D INVESTMENT BANKING. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE COMPA NY HAD DECLARED INCOME ON ACCOUNT OF TRADING IN SECURITIES UNDER TH E HEAD PROFITS AND GAINS FROM BUSINESS AND PROFESSION. ASSESSEE COMP ANY CLAIMED A REBATE UNDER SECTION 88E OF THE ACT OF RS.6,87,55,9 59/-. IN THE IMPUGNED ASSESSMENT FINALIZED BY THE ASSESSING OFFI CER BY INVOKING SECTION 147/148 OF THE ACT, THE TOTAL CLAIM OF REBA TE UNDER SECTION OF THE ACT OF RS.6,87,55,959/- WAS SCALED DOWN AND WA S DISALLOWED TO THE EXTENT OF RS.2,33,32,727/-. THE SAID DISALLOWANCE WAS DETERMINED BY THE ASSESSING OFFICER ON THE GROUND THAT THERE WAS NON-COMPLIANCE WITH THE CONDITION PRESCRIBED IN THE PROVISO TO SEC TION 88E (1) OF THE ACT. AS PER THE DISCUSSION IN PARA 5.8 OF THE ASSE SSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE REQUIREMENT CONTAINED IN THE PROVISO TO SECTION 88E(1) OF THE ACT TO THE EFFECT THAT THE EVIDENCE OF PAYMENT OF SECURITIES TRANSACTION TAX (STT) SHALL BE FURNISHED IN THE PRESCRIBED FORM ALONGWITH THE RETURN OF INCOME HAS NOT BEEN FULLY COMPLIED BY THE ASSESSEE. IT IS FURTHER NOTICED T HAT OUT OF THE TOTAL CLAIM OF REBATE UNDER SECTION 88E OF THE ACT OF RS. 6,87,55,959/-, ASSESSEE COMPANY DID NOT FURNISH THE EVIDENCE OF PA YMENT OF STT FOR A SUM OF RS.2,33,32,727/- AND, THEREFORE THE DISALLOW ANCE. 4. BEFORE US, A PERTINENT POINT WHICH HAS BEEN RAIS ED BY THE ASSESSEE IS THE MANNER IN WHICH THE SCALING DOWN OF THE REBATE UNDER 3 ITA NO. 4502/MUM/2014 (ASSESSMENT YEAR : 2007-08) SECTION 88E OF THE ACT OF RS.2,33,32,727/- HAS BEE N EFFECTUATED BY THE ASSESSING OFFICER. 5. IN ORDER TO APPRECIATE THE CONTROVERSY, A BRIEF REFERENCE IS NECESSARY TO THE PROVISIONS OF SECTION 88E OF THE A CT. SECTION 88E OF THE ACT PRESCRIBES A REBATE IN RESPECT OF STT, WHICH IS PAID BY THE ASSESSEE IN RESPECT OF TAXABLE SECURITIES TRANSACTIONS ENTER ED INTO IN THE COURSE OF BUSINESS DURING A PARTICULAR YEAR. SHORN OF O THER DETAILS, IT WOULD SUFFICE FOR THE PRESENT TO NOTICE THAT THE REBATE I N SECTION 88E OF THE ACT IS BY WAY OF A DEDUCTION FROM THE AMOUNT OF INCOME- TAX PAYABLE ON SUCH INCOME, I.E., INCOME ARISING FROM THE TAXABLE SECURITIES TRANSACTIONS ENTERED INTO IN THE COURSE OF THE BUSI NESS. SECTION 88E OF THE ACT PRESCRIBES DEDUCTION FROM THE AMOUNT OF INCOME-TAX ON SUCH INCOME ARISING FROM SUCH TRANSACTIONS . QUITE CLEARLY, THE DEDUCTION ENVISAGED UNDER SECTION 88E OF THE ACT DOES NOT IMP INGE THE DETERMINATION OF THE TOTAL INCOME BUT IT IS RELEVA NT TO DETERMINE THE AMOUNT OF INCOME TAX PAYABLE BY AN ASSESSEE. SO HO WEVER, IN THE INSTANT CASE, WHILE EFFECTUATING THE DISALLOWANCE O F RS.2,33,32,727/- UNDER SECTION88E OF THE ACT, THE ASSESSING OFFICER ADDED THE AFORESAID AMOUNT TO THE ASSESSED INCOME INSTEAD OF REWORKING THE AMOUNT OF INCOME-TAX PAYABLE BY THE ASSESSEE. THE AFORESAID ASPECT OF THE CONTROVERY WAS PUT ACROSS TO THE LD. DEPARTMENTAL R EPRESENTATIVE FOR THE REVENUE AT THE TIME OF HEARING AND QUITE CLEARL Y THE POSITION OF LAW, ADVERTED BY US ABOVE, WAS NOT CONTROVERTED. 6. IN THIS VIEW OF THE MATTER, WE DEEM IT FIT AND P ROPER TO SET-ASIDE THE ORDER OF THE CIT(APPEALS) AND DIRECT THE ASSESS ING OFFICER TO 4 ITA NO. 4502/MUM/2014 (ASSESSMENT YEAR : 2007-08) RECOMPUTE THE TOTAL INCOME AS ALSO THE REBATE UNDER SECTION 88E OF THE ACT AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO SAY , THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPOR TUNITY OF BEING HEARD IN SUPPORT OF THE CLAIM. 7. BEFORE PARTING, WE MAY REFER TO A PRELIMINARY GR OUND RAISED IN THE MEMO OF APPEAL WITH RESPECT TO THE VALIDITY OF THE PROCEEDINGS INITIATED BY ASSESSING OFFICER BY INVOKING SECTION 147/148 OF THE ACT. THE SAID GROUND HAS NEITHER BEEN ARGUED AND NOR IS BEING ADJUDICATED AND IT IS KEPT OPEN PRIMARILY FOR THE REASON THAT IF THE ASSESSEE WERE TO SUCCEED ON THE ISSUE OF THE REBATE ALLOWABLE UNDER SECTION 88E OF THE ACT, NO GRIEVANCE WOULD SURVIVE IN SUBSTANTIVES TE RMS. IN SUCH A SITUATION, THE OBJECTION TO THE INITIATION OF PROCE EDINGS UNDER SECTION 147/148 OF THE \ACT WOULD BE MERELY ACADEMIC. SO H OWEVER, ASSESSEE WOULD BE AT LIBERTY TO RAISE SUCH ISSUE IN THE ENSU ING REMAND PROCEEDINGS, IF IT IS SO ADVISED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 06/05/ 2016 . SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 06/05/2016 VM , SR. PS 5 ITA NO. 4502/MUM/2014 (ASSESSMENT YEAR : 2007-08) 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. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI