ACIT, CIR.4(2), MUMBAI V. VIKABH SECURITIES PVT. LTD., MUMBAI

ITA 5806/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3136 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 16-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R M MADHAVI DR
• Assessee Lawyers: HARSH BNUTA
• Keywords: Depreciation; Question of law
• Section: 115JB

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.5806/MUM/2013 ASSESSMENT YEAR: 2007-08 ACIT, CIR.4(2), ROOM NO.642, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD MUMBAI-400020 / VS. M/S VIKABH SECURITIES PVT. LTD. 14-B, KHATAU BUILDING ANNEX, A.D. MARG, MUMBAI-400023 ( / REVENUE) ( !' # /ASSESSEE) PAN. NO. AAA CB3469P / REVENUE BY MS. R.M. MADHAVI-DR !' # / ASSESSEE BY SHRI HARSH BNUTA $ % & # ' / DATE OF HEARING : 30/09/2015 & # ' / DATE OF ORDER: 14/10/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 15/07/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO D IRECTING THE ASSESSING OFFICER TO ALLOW REBATE U/S 88E OF TH E ACT FROM INCOME COMPUTATION U/S 115JB OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). M/S VIKABH SECURITIES PVT. LTD. ITA NO.5806/MUM/2013 2 2. DURING HEARING OF THIS APPEAL, AT THE OUTSET, T HE LD. COUNSEL FOR THE ASSESSEE CLAIMED THAT THE IMPUGNED ISSUE IS COVERED BY THE DECISION FROM HONBLE KARNATAKA HIGH COURT IN CIT VS HORIZON CAPITAL LTD. (2011) 245 CTR (KAR. ) 601, IN CIT VS MBL & COMPANY LTD. 358 ITR 1 (DEL.) AND CIT VS CNB FINWIZ LTD. (ITA NO.412/2014) (DEL.). THIS FACT UAL MATRIX WAS NOT CONTROVERTED BY LD. DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDERS FOR READY REFERENCE:- 245 CTR (KAR) 601 HELD: UNDER S. 88E, WHERE THE TOTAL INCOME OF AN ASSESSEE IN A PREVIOUS YEAR INCLUDES ANY INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', ARIS ING FROM TAXABLE SECURITIES TRANSACTIONS, HE SHALL BE ENTITL ED TO A DEDUCTION, FROM THE AMOUNT OF INCOME-TAX ON SUCH IN COME ARISING FROM SUCH TRANSACTIONS SECTION ALSO PROVIDE S THE LIMIT TO WHICH DEDUCTIONS SHALL BE GIVEN. THEREFORE, IT IS C LEAR THAT THE ASSESSEE IS LIABLE TO PAY STT WHEN BE ENTERS INTO S ECURITIES TRANSACTION. TAX IS PAYABLE SIMULTANEOUSLY AFTER RE ALIZING THE CONSIDERATION. HOWEVER, IF THAT TRANSACTION IS INCL UDED IN THE TOTAL INCOME OF THE ASSESSEE WHERE THE TOTAL INCOME IS ASSESSED EITHER UNDER THE PROVISIONS OF THE ACT OR UNDER S. 115JB WHEN TAX CHARGEABLE ON SUCH INCOME IS ARRIVED AT, HE IS GIVEN THE BENEFIT OF TAX DEDUCTIONS OF THE AMOUNT, WHICH HE H AS PAID UNDER S. 88E BY VIRTUE OF S. 87. WHEN UNDER S. 82A (SIC), THE ASSESSEE IS MADE LIABLE TO PAY TAX WITH AN ASSURANC E THAT IT WILL BE DEDUCTED AND S. 87 OF THE ACT GIVES EFFECT TO SU CH PROMISE MADE UNDER THE STATUTE. THAT IS THE REASON WHY THE WORD USED IS REBATE. THE AMOUNT PAID IS HANDED BACK TO THE AS SESSEE. IN OTHER WORDS, PAYMENT OF TAX TWICE ON THE SAME INCOM E IS M/S VIKABH SECURITIES PVT. LTD. ITA NO.5806/MUM/2013 3 AVOIDED. THEREFORE, THE CONTENTION THAT THIS BENEFI T IS NOT AVAILABLE TO THE ASSESSEE WHOSE TOTAL INCOME IS ASS ESSED UNDER S. 115JB HAS NO SUBSTANCE. IN OTHER WORDS, WHEN THE TOTAL INCOME IS ASSESSED AND THE TAX CHARGEABLE IS COMPUT ED, IT IS FROM THAT TAX WHICH IS CHARGEABLE, THE TAX PAID UND ER S. 88E IS GIVEN DEDUCTION, BY WAY OF REBATE, UNDER S. 87 OF T HE ACT. THIS IS THE LEGISLATIVE INTENT. THAT IS A PROMISE TO GIVE D EDUCTION OF THE TAX ALREADY PAID. THIS IS THE MODE IN WHICH TAX ALR EADY PAID IS HANDED BACK AT THE TIME OF FINAL COMPUTATION. THERE FORE, THE JUDGMENT REFERRED (SIC-RENDERED) BY THE TRIBUNAL IS STRICTLY IN ACCORDANCE WITH LAW AND DOES NOT SUFFER FROM ANY LE GAL INFIRMITY, WHICH CALLED FOR INTERFERENCE. WE DO NOT SEE ANY SUBSTANTIAL QUESTION OF LAW INVOLVED IN THIS APPEAL . CONCLUSION: ASSESSEE COMPANY IS ENTITLED TO REBATE UNDER SECTION 88E IN RESPECT OF STT PAID WHERE THE TOTAL INCOME IS ASSESSED U/S 115JB OF THE ACT. (2013) 358 ITR 1 (DELHI) THE MINIMUM ALTERNATE TAX SCHEME WAS INTRODUCED BY INSERTING SECTION 115J OF THE INCOME-TAX ACT, 1961, BY THE FINANCE ACT, 1987. THE PURPOSE OF INTRODUCING THE S CHEME WAS TO TAX PROFITABLE COMPANIES WHICH OTHERWISE WERE NO T LIABLE TO PAY TAX ON ACCOUNT OF VARIOUS DEDUCTIONS AND HIGHER DEPRECIATION AVAILABLE TO THEM IN COMPUTING THE TAX ABLE INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. THE IMPORT OF SECTION 115JB OF THE ACT IS TO PROVIDE AN ALTERNATI VE METHOD OF COMPUTATION OF TAX BY ACCEPTING THE BOOK PROFITS AS SHOWN BY THE ASSESSEE, ALBEIT WITH CERTAIN ADJUSTMENTS AS SP ECIFIED IN EXPLANATION 1 TO SECTION 115JB(2) OF THE ACT AND LEVYING TAX THEREON AS ALTERNATIVE TO THE TAX COMPUTED UNDER TH E OTHER PROVISIONS OF THE ACT. IT CAN BE SEEN FROM THE SCHE ME OF THE ACT THAT THERE ARE EXTENSIVE MACHINERY PROVISIONS FOR C OMPUTING THE TOTAL INCOME OF AN ASSESSEE AND THE TAX PAYABLE THEREON. THE TAX AS DETERMINED IS SUBJECT TO REBATE AS MAY B E AVAILABLE UNDER CHAPTER VIII-A OF THE ACT. SECTION 87(1) OF T HE ACT PROVIDES THAT THE REBATE AS AVAILABLE UNDER SECTION S 88 , 88A , 88B , 88C , 88D AND 88E WILL BE ALLOWED TO AN ASSES SEE IN COMPUTING THE INCOME-TAX PAYABLE BY HIM ON THE TOTA L INCOME OF THE ASSESSEE. THERE IS A CLEAR DISTINCTION BETWE EN THE SCOPE M/S VIKABH SECURITIES PVT. LTD. ITA NO.5806/MUM/2013 4 OF CHAPTER VIII-A OF THE ACT AND THAT OF OTHER PROV ISIONS WHICH SPECIFY DEDUCTIONS THAT ARE AVAILABLE TO AN ASSESSE E IN COMPUTING HIS TOTAL INCOME. WHEREAS DEDUCTIONS ALLO WED IN COMPUTING THE TOTAL INCOME ARE A PART OF THE MACHIN ERY TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE, THE REB ATES UNDER CHAPTER VIII-A OF THE ACT PROVIDE FOR CERTAIN DEDUC TIONS FROM THE TAX PAYABLE AS COMPUTED ON THE TOTAL INCOME OF AN ASSESSEE. THERE IS NO REASON WHY THE REMISSION IN T AX WHICH IS AVAILABLE UNDER SECTION 88E OF THE ACT TO AN ASSESS EE SHOULD NOT BE AVAILABLE ON THE TAX AS COMPUTED UNDER THE MINIM UM ALTERNATE TAX SCHEME AS BOTH SECTION 115JB OF THE A CT AS WELL AS THE OTHER PROVISIONS OF THE ACT HAVE BEEN ENACTED T O PROVIDE THE MACHINERY FOR COMPUTING THE TOTAL INCOME OF AN ASSESSEE WHICH IS EXIGIBLE TO INCOME-TAX. THE REBATE UNDER S ECTION 88E OF THE ACT PROVIDES FOR CERTAIN REBATES AVAILABLE ON T HE TAX PAYABLE BY AN ASSESSEE. THERE WOULD BE NO RATIONALE TO LIMIT THE PLAIN WORDS OF SECTION 88E OF THE ACT AND HOLD THAT THE REBATE IN PAYMENT OF THE TAX IS ONLY APPLICABLE TO TAX AS DETERMINED UNDER THE NORMAL PROVISIONS OF THE ACT A ND NOT WITH RESPECT TO THE MINIMUM ALTERNATE TAX AS COMPUTED UN DER SECTION 115JB . THE PURPOSE OF SECTION 88E OF THE A CT IS TO GRANT AN ASSESSEE, TO A LIMITED EXTENT, CREDIT IN TAX ON ACCOUNT OF SECURITIES TRANSACTION TAX ALREADY BORNE BY HIM IN RESPECT OF THE BUSINESS CARRIED OUT BY HIM IN DEALING IN SECURITIE S. THIS REBATE WOULD BE EQUALLY APPLICABLE TO TAX AS COMPUTED UNDE R SECTION 115JB OF THE ACT AS UNDER THE NORMAL PROVISIONS OF THE ACT. THE PROVISIONS OF SECTIONS 87 AND 88E APPLY TO THE TOTA L INCOME COMPUTED UNDER SECTION 115JB OF THE ACT AND THE ASS ESSEE WOULD BE ENTITLED TO A DEDUCTION TO THE EXTENT OF T HE SECURITIES TRANSACTION TAX BORNE BY IT DURING THE COURSE OF BU SINESS IN THE RELEVANT PREVIOUS YEAR. (2015) 54 TAXMAN.COM 337 (DELHI) THEREFORE, THE CONTENTION THAT THIS BENEFIT IS NOT AVAILABLE TO THE ASSESSEE WHOSE TOTAL INCOME ASSESSED UNDER SECT ION 115JB HAS NO SUBSTANCE. IN OTHER WORDS, WHEN THE TOTAL I NCOME IS ASSESSED 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 TH E ACT. THIS IS M/S VIKABH SECURITIES PVT. LTD. ITA NO.5806/MUM/2013 5 THE LEGISLATIVE INTENT. THAT IS A PROMISE TO GIVE DEDUCTION OF THE TAX ALREADY PAID. THIS IS THE MODE IN WHICH TAX ALR EADY PAID IS HANDED BACK AT THE TIME OF FINAL COMPUTATION. THERE FORE, THE JUDGMENT REFERRED BY THE TRIBUNAL IS STRICTLY IN AC CORDANCE WITH LAW AND DOES NOT SUFFER FROM ANY LEGAL INFIRMITY, W HICH CALLED FOR INTERFERENCE. WE DO NOT SEE ANY SUBSTANTIAL QUE STION OF LAW INVOLVED IN THIS APPEAL, WHICH MERITS ADMISSION. TH E APPEAL IS DISMISSED. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL AND T HE CONCLUSION DRAWN IN THE AFORESAID ORDERS (REPRODUCE D SUPRA), IF KEPT IN JUXTAPOSITION AND ANALYZED, THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A REGISTERED STOCK BROKER OF BSE, ENGAGED IN THE BUSINESS OF DEALING IN SHARES A ND SECURITIES. THE ASSESSEE HAD SUBSTANTIAL GROSS INCO ME OF RS.12,16,03,597/- FROM ARBITRAGE BUSINESS SEGMENT, WHICH ENTAILS VERY LARGE, FREQUENT AND CONTINUOUS PURCHAS E AND SALE TRANSACTION OF SHARES. THE BOOK PROFIT WAS WOR KED OUT BY THE ASSESSING OFFICER AT RS.6,29,69,264/- AND CO MPARED THE 10% OF THE BOOK PROFIT U/S 115JB OF THE ACT TO THE TAX PAYABLE UNDER THE NORMAL PROVISIONS OF THE ACT AFTE R ALLOWING REBATE U/S 88E AND RECOMPUTED THE TAX PAYA BLE ON THE BASIS TO 10% OF THE BOOK PROFIT. ON APPEAL, T HE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION FROM HONBLE KARNATAKA HIGH COURT AND THE TRIBUNAL BY HOLDING THAT REBATE U/S 88E OF THE ACT IS ALLOWABLE TO THE ASSESSEE WHILE COMPUTING THE TAX L IABILITY M/S VIKABH SECURITIES PVT. LTD. ITA NO.5806/MUM/2013 6 U/S 115JB OF THE ACT. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE TOTALITY OF FACTS ARE ANALYZED, SO FAR AS, ALLOWABILITY OF REBATE U/S 88E OF THE ACT, WHILE FR AMING ASSESSMENT OF THE COMPANY U/S 115JB OF THE ACT IS CONCERNED, WHERE THE TOTAL INCOME OF ASSESSEE, IN A PREVIOUS YEAR, INCLUDES ANY INCOME CHARGEABLE UNDER THE HEAD PROFIT & GAINS OF BUSINESS, THE ASSESSEE IS GIVEN THE BEN EFIT OF TAX DEDUCTION OF THE AMOUNT, WHICH HE HAS PAID U/S 88E OF THE ACT BY VIRTUE OF SECTION 87 OF THE ACT. WHEN THE AS SESSEE IS MADE LIABLE TO PAY TAX WITHIN ASSURANCE THAT IT WIL L BE DEDUCTED U/S 87 OF THE ACT, GIVES EFFECT TO SUCH PR OMISE MADE UNDER THE STATUTE, THAT IS THE REASON WHY THE WORD USED IS REBATE. THE AMOUNT HANDED BACK TO THE ASSES SEE, IN OTHER WORDS, THE PAYMENT OF TAX TWICE ON THE SAME I NCOME IS AVOIDED, THEREFORE, THE CONTENTION OF THE LD. DR, T HAT THIS BENEFIT IS NOT AVAILABLE TO THE ASSESSEE, WHOSE TOT AL INCOME IS ASSESSED U/S 115JB OF THE ACT, HAS NO SUBSTANCE. IT CAN BE SAID THAT THE TAX PAID U/S 88E IS GIVEN DEDUCTIO N, BY WAY OF REBATE U/S 87 OF THE ACT AS PER THE LEGISLATIVE INTENT. IN VIEW OF THESE FACTS, IT IS CONCLUDED THAT THE ASSES SEE IS ENTITLED TO REBATE U/S 88E IN RESPECT OF STT PAID W HERE THE TOTAL INCOME IS ASSESSED U/S 115JB OF THE ACT. OUR VIEW IS FORTIFIED BY THE AFORESAID DECISIONS (REPRODUCED HE REINABOVE), THEREFORE, WE AFFIRM THE STAND OF THE LD. COMMISSIO NER OF INCOME TAX (APPEALS), RESULTING INTO, DISMISSAL OF THE GROUND, RAISED BY THE REVENUE. M/S VIKABH SECURITIES PVT. LTD. ITA NO.5806/MUM/2013 7 FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 30/09/2015. SD/ - (RAMIT KOCHAR) SD/ - (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; ) DATED : 14/10/2015 F{X~{T? P.S/. .. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 2# ( +, ) / THE CIT, MUMBAI. 4. 1 1 2# / CIT(A)- , MUMBAI 5. 45/# , 1 +,'+ 6 , / DR, ITAT, MUMBAI 6. 7! / GUARD FILE. ! / BY ORDER, 04,#/# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI