Appeal Details
Counselvise Citation
580919914 RSA 2011
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 5 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-02-2015
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
E
Next Hearing Date
02-02-2015
Assessment Year
2008-2009
Appeal Filed On
17-08-2011
Judgement Text
, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , ! ' ' ' ' #$ , # ! BEFORE S/SH.JOGINDER SINGH, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.5809/MUM/2011, % % % % & & & & / ASSESSMENT YEAR-2008-09 DCIT-RANGE 4(3), R. NO. 649, 6TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 % VS. M/S SETU SECURITIES P. LTD. 201, AVI RAHI BUILDING, BEHIND ADIDAS SHOWROOM, S.V.ROAD, BORIWALI(W), MUMBAI-400092 PAN: AAGSC9319K ( '( / APPELLANT) ( )*'( / RESPONDENT) ! + , # / REVENUE BY : SHRI VIJAY KUMAR BORA % -. % -. % -. % -. , , , , # ## # / ASSESSEE BY :SHRI HIRO RAI % % % % + ++ + . / . / . / . / / DATE OF HEARING : 02 -02-2015 0& + . / / DATE OF PRONOUNCEMENT : 02 -02-2015 % % % % , 1961 + ++ + 254(1) # ## # .. .. .. .. #1 #1 #1 #1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. # ! #$ # % : CHALLENGING THE ORDER DATED 21.06.2011 OF THE CIT(A )-8, MUMBAI, THE ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 19,565/- MADE U/S 40 (A)(IA ) ON ACCOUNT OF LEASELINE CHARGES, RS. 50,73,077/- ON ACCOUNT OF TRANSACTION CHARGES U/S 1 94J AND RS. 5,90,239/- ON ACCOUNT OF PENALTY PAID.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DETERMINING THE TAX LIABILITY U/S 115JB BY COMPARIN G TAX PAYABLE AFTER REBATE AT RS. 35,93,523/- AS AGAINST TAX PAYABLE AT RS. 90,77,972/- U/S 115JB WI THOUT ALLOWING REBATE U/S 88E OF THE INCOME TAX ACT.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE IMPUGNED ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW TO BE SET ASIDE AND THAT OF THE ASS ESSING OFFICER BE RESTORED.' 4. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF SUB-BRO KING & TRADING IN SHARES AND SECURITIES, FILED ITS RETURN OF INCOME ON 02.09.2008 DECLARING TOTAL INCOME AT RS.13.60 CRORES.THE AO COMPLETED THE ASSESSMENT ON 31.12.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 14,17,49, 230/-.DURING THE ASSESSMENT PROCEEDINGS, THE AO FOU ND THAT THE ASSESSEE-COMPANY HAS PAID TRANSACTIONS CHARGES TO BSE/NSE OF RS. 50.73 LAKHS AND LEASE LINE CHARGES OF RS. 19,565/-, THAT IT HAD NOT DEDUCTED TAX AT SOURCE FOR THOSE PAYMENT S. INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT,THE AO HELD THAT BECAUSE OF THE FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE SAME WERE TO BE DISALLOWED.BESIDES,HE HELD THAT THE ASSE SSEE HAD PAID PENALTY TO THE STOCK-EXCHANGE OF RS.5.90 LAKHS AND IT WAS NOT ALLOWABLE AS PER THE P ROVISIONS OF SECTION 37 OF THE ACT 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).FOLLOWING THE DECISIONS IN THE CASE OF KOTAK SECURITIES LTD. (ITA/1955/MUM/ 2008),ANGEL BROKING LTD. (35 SOT 457) AND NH SECURI TIES LTD. (11 SOT 302),HE DELETED ALL THE ADDITIONS NAMELY LEASE LINE CHARGES, TRANSACTION CH ARGES AND PENALTY PAID TO STOCK EXCHANGE. 4. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE(DR)AND THE AUTHORISED 2 ITA NO. 5809/M/2011 M/S SETU SECURITIES P. LTD. REPRESENTATIVE(AR) AGREED ISSUES OF LEASE LINE CHAR GES AND PENALTY PAID TO STOCK-EXCHANGE WAS DECIDED IN FAVOUR OF THE ASSESSEE.WITH REGARD TO TR ANSACTION CHARGES,THE DR SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH COURT HAD DECIDED THE I SSUE AGAINST THE ASSESSEE.THE AR CONTENDED THAT PROVISO WAS INSERTED TO SECTION 40(A)(IA) OF T HE ACT W.E.F. 01.04.2013, THAT TRIBUNAL HAD TAKEN A VIEW THAT PROVISO WAS RETROSPECT TIVE IN EFFECT, THAT MATTER COULD BE REFERRED BACK TO THE AO. HE REFERRED TO THE CASES OF:RAJEEV KUMAR AGARWAL(34 IT R 479,AGRA-TRIB),DR. JAIDEEP KUMAR SHARMA(34 ITR 565,DEL-TRIB) AND ANANDA MARAKALA(1 50 ITD 323,BANG-TRIB) IN THIS REGARD. 5. WE HAVE CONSIDERED THE SUBMISSION AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT IN THE CASE OF JAIDEEP KUMAR SHARMA(SUPRA) IT HAS B EEN HELD THAT THE PROVISO TO SECTION 40(A)(IA) IS RETROSPECTIVE IN EFFECT.THEREFORE,IN THE INTERES T OF JUSTICE,WE ARE REFERRING BACK THE MATTER TO TH E FILE OF THE AO,TO DECIDE THE ISSUE OF APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA) WITH REGARD TO THE TRANSACTION TAX AFRESH,AFTER AFFORDING A REA SONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.1 IS DECIDED IN FAVOUR OF THE AO, IN PART . 6. NEXT GROUND OF APPEAL IS ABOUT DETERMINING THE TAX LIABILITY U/S.115JB OF THE ACT.WHILE COMPUTING THE TAXABLE INCOME OF THE ASSESSEE,THE AO MENTIONED THAT REBATE U/S.88E WAS TO BE GIVEN AT RS. 3.89 LAKHS IN THE COMPUTATION OF TAX U NDER NORMAL PROVISIONS OF THE ACT. 7. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FAA. BEFORE HIM IT WAS ARGUED THAT GROSS TAX PAYABLE AS COMPUTED UN DER THE ACT HAD TO BE COMPARED WITH MAT PROVISIONS,THAT HIGHER OF THE TWO WOULD BE THE TAX PAYABLE BY THE ASSESSEE FROM WHICH REBATE U/S. 88E HAD TO BE REDUCED.THE ASSESSEE PLACED RELIANCE UPON THE DECISION HORIZON CAPITAL LTD DELIVERED BY THE BANGALORE BENCH OF TRIBUNAL (ITA N O. 592/BANG/2010). 8 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ,THE FAA HELD THAT DECISION OF THE BANGALORE TRIBUNAL PRONOUNCED IN THE CASE OF HORIZON CAPITAL LTD.(SUPRA) WAS APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION, THAT THE PROVISIONS OF SE CTION 87 AND 88A TO 88E WERE TO BE APPLIED AFTER TOTAL INCOME WAS COMPUTED U/S 115JB OF THE AC T,THAT THE ASSESSEES TOTAL INCOME INCLUDED INCOME FROM TAXABLE SECURITIES TRANSACTION, THAT TH E ASSESSEE WAS ENTITLED TO DEDUCTION OF THE AMOUNT EQUAL TO STT PAID BY IT IN RESPECT OF TAXABL E SECURITIES TRANSACTIONS ENTERED INTO IN THE COURSE OF BUSINESS DURING THE PREVIOUS YEAR.ACCORDI NGLY, HE DIRECTED THE AO TO GIVE REBATE U/S 88E FOR THE STT PAID BY THE ASSESSEE FROM THE INCOM E TAX ON THE INCOME COMPUTED U/S 115JB OF THE ACT. 9. BEFORE US,THE DR SUPPORTED THE ORDER OF THE AO.THE AR RELIED UPON THE CASES OF FUTUREPATH MANAGEMENT SERVICES P. LTD.(36 CCH 220(MUM-TRIB),E. COM INTERNENT SERVICES P.LTD.(1524/ M/ 2012,HORIZON CAPITAL LTD.(245 CTR 601),MBL & CO. LT D.(358 ITR 1).WE FIND THAT IN THE CASE OF MBL & CO. THE HON'BLE DELHI HIGH COURT HAS HELD AS UNDER: 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 SCHEME W AS TO TAX PROFITABLE COMPANIES WHICH OTHERWISE WERE NOT LIABLE TO PAY TAX ON ACCOUNT OF VARIOUS DEDUCTIONS AND HIGHER DEPRECIATION AVAILABLE TO THEM IN COMPUTING THE TAXABLE INCOME UNDER THE NORMAL PROVIS IONS OF THE ACT. THE IMPORT OF SECTION 115JB OF THE ACT IS TO PROVIDE AN ALTERNATIVE METHOD OF COMPUTATION OF TAX BY ACCEPTING THE BOOK PROFITS AS SHOWN BY THE ASSESSEE, ALBEIT WITH CERTAIN ADJUSTMENTS AS SPECIFIED IN EXPLANATION 1 TO SECTION 115JB(2) OF THE ACT AND LEVYING TAX THEREON AS ALTERNATIVE TO THE TAX COMPUTED UNDER THE OTHER PROVISIONS OF THE ACT. IT CAN BE SEEN FROM THE SCHEME OF THE ACT THAT THERE ARE EXTENSIVE MAC HINERY PROVISIONS FOR COMPUTING THE TOTAL INCOME OF AN ASSESSEE AND THE TAX PAYABLE THEREON. THE TAX AS DETERMINED IS SUBJECT TO REBATE AS MAY BE AVAILABLE UNDER CHAPTER VIII-A OF THE ACT. SECTION 87(1) OF THE AC T PROVIDES THAT THE REBATE AS AVAILABLE UNDER SECTIONS 88 , 88A , 88B , 88C , 88D AND 88E WILL BE ALL OWED TO AN ASSESSEE IN COMPUTING THE INCOME- TAX PAYABLE BY HIM ON THE TOTAL INCOME OF THE ASSESSEE. THE RE IS A CLEAR DISTINCTION BETWEEN THE SCOPE OF CHAPTER VIII-A OF THE ACT AND THAT OF OTHER PROVISIONS WHICH SPECIFY DEDUCTIONS THAT ARE AVAILABLE TO AN 3 ITA NO. 5809/M/2011 M/S SETU SECURITIES P. LTD. ASSESSEE IN COMPUTING HIS TOTAL INCOME. WHEREAS DEDUCTIONS ALLOWED IN COMPUTING THE TOTAL INCOME ARE A PART OF THE MACHINERY TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE, THE REBATES UNDER CHAPTER VIII-A OF THE ACT PROVIDE FOR CERTAIN DEDUCTIONS FROM THE TAX PAYABLE AS COMPUT ED ON THE TOTAL INCOME OF AN ASSESSEE. THERE IS NO REASON WHY THE REMISSION IN TAX WHICH IS AVAI LABLE UNDER SECTION 88E OF THE ACT TO AN ASSESSEE SHOULD NOT BE AVAILABLE ON THE TAX AS COMPUTED UNDER THE MINI MUM ALTERNATE TAX SCHEME AS BOTH SECTION 115JB OF THE ACT AS WELL AS THE OTHER PROVISIONS OF THE ACT HAVE BEEN ENACTED TO PROVIDE THE MACHINERY FOR COMPUTING THE TOTAL INCOME OF AN ASSESSEE WHICH IS EXIGIBLE T O INCOME-TAX. THE REBATE UNDER SECTION 88E OF THE ACT PROVIDES FOR CERTAIN REBATES AVAILABLE ON THE T AX 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 AND NOT WITH RESPECT TO THE MINIMUM ALTERNATE TAX AS COMPUTED UNDER SECTION 115JB .THE PURPOS E OF SECTION 88E OF THE ACT 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 SECURI TIES. THIS REBATE WOULD BE EQUALLY APPLICABLE TO TAX AS COMPUTED UNDER SECTION 115JB OF THE ACT AS UNDER THE NOR MAL PROVISIONS OF THE ACT. THE PROVISIONS OF SECTIONS 87 AND 88E APPLY TO THE TOTAL INCOME COMPUTED UNDER SECTI ON 115JB OF THE ACT AND THE ASSESSEE WOULD BE ENTITLED TO A DEDUCTION TO THE EXTENT OF THE SECURI TIES TRANSACTION TAX BORNE BY IT DURING THE COURSE OF BUSINESS IN THE RELEVANT PREVIOUS YEAR. RESPECTFULLY,FOLLOWING THE SAME, WE DECIDED THE GRO UND NO.2 AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS PARTLY ALLOWED. 2.3 % -. / 4 5 + 1.3 6 + . 7 . ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND , FEBRUARY,2015. #1 + 0& # 8 9% 2 QJ QJQJ QJ / , ,, , 201 5 + = SD/- SD/- ( /JOGINDER SINGH) ( #$ / RAJENDRA) ! / JUDICIAL MEMBER # # # # ! ! ! ! / ACCOUNTANT MEMBER / MUMBAI, 9% /DATE:02.02.2015 SK #1 #1 #1 #1 + ++ + ).> ).> ).> ).> ?#>&. ?#>&. ?#>&. ?#>&. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '( 2. RESPONDENT / )*'( 3. THE CONCERNED CIT(A)/ @ A , 4. THE CONCERNED CIT / @ A 5. DR E BENCH, ITAT, MUMBAI / >B ).% BZ BZBZ BZ , . . . 6. GUARD FILE/ 2 * >. ). //TRUE COPY// #1 % / BY ORDER, C / DY./ASST. REGISTRAR , /ITAT, MUMBAI
Mehul