Appeal details
Counselvise Citation
[2012] 119 COUNSELVISE.COM (IT) 8609 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-10-2012
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
G
Next Hearing Date
27-09-2012
Assessment Year
2008-2009
Appeal Filed On
25-08-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 5940/MUM/2011 (ASSESSMENT YEAR: 2008-09) DY. COMMISSIONER OF INCOME- TAX - 4(1), MUMBAI VS M/S. GHALLA BHANSALI STOCK BROKERS PVT. LTD., DEVANSH, 133, DSP ROAD, NR. RANJIT STUDIOS, DADAR (E), MUMBAI -400 014 PAN: AAACG 5139 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMAR DEEP RESPONDENT BY : MS. TORAL SHAH DATE OF HEARING: 27.09.2012 DATE OF PRONOUNCEMENT: 10.10.2012 O R D E R PER VIVEK VARMA, JM: THE APPEAL FILED BY THE DEPARTMENT, ARISES FROM THE ORDER OF CIT(A) 8, MUMBAI, DATED 07.06.2011, WHEREIN THE DEPARTMENT H AS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN CANCELING THE PENALTY OF RS . 1,54,745/- LEVIED U/S 271(1)(C) OF THE I.T. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN COMPARING BETWEEN THE TAX D ETERMINED UNDER NORMAL PROVISIONS OF I.T. ACT AND UNDER PROVI SIONS U/S 115JB BE MADE FOR THE PURPOSE OF APPLICABILITY OF T HE PROVISION OF SEC 115JB ON GROSS BEFORE ALLOWING REBATE U/S 88 E. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE IMPUGNED ORDER OF THE LD. CIT(A) IS CONTRARY TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. M/S. GHALLA BHANSALI STOCK BROKERS PVT. LTD. ITA NO. 5940/MUM/2011 2 2. GROUND NO. 1, WE FIND THAT THE GROUND WAS WRONGLY WO RDED IN THE ORIGINAL MEMORANDUM OF APPEAL. THE GROUND WAS REVISED AND PROPERLY WORDED VIDE LETTER DATED 26.09.2012, WHICH WE TA KE UP FOR ADJUDICATION, WHICH READS AS, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY PAID TO THE STOCK EXCHANGE OF RS. 1,54,745. 3. THE AO IN HIS ORDER HAS INVOKED EXPLANATION TO SECTION 37(1) TO DISALLOW THE FINE PAID TO STOCK EXCHANGE AT RS. 1,54,745. BE FORE THE AO, IT WAS SUBMITTED THAT THE AMOUNT PAID TO STOCK EXCH ANGE PERTAINED TO DELAY IN PAYMENT OF CHARGES PAYABLE TO NSE AND FOR THE NON REPORTING OF CERTAIN TRANSACTIONS, WHICH DID NOT INVOLVE ANY DEFALCATION OF ANY LAW OR STATUTORY PROVISIONS. THESE WERE JUST COMPENSATIONS ON DELAYED PAYMENTS. 4. THE ASSESSEE APPROACHED THE CIT(A), WHO ON CONSIDERING THE ASSESSEE REPLY AND TAKING INTO ACCOUNT THE DECISIONS IN VRM SHARE BROKING PVT. LTD. REPORTED IN 27 SOT 469 AND GOLDCREST C APITAL MARKETS LTD. REPORTED IN 130 TTJ 446, HELD THAT THESE D ID NOT REPRESENT ANY PENALTY FOR VIOLATION OF LAW AND HENCE EXPLAN ATION COULD NOT BE INVOKED AND ALLOWED THE GROUND. THUS, THE DEPARTM ENT IS IN APPEAL BEFORE THE ITAT. 5. THE DR RELIED ON THE ORDER OF AO. 6. THE AR RELIED ON THE ORDER OF THE CIT(A) AND REITERATE D THAT THE EXPLANATION TO SECTION 37(1) CANNOT BE INVOKED ON SUCH A PAYMENT. 7. WE HAVE HEARD THE ARGUMENTS, IT IS OBSERVED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECIS ION OF THE TRIBUNAL IN THE CASES OF VRM SHARE BROKING PVT. LTD (SUPRA) AND GOLDCREST CAPITAL MARKETS LTD. (SUPRA) , WHEREIN AFTER EXAMINING THE M/S. GHALLA BHANSALI STOCK BROKERS PVT. LTD. ITA NO. 5940/MUM/2011 3 NATURE OF PENALTY IMPOSED BY THE STOCK EXCHANGE ON ITS MEMBERS, IT WAS HELD THAT THE SAME IS NOT FOR ANY PURPOSE WHICH IS A N OFFENCE OR WHICH IS PROHIBITED BY LAW, AS CONTEMPLATED IN EXPLANATION TO SECTION 37(1). 8. RESPECTFULLY FOLLOWING THE SAID DECISIONS OF THE COORDINA TE BENCHES OF THE TRIBUNAL, WE UPHOLD THE IMPUGNED ORDER OF T HE CIT(A) ON THIS ISSUE. 9. THE GROUND, AS RAISED, IS THUS REJECTED. 10. GROUND NO. 2 IS ON THE ISSUE OF DETERMINING TAX LIABILITY U/S 115JB BY COMPARING TAX LIABILITY AFTER REBATE U/S 88E WITH LIABILITY ON BOOK PROFIT BEFORE REBATE U/S 88E. 11. THE AO, AFTER CONSIDERING THE SUBMISSIONS MADE CONCLUDE D THAT, IN CASE OF A COMPANY, IF TAX PAYABLE AFTER ALLOWING REBATE U/S 88E IS LESS THEN 10% OF BOOK PROFIT, PROVISIONS OF SECTION 115JB AR E APPLICABLE. 12. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A), WHO, FOLLO WING COORDINATE BENCH AT BANGALORE, IN THE CASE OF HORIZON CAP ITAL LTD., REPORTED IN 2010-TIOL-605-ITAT, HELD THAT PROVISIONS OF SECTION 87 & 88A TO 88E APPLY AFTER THE TOTAL INCOME IS COMPUTED U/S 115JB AND THAT THE ASSESSEE WAS ENTITLED FOR THE DEDUCTION , AS CLAIMED. 13. AGAINST THIS FINDING, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 14. BEFORE US, THE DR RELIED ON THE ORDER OF THE AO AND T HE AR PLACED RELIANCE ON THE ORDER OF THE CIT(A) AND REFERRED T O THE CASE OF HORIZON CAPITAL LTD. (SUPRA) AND SUBMITTED THAT EVEN THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS HORIZON CAP ITAL LTD., M/S. GHALLA BHANSALI STOCK BROKERS PVT. LTD. ITA NO. 5940/MUM/2011 4 REPORTED IN 245 CTR 601 (COPY ENCLOSED IN THE APB), UPHELD THE DECISION OF THE COORDINATE BENCH AT BANGALORE. THE AR, THU S PLEADED THAT THE CIT(A) WAS CORRECT IN LAW, WHILE DELETING THE DISALLOW ANCE MADE BY THE AO. 15. WE HAVE HEARD THE ARGUMENTS FROM EITHER SIDES AND H AVE ALSO GO THROUGH THE ORDER OF BOTH THE REVENUE AUTHORITIES. ON G OING THROUGH THE IMPUGNED ORDER AND THE SUBMISSIONS OF THE ASSESSEE , AS INCORPORATED IN THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF THE COORDINATE B ENCH OF THE TRIBUNAL IN THE CASE OF HORIZON CAPITAL LTD. (SUPRA) , AND THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF HORIZON CAPITAL LTD., WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTIONS 87 AND 88A TO 88E ARE REBATES ON TAX, AND NOT DEDUCTIONS AND THE SAME B EING APPLICABLE ONLY AFTER INCOME IS COMPUTED U/S 115 JB. THE ASSESSEE WAS ENTITLED FOR THE SAID REBATES AS CLAIMED. 16. RESPECTFULLY FOLLOWING THE SAID DECISIONS, OF THE COORDIN ATE BENCH OF THE TRIBUNAL, AND ALSO THE DECISION OF THE HONBLE KARNA TAKA HIGH COURT, WE ENDORSE THE FINDINGS OF THE CIT(A) AND REJECT GROUND NO. 2. 17. GROUND NO. 3 & 4 ARE GENERAL IN NATURE. 18. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 10/10/2012. SD/- (P.M. JAGTAP) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 10/10/2012 M/S. GHALLA BHANSALI STOCK BROKERS PVT. LTD. ITA NO. 5940/MUM/2011 5 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-8, MUMBAI. 4) THE CIT -4, MUMBAI, 5) THE D.R. G BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN
Mehul