DCIT 4(1), MUMBAI V. D.P. VORA SECURITIES P. LTD, MUMBAI

ITA 6447/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70885 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEKHAR L GAJBHIYE
• Assessee Lawyers: SATENDRA
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENC H, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.6447/M/2011 ( / ASSESSMENT YEAR : 2008-2009 ) DCIT-4(1), 6 TH FLOOR, R.NO.640 AAYAKAR BHAVAN, MUMBAI 400 020. / VS. D.P VORA SECURITIES PLTD , 21/22/B, 1 ST FLOOR, KHATAU BLDG, A.D. MODI MARG, FORT, MUMBAI 400 023. ./PAN : AACCD 1947 L ( /APPELLANT) .. ( / RESPONDENT) / APPELLANT BY : SHRI SHEKHAR L. GAJBHIYE, DR / RESPONDENT BY : SHRI K. GOPAL AND SH SATENDRA PANDEY ! /DATE OF HEARING : 6.8.2013 '# ! /DATE OF PRONOUNCEMENT : 30.8.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 21.9.2011 IS A GAINST THE ORDER OF CIT (A)- 8, MUMBAI DATED 5.7.2011 FOR THE ASSESSMENT YEAR 20 08-2009. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROU NDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN COMPARISON BETWEEN THE TAX DETERMINED UNDE R THE NORMAL PROVISIONS OF THE ACT AND THE DETERMINED UNDER PROVISIONS U/S 115JB SHALL BE MADE FOR THE PURPOSE OF DETERMINING THE APPLICABILITY OF THE PROVISIONS OF SECTION 115JB ON GROSS BEFORE ALLOWING REBATE U/S 88E OF THE INCOME TAX ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) IN DIRECTING THE AO TO GRANT REBATE U/S 88E FOR STT PAID BY THE ASSESSEE FROM THE INCOME TAX OF INCOME COMPUTED U/S 115JB OF THE INCOME TAX ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , THE IMPUGNED ORDER OF THE CIT (A) IS CONTRARY TO LAW TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE ENGAGED IN THE BUSINESS OF BROKERAGE ON SHARES AND SECURITIES AS M AIN BROKER OF THE STOCK EXCHANGES. ASSESSEE FILED THE RETURN OF INCOME DECL ARING THE TOTAL LOSS OF RS. 2,00,67,960/-. DURING THE SCRUTINY ASSESSMENT, AO RECOMPUTED THE BOOK PROFITS AS 2 PER THE PROVISIONS OF SECTION 115JB OF THE ACT AT R S.1,99,24,378/- AND THE INCOME TAX PAYABLE @ 10% OF THE BOOK-PROFIT IS RS.19,92,43 8/- WHICH IS LESS THAN THE TAX PAYABLE AFTER REBATE U/S 88E OF THE ACT IE RS.5,11, 465/-. AO CAME TO THE CONCLUSION THAT IF THE TAX PAYABLE AFTER ALLOWING REBATE U/S 8 8E IS LESS THAN THAT OF 10% OF BOOK PROFIT, THEN THE PROVISIONS U/S 115JB ARE APPLICAB LE. THEREFORE, BY INVOKING THE PROVISIONS OF SECTION 115JB, THE BOOK PROFIT OF RS. 1,99,24,378/- WAS DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABL E THEREON IS RS. 19,92,438/-@ 10% OF THE BOOK-PROFITS. THUS, AO COMPARED THE TOT AL INCOME OF THE ASSESSEE AS PER THE NORMAL PROVISIONS VIS--VIS THE INCOME COMP UTED UNDER SPECIAL PROVISIONS OF SECTION 115JB OF THE ACT BEFORE CLAIMING THE REBATE U/S 88E OF THE ACT AND HELD THAT THE PROVISIONS OF SECTION 115JB ARE APPLICABLE TO T HE PRESENT CASE. AGGRIEVED WITH THE ABOVE ESTIMATION OF THE BOOK PROFITS, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, ASSESSEE RELIED ON THE DECISION OF THE ITAT, BANGALORE IN THE CASE OF M/S. HORIZON CAPITAL LTD VS. ITO VIDE ITA NO.592(BAN)/10 ORDER DATED 16.7.2010 FOR T HE PROPOSITION THAT THE REBATE GIVEN TO THE ASSESSEE IN RESPECT OF THE TAX PAID BY HIM U/S 88E OF THE ACT IS AVAILABLE IRRESPECTIVE OF THE FACT WHETHER ASSES SEES TAXABLE INCOME IS COMPUTED UNDER THE REGULAR PROVISIONS OF THE ACT OR UNDER SPECIAL PROVISIONS OF SECTION 115JB OF THE ACT. ON HEARING THE ASSESSEE AND CONSIDERING THE SAID DECISION OF THE ITAT, BANGALOR E BENCH IN THE CASE OF M/S. HORIZON CAPITAL LTD (SUPRA) AND HELD THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT IN THE SAID CASE AND DIRECTED THE AO TO DETERMINE THE TAX PAYABLE BY THE ASSESSEE AS PER THE SAID DECISION OF ITAT, BANGALORE BENCH. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. DURING THE PROCEEDINGS BEFORE US, SHRI K. GOPAL AND SH SATENDRA PANDEY, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO T HE SAID ORDER OF THE ITAT, BANGALORE BENCH IN THE CASE OF M/S. HORIZON CAPITAL LTD (SUPRA) AND MENTIONED THAT THE SAID DECISION OF THE TRIBUNAL WAS FINALLY APPR OVED BY THE JUDGMENT OF THE 3 HONBLE HIGH COURT OF KARNATAKA REPORTED IN [2012] 17 TAXMANN.COM 8 (KAR.) IN IT APPEAL NO.434 OF 2010, DATED 24 TH OCTOBER, 2011. HE FURTHER FILED A COPY OF THE ORDER OF THE ITAT, MUMBAI IN THE CASE OF DCIT VS. M /S. JMP SECURITIES PVT. LTD., ITA NO. 7169/M/2011 (AY 2008-2009) ORDER DATED 12.10.20 10, WHEREIN AN IDENTICAL VIEW WAS TAKEN BY THE ITAT AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY RELYING ON THE JUDGMENT OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF M/S. HORIZON CAPITAL LTD (SUPRA) AS WELL AS THE COORDINA TE BENCH DECISION OF THE ITAT IN THE CASE OF M/S. TUCHSTONE CAPITAL MARKET SERVICES PVT. LTD. VS. ITO IN ITA NO. 6031/MUM/2011. 6. ON THE OTHER HAND, LD DR DUTIFULLY RELIED ON THE ORDER OF THE AO. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AS WELL AS THE DECISIONS CITED BY THE L D COUNSEL. THE CORE ISSUE OF WHETHER REBATE U/S 88E OF THE ACT IS AVAILABLE IN C OMPUTING THE BOOK PROFITS U/S 115JB OF THE ACT OR NOT IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE THE ORDER OF THE COORDINATE BENCH DECISION IN THE CASE OF M/S . JMP SECURITIES PVT. LTD. RELEVANT PORTION OF THE SAID ORDER OF THE TRIBUNAL READS AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES, CAREFULLY, PERUS ED THE ORDERS OF THE REVENUE AUTHORITIES AND THE DECISION CITED BY THE LD COUNSE L. CORE ISSUE TO BE DECIDED BY US ON THIS APPEAL IS WHETHER REBATE U/S 88E OF THE ACT IS AVAILABLE IN COMPUTING THE BOOK PROFITS U/S 115JB OF THE ACT OR NOT? THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE THE DECISION CITED BY THE LD COUNSEL. IT IS R ELEVANT TO REPRODUCE THE HELD PORTION OF THE SAID KARNATAKA HIGH COURT JUDGMENT IN THE CA D OF CIT VS. M/S. HORIZON CAPITAL LTD (SUPRA) WHICH IS AS UNDER: SECTION 115 JB PROVIDES THAT IF THE TAX PAYABLE ON THE TOTAL INCOME IS LESS THAN 7.5 PER CENT OF THE BOOK PROFIT, THE TAX PAYABLE UNDER THIS PROVISION SHALL BE THE AMOUNT OF INCOME TAX AT THE RATE OF 7.5 PERCENT OF BOOK PROFI T. IN OTHER WORDS, IF COMPUTATION OF INCOME IS DONE UNDER THE PROVISIONS OF THE ACT AND IF THE TAX PAYABLE IS LESS THAN 7.5 PER CENT OF THE BOOK PROFIT AND THE ASSESSEE IS A C OMPANY, THEN THE MINIMUM TAX PAYABLE BY SUCH A COMPANY IS 7.5 PER CENT OF THE BO OK PROFIT. EXCEPT TO THAT EXTENT, ALL OTHER PROVISIONS IN THE ACT ARE APPLICABLE IN R ESPECT OF BOTH TYPE OF ASSESSMENT [PARA 6]. 8. FROM THE ABOVE, IT IS EVIDENT THAT THE REBATE IN RESPECT OF TAX PAID U/S 88E IS AVAILABLE TO THE ASSESSEE FOR COMPUTATION OF TOTAL TAXABLE INCOME UNDER REGULAR PROVISIONS OF THE ACT AS WELL AS FOR COMPUTATION OF BOOK PROFITS UNDER THE SPECIAL PROVISIONS UNDER SECTION 115JB OF THE ACT. IN FACT , IDENTICAL VIEW WAS TAKEN BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/ S. TOUCHSTONE CAPITAL MARKET SERVICES PVT. LTD. (SUPRA) AND THE RELEVANT PARA 5 READS AS UNDER: 5. BEFORE US, AN IDENTICAL ISSUE CAME UP IN THE CA SE OF ACIT VS. M/S. SHREEPATI HOLDING & FINANCE PVT. LTD. IN ITA NO.6046/M/2011 WHEREIN WE HAVE HELD THAT THE ASSESEE IS ENTITLED FOR CLAIMING TAX REBATE U/S 88E FROM THE N ORMAL PROFIT AND THEREAFTER THE PROFIT TO 4 BE COMPARED WITH THE PROFIT AS PER PROVISIONS OF SE CTION 115JB. IN THAT CASE, WE HAVE FOLLOWED THE DECISIONS OF HONBLE HIGH COURT OF KAR NATAKA IN THE CASE OF CIT VS. HORIZON CAPITAL LTD. IN ITA NO.434 OF 2010 WHEREIN THE HON BLE KARNATAKA HIGH COURT HAS HELD THAT: THEREFORE, THE CONTENTION THAT THIS BENEFIT IS NO T AVAILABLE TO THE ASSESSEE WHOSE TOTAL INCOME IS ASSESSEE U/S 115JB HAS NO SUB STANCE. IN OTHER WORDS, WHEN THE TOTAL INCOME IS ASSESSED AND THE TAX PAID U/S 88E I S GIVEN DEDUCTION, BY WAY OF REBATE, U/S 87 OF THE ACT. THIS IS THE LEGISLATIVE INTENT. THAT IS A PROMISE TO GIVE DEDUCTION OF THE TAX ALREADY PAID. THIS IS THE MODE IN WHICH TAX AL READY PAID IS HANDED BACK AT THE TIME OF FINAL COMPUTATION. THEREFORE, THE JUDGMENT REFERRE D BY THE TRIBUNAL IS STRICTLY IN ACCORDANCE WITH THE LAW AND DOES NOT SUFFER FROM AN Y LEGAL INFIRMITY, WHICH CALLED FOR INTERFERENCE. THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL ARE IDENTICAL WITH THE FACTS AND ISSUES IN ITA NO.6064/M/2011 (SUPRA). RESPECTF ULLY, FOLLOWING THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. HORIZON CAPITAL LTD (SUPRA) AND OUR DECISION IN ITA NO. 6064/M/2011, WE DO NOT FIND ANY REASON TO I NTERFERE WITH THE FINDINGS OF LD CIT (A). THE FINDINGS OF THE LD CIT (A) ARE CONFIRMED. GROUND RAISED BY THE REVENUE IS DISMISSED. 8.1. THUS, IT IS DECIDED IN FAVOUR OF THE ASSESSEE THAT REBATE U/S 88E OF THE ACT IS REQUIRED TO BE GIVEN, OUT OF THE TAX CALCULATED AT THE SPECIFIED RATE ON THE BOOK PROFITS ON PART WITH THE TAX COMPUTED UNDER NORMAL PROVISIONS. THUS, THE ISSUE IS COVERED BY THE DECISIONS MENTIONED ABOVE. ACCORDIN GLY, GROUND NO.1 & 2 OF THE REVENUES APPEAL ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 8. CONSIDERING THE ABOVE SETTLED POSITION OF THE IS SUE, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2013. SD/- SD/- (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; $% 30.8.2013 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & ( ) / THE CIT(A)- 4. & / CIT 5. '( ) * , ! * , / DR, ITAT, MUMBAI 5 6. )+ , / GUARD FILE. ' //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI