Mrs. Renu Gupta, Delhi V. ACIT, New Delhi

ITA 6497/DEL/2013

• Counselvise Citation: 649720114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Keywords: Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI H.S. SIDHU: JUDICIAL MEMBER ITA NO. 6497/DEL/2013 ASSTT. YR: 2007-08 DR. (MRS.) RENU GUPTA VS. ACIT, CIRCLE 37(1), C-72, PREET VIHAR, DELHI-110092. NEW DELHI. PAN: AAPPG 1447 C ( APPELLANT ) (RESPONDENT) APPELLANT BY : MS. RANO JAIN CA RESPONDENT BY : SHRI GAURAV DUDEJA SR. DR DATE OF HEARING : 01/07/2015. DATE OF ORDER : 07/09/2015. O R D E R PER S.V. MEHROTRA, A.M.. : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 16-08-2013 PASSED BY THE LD. CIT(APPEALS)-XXVIII, NEW DELHI IN APPEAL NO. 88/2012-13, RELATING TO ASSTT. YEAR 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I N THE RELEVANT ASSESSMENT YEAR CARRIED ON THE PROFESSION AS MEDICAL PRACTITIO NER AND DERIVED INCOME FROM BUSINESS OR PROFESSION, INCOME FROM SALARY, IN COME FROM CAPITAL GAIN AND INCOME FROM OTHER SOURCES. SHE FILED HER RETURN DECLARING TOTAL INCOME 2 ITA 6497/DEL/2013 DR.(MRS.) RENU GUPTA OF RS. 79,24,280/-. THE ASSESSEE HAD, INTER ALIA, C LAIMED REBATE U/S 88E OF THE INCOME-TAX ACT FROM THE TAX PAYABLE BY HER. 3. THE DISPUTE IN THE PRESENT CASE IS REGARDING THE QUANTUM OF REBATE ALLOWABLE TO ASSESSEE AS PER THE PROVISIONS OF SECT ION 88E. THE ASSESSEE HAD CLAIMED THE REBATE OF RS. 2,41,456/- U/S 88E OUT OF THE TOTAL SECURITIES TRANSACTION TAX (STT) PAID FOR RS. 5,07,785/-. TH IS COMPUTATION WAS MADE BY APPLYING THE AVERAGE RATE OF INCOME-TAX WHICH WA S 14.28% ON RS. 16,90,870/-, TAKEN AS INCOME FROM TAXABLE SECURITIE S TRANSACTIONS AFTER GROSSING UP THE STT PAID BY ASSESSEE WITH AMOUNT CR EDITED TO P&L A/C ON THIS COUNT. HOWEVER, THE AO APPLIED THIS AVERAGE R ATE OF TAX ON RS. 11,83,085/-, AS PER AO, WHICH WAS ACTUALLY THE INCOME FROM TAXABLE SECURITIES TRANSACTIONS, AS REFLECTED BY THE AUDITE D PROFIT & LOSS ACCOUNT. THUS, HE DETERMINED THE ALLOWABLE REBATE U/S 88E AT RS. 1,68,945/- (11,83,085 X 14.28%), AS AGAINST RS. 2,41,456/- (16 ,90,870 X 14.28%), DETERMINED BY ASSESSEE. 4. LD. CIT(A) DISMISSED THE ASSESSEES APPEAL ON TH IS COUNT, INTER ALIA, OBSERVING THAT THE REBATE WOULD BE ADMISSIBLE FROM THE AMOUNT OF TAXABLE INCOME FROM SECURITIES AND NOT FROM GROSS AMOUNT A FTER ADDING BACK THE AMOUNT OF STT. 3 ITA 6497/DEL/2013 DR.(MRS.) RENU GUPTA 5. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US AND HAS TAKEN FOLLOWING EFFECTIVE GROUND OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING TH E ACTION OF AO IN ALLOWING RELIEF UNDER SECTION 88E OF THE ACT TO THE EXTENT OF RS. 1,68,945/- AS AGAINST RS. 2,41,456/- CLAIME D BY THE ASSESSEE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE ASSESSEES CLAI M IS THAT STT AMOUNTING TO RS. 5,07,785/- WAS TO BE ADDED FOR COMPUTING THE INCOME FROM TAXABLE SECURITIES TRANSACTIONS, BECAUSE STT WAS DISALLOWED U/S 40(A)(IB) OF THE INCOME-TAX ACT. THE PROVISIONS OF SECTION 88E READ AS UNDER: 88E. (1) 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', ARISING FROM TAXABLE SECURITIES TRANSACTIONS, HE SHALL BE ENTITLED TO A DEDUCTION, FROM THE AMOUNT OF INCOME-TAX ON SUCH INCOME ARISING FROM SUCH TRANSACTIONS, COMPUTED IN THE MANNER PROVIDED IN SUB-SECTION (2), OF AN AMOUNT EQUAL TO THE SECURITIES TRANSACTION TAX PAID BY HIM IN RESPECT O F THE TAXABLE SECURITIES TRANSACTIONS ENTERED INTO IN THE COURSE OF HIS BUSINESS DURING THAT PREVIOUS YEAR: PROVIDED THAT NO DEDUCTION UNDER THIS SUB-SECTION SHALL BE ALLOWED UNLESS THE ASSESSEE FURNISHES ALON G WITH THE RETURN OF INCOME, EVIDENCE OF PAYMENT OF SECURITIES TRANSACTION TAX IN THE PRESCRIBED FORM. 4 ITA 6497/DEL/2013 DR.(MRS.) RENU GUPTA PROVIDED FURTHER THAT THE AMOUNT OF DEDUCTION UNDER THIS SUB-SECTION SHALL NOT EXCEED THE AMOUNT OF INCOME-TAX ON SUCH INCOME COMPUTED IN THE MANNER PROVIDED IN SUB-SECTION (2). (2) FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT OF INCOME-TAX ON THE INCOME ARISING FROM THE TAXABLE SECURITIES TRANSACTIONS, REFERRED TO IN THAT SUB-SE CTION, SHALL BE EQUAL TO THE AMOUNT CALCULATED BY APPLYING THE AVERAGE RATE OF INCOME- TAX ON SUCH INCOME. [(3) NO DEDUCTION UNDER THIS SECTION SHALL BE ALLO WED IN, OR AFTER, THE ASSESSMENT YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2009.] EXPLANATION.-FOR THE PURPOSES OF THIS SECTION, THE EXPRESSIONS, 'TAXABLE SECURITIES TRANSACTION' AND 'SECURITIES TRANSACTION TAX' SHALL HAVE THE SAME MEANINGS RESPECTIVELY ASSIGNED TO THEM UNDER CHAPTER VII OF THE FINANCE (NO.2) ACT 2004.]. 7. A BARE PERUSAL OF THE SECTION MAKES IT CLEAR THA T THE ASSESSEE IS ENTITLED TO THIS REBATE FROM THE AMOUNT OF TAX ON INCOME FRO M TAXABLE SECURITIES TRANSACTIONS. NOW, THE QUESTION ARISES AS TO WHAT I S THE INCOME ARISING FROM TAXABLE SECURITIES TRANSACTIONS. IS IT THE INCOME A S PER P&L A/C OR IS IT THE GROSSED UP AMOUNT INCLUDING STT. ADMITTEDLY, THE AS SESSEE, WHILE COMPUTING THE TOTAL INCOME HAD ADDED BACK THE STT P AID BY IT. THEREFORE, WHILE COMPUTING ITS INCOME TAX LIABILITY, THE DEDUC TION FOR STT WAS NOT ALLOWED, CONSEQUENTLY, ENHANCING THE ASSESSEES LIA BILITY TO INCOME-TAX. THE REBATE U/S 88E IS ALLOWED TO ASSESSEE IN ORDER TO A VOID DOUBLE TAXATION - FIRSTLY, BY PAYING STT AND THEN PAYING INCOME-TAX A LSO. THEREFORE, WHEN THE REBATE IS TO BE COMPUTED THEN INCOME FROM TAXABLE S ECURITIES TRANSACTIONS IS TO BE ARRIVED AT AFTER GROSSING UP THE STT PAID BY ASSESSEE, SO AS TO ALLOW THE 5 ITA 6497/DEL/2013 DR.(MRS.) RENU GUPTA ASSESSEE THE BENEFIT FROM INCOME TAX OF REBATE ON T HE ENTIRE SUM RELATING TO INCOME FROM TAXABLE SECURITIES TRANSACTIONS. THE IN COME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSIO N ARISING FROM TAXABLE SECURITIES TRANSACTIONS IS THE GROSS AMOUNT INCLUDI NG STT AND NOT THE NET RECEIPTS SHOWN IN THE P&L ACCOUNT, BECAUSE THE ASSE SSEE HAS NOT BEEN ALLOWED DEDUCTION FOR STT PAID BY IT AND, THEREFORE , THE SAME AMOUNT HAS TO BE GROSSED UP WHILE COMPUTING THE INCOME FROM TAXAB LE SECURITIES TRANSACTIONS. IN VIEW OF ABOVE DISCUSSION, WE ALLO W THE CLAIM OF THE ASSESSEE AND DELETE THE PART DISALLOWANCE MADE U/ S 88E. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 07/09/2015.. SD/- SD/- (H.S. SIDHU) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07/09/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. 6 ITA 6497/DEL/2013 DR.(MRS.) RENU GUPTA - + DATE INITIAL 1. DRAFT DICTATED ON - 07.2015 PS 2. DRAFT PLACED BEFORE AUTHOR .07.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.