ADDL CIT RG 4(3), MUMBAI V. JMP SECURITIES P. LTD, MUMBAI

ITA 7169/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8710 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2008-2009
• Appeal Filed On: 24-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVATSAVA SR
• Keywords: Sale consideration of property below Jantri Value
• Section: 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.7169/M/2011 ASSESSMENT YEAR: 2008-2009 THE DY. COMMISSIONER OF INCOME- TAX 4(3), 6 TH FLOOR, R.NO.649, AAYAKAR BHAVAN, MUMBAI 400 020. VS. M/S. JMP SECURITIES PVT. LTD., 101 TO 105, FORT FOUNDATION, KALAGHODA, FORT, MUMBAI 400 023. PAN: AAACJ8850C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.D. SRIVATSAVA, SR. AR RESPONDENT BY : SHRI K. GOPAL DATE OF HEARING: 27.9.2012 DATE OF ORDER: 1 2.10.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 24.10.2011 IS D IRECTED AGAINST THE ORDER OF THE CIT (A)-8, MUMBAI DATED 9.8.2011 IN RELATION TO ASSESSMENT YEAR 2008-2009. 2. IN THIS APPEAL, THE REVENUE 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 ALLOWING ESTIMATION OF PROF IT U/S 115JB OF THE I.T. ACT MADE BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE IMPUGNED ORDER OF THE LD CIT (A) IS CONTRARY TO LAW TO BE SE T ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED THE FACTS OF THE PRESENT CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE-BROKING AND TRADING OF SHA RES AND FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 25.88 CRORES ( ROUNDED OF). DURING THE SCRUTINY ASSESSMENT, THE ASSESSED INCOME WAS COMPUTED AT RS. 26.34 CRORES. AO RECOMPUTED THE BOOK PROFITS AS PER THE PROVISIONS O F SECTION 115JB OF RS. 18,34,66,757/- AND THE INCOME TAX PAYABLE @ 7% OF T HE BOOK PROFITS IS RS. 1,83,46,676/- WHICH IS HIGHER THAN THE INCOME TAX P AYABLE CALCULATED AFTER REBATE 2 M/S. JMP SECURITIES PVT. LTD., U/S 88E OF THE ACT I.E. RS. 1,08,78,731/-. THEREFO RE, BY INVOKING THE PROVISIONS OF SECTION 115JB, THE BOOK PROFIT OF RS. 18,34,66,757/ - WAS DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABLE THEREON IS RS. 1,83,46,676/- I.E. 10% OF THE BOOK PROFITS. THIS SHALL BE FURTHER INCREASED BY SURCHARGE AND EDUCATION CESS AS PER THE RATES APPLICABLE. THUS, DURING THE ASSESSM ENT PROCEEDINGS, AO COMPARED THE TOTAL INCOME OF THE ASSESSEE AS PER THE NORMAL PROVISIONS VIS--VIS THE INCOME COMPUTED UNDER SPECIAL PROVISIONS OF SECTION 115JB OF THE ACT BEFORE CLAIMING THE REBATE U/S 88E OF THE ACT AND HELD THAT THE PROVISI ONS OF SECTION 115JB ARE APPLICABLE TO THE PRESENT CASE. 4. AGGRIEVED WITH THE ABOVE ESTIMATION OF BOOK PRO FITS I.E. COMPARING THE PROFITS AND BOOK PROFITS WITHOUT GRANTING REBATE U/S 88E OF THE ACT, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) AND OBJECTED TO THE SAID DETERMI NATION OF BOOK PROFITS U/S 115JB. THE ASSESSEE RELIED ON THE JUDGMENT OF THE BANGALOR E BENCH OF ITAT IN THE CASE OF M/S. HORIZON CAPITAL LTD. VS. ITO IN ITA NO.592(BNG )/10 VIDE ORDER DATED 16.7.2010 FOR THE PROPOSITION THAT THE REBATE GIVEN TO THE AS SESSEE IN RESPECT OF THE TAX PAID BY HIM U/S 88E OF THE ACT IS AVAILABLE IRRESPECTIVE OF THE FACT WHETHER ASSESSEES 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 ALSO AFTER CONSIDERING THE SAID DECISION OF THE ITAT, BANGALOR E BENCH DECISION IN THE CASE OF M/S. HORIZON CAPITAL LTD. (SUPRA), THE LD CIT (A) H ELD THAT INSTANT CASE IS SQUARELY COVERED BY THE DECISION OF THE ITAT IN THE SAID CAS E AND DIRECTED THE AO TO DETERMINE THE TAX PAYABLE BY THE ASSESSEE AS PER TH E SAID DECISION OF ITAT, BANGALORE BENCH. AGGRIEVED WITH THE SAME, ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 5. SHRI K. GOPAL, LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE SAID ORDER OF THE ITAT, BANGALORE BENCH IN THE CASE OF M/S. HORIZON C APITAL LTD. (SUPRA) AND MENTIONED THAT THE SAID DECISION OF THE TRIBUNAL WA S FINALLY APPROVED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF KARNATAKA REP ORTED IN [2012] 17 TAXMAN.COM 8 (KAR.) IN IT APPEAL NO.434 OF 2010, DATED 24 TH OCTOBER, 2011. HE FURTHER MENTIONED THAT AN IDENTICAL VIEW WAS TAKEN BY THE I TAT, MUMBAI E BENCH, MUMBAI 3 M/S. JMP SECURITIES PVT. LTD., IN THE CASE OF M/S. TOUCHSTONE CAPITAL MARKET SERVI CES PVT. LTD. VS. ITO IN ITA NO.6031/MUM/2011 FOR THE AY 2008-2009. 6. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 7. WE HAVE HEARD BOTH THE PARTIES, CAREFULLY PERUSE D THE ORDERS OF THE REVENUE AUTHORITIES AND THE DECISION CITED BY THE LD COUNSE L. CORE ISSUE TO BE DECIDED BY US IN 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 ISS UE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE THE DECISION CITED BY THE LD COUNSEL. IT IS RELEVANT TO REPRODUCE THE HELD PORTION OF THE SAID KARNATAKA HIGH COURT JUDGM ENT IN THE CASE OF CIT VS. M/S. HORIZON CAPITAL LTD. (SUPRA) WHICH IS AS UNDER: SECTION 115JB PROVIDES THAT IF THE TAX PAYABLE ON THE TOTAL INCOME IS LESS THAN 7.5 PER CENT OF THE BOOK PROFIT, THE TAX PAYAB LE UNDER THIS PROVISION SHALL BE THE AMOUNT OF INCOME TAX AT THE RATE OF 7.5 PER CENT OF BOOK PROFIT. 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 COMPANY, THEN THE MINIMUM TAX PAYABLE BY SUCH A COMPANY IS 7.5 PER CENT OF THE BOOK PROFIT. EXCEPT TO THAT EX TENT, ALL OTHER PROVISIONS IN THE ACT ARE APPLICABLE IN RESPECT OF BOTH TYPE OF A SSESSMENT [PARA 6]. 8. FROM THE ABOVE, IT IS EVIDENT THAT REBATE IN RES PECT 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. 60 46/M/2011 WHEREIN WE HAVE HELD THAT THE ASSESSEE IS ENTITLED FOR CLAIMIN G TAX REBATE U/S 88E FROM THE NORMAL PROFIT AND THEREAFTER THE PROFIT TO BE C OMPARED WITH THE PROFIT AS PER PROVISIONS OF SECTION 115JB. IN THAT CASE, WE H AVE FOLLOWED THE DECISION OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF C IT VS. HORIZON CAPITAL LTD. IN ITA NO.434 OF 2010 WHEREIN THE HONBLE KARNATAKA HIGH COURT HAS HELD THAT: THEREFORE, THE CONTENTION THAT THIS BENEFIT IS NOT AVAILABLE TO THE ASSESSEE WHOSE TOTAL INCOME IS ASSESSED U/S 115JB H AS NO SUBSTANCE. IN 4 M/S. JMP SECURITIES PVT. LTD., OTHER WORDS, WHEN THE TOTAL INCOME IS ASSESSED AND THE TAX PAID U/S 88E IS GIVEN DEDUCTION, BY WAY OF REBATE, U/S 87 OF THE AC T. THIS IS THE LEGISLATIVE INTENT. THAT IS A PROMISE TO GIVE DEDUCTION OF THE TAX ALREADY PAID. THIS IS THE MODE IN WHICH TAX ALREADY PAID IS HANDED BANK A T THE TIME OF FINAL COMPUTATION. THEREFORE, THE JUDGMENT REFERRED BY T HE TRIBUNAL IS STRICTLY IN ACCORDANCE WITH LAW AND DOES NOT SUFFER FROM ANY LE GAL INFIRMITY, WHICH CALLED FOR INTERFERENCE. THE FACTS AND ISSUE INVOLVED IN THE PRESENT APPEAL ARE IDENTICAL WITH THE FACTS AND ISSUES IN ITA NO.6046/M/2011 (SUPRA). RESPECTFULLY FOLLOWING THE DECISION OF THE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. HORIZON CAPITAL LTD (SUPRA) AND OUR OWN DECISION IN ITA NO. 6046/M/2011, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF L D 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 PAR WITH THE TAX COMPUTED UNDER NORMAL PROVISIONS. THUS, THE ISSUE IS COVERED BY THE DECISIONS MENTIONED ABOVE. ACCORDIN GLY, GROUND NOS. 1 & 2 OF THE REVENUES APPEAL ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF OCTOBER, 2012. SD/- SD/- (H.L. KARWA) (D. KARUNAKAR A RAO) PRESIDENT ACCOUNTANT MEMBER DATE : 12.10.2012 AT :MUMBAI OKK COPY TO : 1. M/S. JMP SECURITIES PVT. LTD., MUMBAI. 2. DCIT-4(3), MUMBAI. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR J, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// 5 M/S. JMP SECURITIES PVT. LTD., BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI