D.C.I.T Cir - 3,kolkata, Kolkata V. M/s Jaroli Vincom Pvt Ltd, Kolkata

ITA 877/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100170 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMITABHA CHUDHURI
• Assessee Lawyers: A K TIBREWAL
• Keywords: Business income; Earning of tax free income; Speculation loss
• Section: 143(3); 14A; 115JB; 43(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 877 - 878 / KOL / 2013 ASSESSMENT YEARS :2006-07 & 2008-09 DCIT, CIRCLE-3, P7, CHOWRINGHEE SUARE, AAYKAR BHAWAN, KOLKATA-69 V/S . M/S JAROLI VINCOM PVT. LTD. 24, HEMANTA BASU SARANI, KOLKATA 700 001 [ PAN NO.AAACCJ 7695 K ] /APPELLANT .. / RESPONDENT C.O. NO.61/KOL/2013 (A/O ITA NO.878/KOL/2013) ASSESSMENT YEAR: 2008-09 M/S JAROLI VINCOM PVT. LTD. 24, HEMANTA BASU SARANI, KOLKATA 700 001 V/S . DCIT, CIRCLE-3, P7, CHOWRINGHEE SUARE, AAYKAR BHAWAN, KOLKATA-69 /APPLICANT .. CROSS-OBJECTOR /BY ASSESSEE SHRI A.K.TIBREWAL, FCA /BY REVENUE SHRI AMITABHA CHUDHURI, DR /DATE OF HEARING 30-11-2015 ! /DATE OF PRONOUNCEMENT 16-12-2015 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS FILED BY REVENUE AND CROSS OBJECTION (CO) FILED BY ASSESSEE ARE ARISING OUT OF ORDER OF COMMISSIONER O F INCOME TAX (APPEALS)-I, ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 2 KOLKATA IN APPEALS NO.196, 334/CIT(A)-I/3(2)-3/08-0 9/10-11 DATED 24.01.2013. ASSESSMENTS WERE FRAMED BY ITO WARD-3(2) AND DCIT C IRCLE-3, KOLKATA U/S 143(3) R.W.S.115JB OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) VIDE THEIR ORDERS DATED 05.12.2008 AND 27.12. 2010 FOR ASSESSMENT YEARS 2006-07 & 2008-09 RESPECTIVELY. FIRST WE TAKE UP ITA NO. 877/KOL/2013 A.Y. 06-07. 2. FIRST GROUND RAISED BY REVENUE IS REGARDING THAT THE LD. CIT(A) HAS ERRED IN HOLDING LOSS ON ACCOUNT OF NON-SPECULATION TRANSACTION FOR AN AMOUNT OF 1,47,27,937/-AS SPECULATION. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND IS REGISTERED WITH RESERVE BANK OF INDIA AS NON-BAN KING FINANCE COMPANY (NBFC FOR SHORT). THE ASSESSEES INCOME COMPRISES O F TRADING IN SHARES AND DERIVATIVES, INTEREST ON LOAN AND DEBENTURES, DIVID END AND CAPITAL GAINS. DURING THE YEAR, ASSESSEE HAS INCURRED LOSS AT 2,73,14,421/- ON ACCOUNT OF SALE-PURCHASE OF DERIVATIVES AND BREAK-UP OF THE LO SS FROM ITS DERIVATIVE BUSINESS STANDS AS UNDER :- A) LOSS ON SALE OF DERIVATIVES FROM 01.04.2005 TO 2 4.1.2005 AT 1,47,47,937/-; B) LOSS OF SALE OF DERIVATIVES FROM 25.01.2006 TO 3 1-3-2006 AT 1,25,66,484/-; THE ASSESSING OFFICER SOUGHT CLARIFICATION FROM ASS ESSEE BY ISSUING NOTICE STATING THAT WHY LOSS INCURRED ON SALE/PURCHASE OF DERIVATIVE PRIOR TO 25.01.2006 SHOULD NOT BE TREATED AS SPECULATION LOS S. ASSESSEE SUBMITTED THAT AS PER SECTION 43(5)(D) OF THE ACT, TRADING IN DERIVATIVES IS NOT A SPECULATIVE BUSINESS. THE RELEVANT SUB-CLAUSE (D) I N SEC. 43(5) OF THE ACT WAS INSERTED BY FINANCE ACT, 2005 WHICH IS EFFECTIVE FR OM 01.04.2006 CLARIFYING THAT THE TRADE IN DERIVATIVES SHALL NOT AMOUNT SPEC ULATION BUSINESS IF IT IS CARRIED OUT IN THE RECOGNIZED EXCHANGE. HOWEVER, CL AIM OF ASSESSEE WAS DISREGARDED BY AO RELYING ON THE NOTIFICATION NO. 2 /2006 DATED 25.01.2006, ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 3 WHEREIN BOMBAY STOCK EXCHANGE LTD., MUMBAI AND NATI ONAL STOCK EXCHANGE OF INDIA LTD., MUMBAI WERE NOTIFIED AS RECOGNIZED S TOCK EXCHANGE FOR THE PURPOSE OF CLAUSE (D) OF THE PROVISO OF SEC. 43(5) OF THE ACT. HENCE, IT IS IMPLIED THAT AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING IN DERIVATIVE CARRIED OUT ON THESE STOCK EXCHANGES W.E.F. 25.01.2006 SHAL L ALONE BE TREATED AS NON SPECULATIVE TRANSACTION. THEREFORE, LOSS OF 1,47,47,937/- ON SALE OF DERIVATIVE PRIOR TO 25.01.2006 WAS TREATED AS SPECULATION LOSS AND ACCORDINGLY IT WAS NOT ALLOWED TO BE SET OFF WITH NON-SPECULATION INCOME. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO HELD THAT THE TRANSACTION IN QUESTION WAS NOT A SPECULATION T RANSACTION BY OBSERVING AS BELOW:- THE FINANCE ACT, 2005 CLEARLY EXCLUDES THE TRADING ON DERIVATIVES FROM THE DEFINITION OF SPECULATION TRANSACTIONS W.E.F. A SSESSMENT YEAR 2006- 07. A SUBSEQUENT NOTIFICATION, IN FACT NOT EVEN THE NOTIFICATION BUT AN INFERENCE DRAWN FROM THE NOTIFICATION CANNOT OVERRI DE THE ACT ITSELF. IN SHREE CAPITAL SERVICES LTD. VS. ASSTT. CIT IT WA S HELD BY THE SPECIAL BENCH OF ITAT, KOLKATA THAT IT IS EVIDENT THAT THE TRANSACTION IN DERIVATIVES IS EXEMPTED FROM THE PURVIEW OF SPECULA TIVE TRANSACTION UNDER SECTION 43(5) BECAUSE OF RECENT SYSTEMIC AND TECHNOLOGICAL CHANGES INTRODUCED BY STOCK EXCHANGE. THE INTENTION OF THE LEGISLATURE IS ALSO CLEAR FROM THE FACT THAT ALL THE TRANSACTI ONS IN DERIVATIVES HAVE NOT BEEN EXEMPTED FROM THE AMBIT OF SPECULATIVE TRA NSACTION UNDER SECTION 43(5) BUT ONLY THE ELIGIBLE TRANSACTIONS OF TRADING IN DERIVATIVES CARRIED OUT IN A RECOGNIZED STOCK EXCHANGE ARE EXEM PT. BY WAY OF EXPLANATION, THE LEGISLATURE HAS ALSO DEFINED THE T ERM ELIGIBLE TRANSACTION AND RECOGNIZED STOCK EXCHANGE . FROM THE ABOVE, IT IS CLEAR THAT IF IT IS A NECESSA RY IMPLICATION FROM THE LANGUAGE EMPLOYED THAT THE LEGISLATURE INTENDED A P ARTICULAR SECTION TO HAVE RETROSPECTIVE OPERATION THE COURT WILL GIVE IT SUCH OPERATION. BUT IN THE PRESENT CASE, THE EXPLANATORY MEMORANDUM TO THE FINANCE BILL, 2005 WHICH INTRODUCED THE AMENDMENT, MAKES IT ABUND ANTLY EVIDENT THAT THE LEGISLATURE MADE THE AMENDMENT BECAUSE OF THE TECHNOLOGICAL ADVANCEMENT INTRODUCED BY THE STOCK MARKETS RESULTI NG IN MORE TRANSPARENCY IN THE DEALINGS. THEREFORE, THE CIRCUM STANCES UNDER WHICH AMENDMENT WAS BROUGHT INTO EXISTENCE WAS NOT INTEND ED TO PROVIDE FOR AN OBVIOUS OMISSION BUT WAS MADE IN VIEW OF THE CHA NGED ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 4 CIRCUMSTANCES. HENCE, THE AMENDMENT IS PROSPECTIVE IN NATURE AND NO INFERENCE SHOULD BE DRAWN THAT IT WAS RETROSPECTIVE . THE ITAT, KOLKATA SPECIAL BENCH FURTHER EXPLAINS WH AT IS PROSPECTIVE:- IN VIEW OF THE ABOVE, CLAUSE (D) OF SECTION 43(5) IS PROSPECTIVE IN NATURE AND WILL BE EFFECTIVE FROM THE DATE FROM WHI CH THE LEGISLATURE MADE IT EFFECTIVE, I.E, 1-4-2006 AND WI LL BE APPLICABLE FROM ASSESSMENT YEAR 2006-07 ONWARDS. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE PREFERRED APPEAL BEFORE US. SHRI A.K. TIBREWAL, LD. AUTHORIZED REPRESENTATIVE A PPEARING ON BEHALF OF ASSESSEE AND SHRI AMITABHA CHOUDHURI, LD. DEPARTMEN TAL REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 5. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. DR VEHEMENTLY RE LIED ON THE ORDER OF ASSESSING OFFICER WHEREAS LD. AR ALSO RELIED ON THE ORDER OF LD. CIT(A). LD. AR SUBMITTED VARIOUS CASE LAWS IN SUPPORT OF HIS CL AIM. FROM THE AFORESAID DISCUSSION WE FIND THAT AO HAS TREATED THE LOSS INC URRED BY ASSESSEE ON ACCOUNT OF DERIVATIVE TRANSACTION UP-TO 25.01.2006 AS SPECULATION LOSS IN TERMS OF NOTIFICATION NO. 2/2006 ISSUE ON DATED 25.1.2006 AND EXPLANATORY MEMORANDUM IN NOTIFICATION NUMBER SO. 89(E), AND TH E LOSS DURING THE PERIOD FROM 25.1.2006 TO 31.3.2006 AS BUSINESS LOSS. THE A O TREATED THE LOSS UP-TO 25-1-2006 AS SPECULATIVE AS THE NOTIFICATION WAS IS SUED ON DATED 25.1.2006 FOR RECOGNIZING THE STOCK EXCHANGES. AS PER THE AME NDED SECTION 43(5)(D), THE TRADING OF DERIVATES IF CARRIED OUT IN RECOGNIZ ED STOCK EXCHANGE THEN IT WILL NOT TREATED AS SPECULATIVE BUSINESS. THE RELEVANT N OTIFICATION WAS ISSUED ON DATED 25.1.2006 FOR RECOGNIZING THE STOCK EXCHANGE SO THE LOSS FROM THE SPECULATIVE TRANSACTIONS UP-TO 25-1-2006 IS SPECULA TION LOSS. HOWEVER, WE FIND THAT HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. NASA FINLEASE P. LTD. APPEAL NO.647/2012 (DELHI HIGH COURT) DT.06.09.2013 HAS DECIDED IN FA VOUR OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW : ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 5 7. THE FACTUAL POSITION IS NOT IN DISPUTE. NOTIFIC ATION NO.2/2006 DATED 25 TH JANUARY, 2006, ISSUED BY THE CENTRAL BOARD OF DIRE CT TAXES DOES NOT SPECIFY ANY PARTICULAR DATE AND SIMPLY NOTIFIES THE NATIONAL STOCK EXCHANGE INDIA LTD., AND BOMBAY STOCK EXCHANGE, MUM BAI UNDER PROVISO (D) TO CLAUSE (5) TO SECTION 43 OF THE ACT. THE SAID PROVISO HAD BECOME APPLICABLE WITH EFFECT FROM 1 ST APRIL, 2006. ISSUE OF NOTIFICATION OBVIOUSLY HAD TO TAKE SOME TIME AS IT INVOLVED PROC ESSING AND EXAMINATION OF APPLICATIONS ETC. THIS WAS A MATTER RELATING TO PROCEDURE AND THE DELAY IN ISSUE OF NOTIFICATION OR EVEN FRAM ING OF THE RULES WAS DUE TO ADMINISTRATIVE CONSTRAINS. WE AGREE WITH THE TRIBUNAL THAT THE DELAY OCCASIONED, AS PROCEDURE AND FORMALITIES HAVE TO BE COMPLIED WITH, SHOULD NOT DISENTITLE AND DEPRIVE AN ASSESSEE , SPECIALLY, WHEN THE TRANSACTIONS WERE CARRIED THROUGH A NOTIFIED STOCK EXCHANGE. THE AFORESAID DELAY IS NOT ATTRIBUTABLE TO THE ASSESSEE . THE NOTIFICATION, THEREFORE, MERITS ACCEPTANCE AND SHOULD BE GIVEN RE TROSPECTIVE EFFECT. NOTIFICATION WAS PROCEDURAL AND NECESSARY ADJUNCT T O THE SECTION ENFORCED WITH EFFECT FROM 1 ST APRIL, 2006. THE RULE AND NOTIFICATION ISSUED IN THE PRESENT CASE EFFECTUATE THE STATUTORY AND TH E LEGISLATIVE MANDATE. THERE IS NO GOOD GROUND OR REASON WHY THE NOTIFICAT ION IN QUESTION SHOULD NOT BE GIVEN EFFECT FROM 1 ST APRIL, 2006. NO REASON OR GROUND IS ALLEGED OR ARGUED TO CONTEND THAT NATIONAL STOCK EX CHANGE INDIA LTD. COULD NOT AND SHOULD NOT HAVE BEEN NOTIFIED FROM 1 ST APRIL, 2006. WE ALSO FIND FROM THE ORDER OF THIS TRIBUNAL OF KOL KATA BENCH IN C BENCH IN THE CASE OF VINOD KUMAR RAMPURIA V. ITO IN ITA NO.1902/KOL/2009 ORDER DATED 16.07.2010 WHERE THE ISSUE WAS DECIDED IN FAV OUR OF ASSESSEE. THE RELEVANT EXTRACT IS MENTIONED BELOW:- 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED BEFORE US. WE FIND THAT THE ISSUE IN QUESTION IS COVERED B Y THE DECISION OF TRIBUNAL IN THE CASE OF G.K. ANAND BROS. BUILDWELL (P) LTD. (SUPRA), WHEREIN ON IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE SPECIAL BENCH DECISION OF ITAT IN T HE CASE OF SHREE CAPITAL SERVICES LTD. VS. ACIT, REPORTED IN 318 ITR (AT) 1 (KOL-SB), THE TRIBUNAL TREATED THE LOSS INCURRED BY THE ASSESSEE ON DERIVATIVE TRANSACTION AS BUSINESS LOSS. THE FINDING OF THE TR IBUNAL IN THE SAID CASE IS AS UNDER:- SECTION 43(5) DEFINES SPECULATIVE TRANSACTION WHICH MEANS A TRANSACTION IN WHICH A CONTRACT FOR THE PURCHASE OR SALE OF ANY COMMODITY INCLUDING STOCKS AND SHARES IS PERIODICAL OR ULTIMATELY SETTLED OTHERWISE THAN BY THE ACTUAL DELIVERY OR TH E TRANSFER OF COMMODITY OR SCRAPS. PROVISO BELOW SECTION 43(5) CA RES OUT EXCEPTIONS TO SECTION 43(5). AS PER CLAUSE (D) OF T HE SAID PROVISION AN ELIGIBLE TRANSACTION IN RESPECT OF TRADING IN ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 6 DERIVATIVES REFERRED TO IN THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 CARRIED OUT IN A RECOGNIZED STOCK EXCHANGE SHALL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION. CLAUSE (D) IN THE PROVISO WAS INSERTED BY THE FINANCE ACT, 2005 WITH EFFECT FROM 1-4-2006. THEREF ORE, IF A TRANSACTION FALLS WITHIN CLAUSE (D) OF THE PROVISO IT WILL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION IN RESPECT O F TRANSACTION PERTAINING TO THE ASSESSMENT YEAR 2006-07 UNDER CLA USE (D) OF THE PROVISO, A TRANSACTION IS NOT A SPECULATIVE TR ANSACTION PROVIDED IT IS AN ELIGIBLE TRANSACTION WITHIN THE M EANING OF CLAUSE (I) OF THE EXPLANATION AND IT IS CARRIED ON AT THE RECOGNIZED STOCK EXCHANGE AS EXPLAINED IN CLAUSE (II) OF THE SAID EX PLANATION BELOW PROVISO TO SECTION 43(5)(D). THE RECOGNIZED STOCK E XCHANGE MEANS A RECOGNIZED STOCK EXCHANGE AS NOTIFIED BY TH E CENTRAL GOVERNMENT FOR THIS PURPOSE. THEREFORE, EVEN IF THE NOTIFICATION IS FROM 25-1-2006 AS PER CLAUSE (D) INSERTED, THE SAME WILL APPLY TO ALL THE TRANSACTIONS IN RELATION TO THE ASSESSMENT YEAR 2006-07 AND ONWARDS. CLAUSE (D) DOES NOT MENTION THAT UNLES S THE RECOGNIZED STOCK EXCHANGE IS NOTIFIED, THE TRANSACT ION WILL NOT BE DEEMED TO BE A SPECULATIVE TRANSACTION. THE POWER T O NOTIFY THE STOCK EXCHANGE IS GRANTED UNDER THE STATUTE AND HEN CE, ONCE THE RECOGNIZED STOCK EXCHANGE IS NOTIFIED, THE SAME WIL L APPLY RESPECT OF ALL ELIGIBLE TRANSACTIONS CARRIED OUT IN RELATIO N TO THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07 AND ON WARDS. THE NOTIFICATION DATED 25-1-2006 IS BY WAY OF A SUBORDI NATED LEGISLATION BUT CANNOT OVERRIDE THE PRINCIPAL LEGIS LATION ENACTED BY THE PARLIAMENT. IT ONLY CLARIFIES BUT WILL NOT OVER RIDE UNLESS STATUTORILY SO PRESCRIBED. SINCE THERE WAS NO DISPU TE TO THE FACT THAT THE TRANSACTIONS, IN THE INSTANT CASE, IN FUTU RE AND OPTION SEGMENT WERE THE ELIGIBLE TRANSACTIONS CARRIED OUT IN A RECOGNIZED STOCK EXCHANGE, LOSS IN SUCH TRANSACTIONS COULD NOT BE DEEMED TO BE LOSS IN THE SPECULATION BUSINESS. THEREFORE, THE LOSS-IN- QUESTION WAS TO BE TREATED AS A BUSINESS LOSS AND N OT AS LOSS IN SPECULATION BUSINESS. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TRIBUNAL IN THE CASE OF G.K. ANAND BROS. BUILDWELL (P) LTD. (SUPRA), WE HOLD THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN TREATING THE LOSS OF RS.2,22,296/- INCURRED UPTO 24/1/2006 ON DERIVATIVE TRANSACTION AS SPECULATION LOSS INSTEAD OF BUSINESS LOSS AS CLAIMED BY THE ASSESSEE. THEREFORE, THE ADDITION MADE OF THE SAID AMOUNT TO THE ASSESSEES TOTAL INCOME IS DELETED. WE ORDER ACCORD INGLY. FROM THE ABOVE CASE LAWS WE FIND THAT THE TRADING O F DERIVATIVES FOR THE ENTIRE ASSESSMENT 2006-07 IS OUT OF THE DEFINITION OF SPEC ULATION BUSINESS IF IT IS ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 7 CARRIED OUT IN THE RECOGNIZED STOCK EXCHANGE. THE A SSESSEE HAS DONE THE TRADING IN THE RECOGNIZED STOCK EXCHANGE. SO IT IS CLEAR THAT LOSS ON ACCOUNT OF DERIVATIVE TRANSACTION OR VERY MUCH COVERED IN CLAU SE (D) OF THE PROVISO SECTION 43(5) OF THE ACT. IN VIEW OF SUCH AMENDMENT UNDER THE ACT, THE INCOME/LOSS ARRIVED ON DERIVATIVE SHALL BE TREATED AS NON-SPECULATIVE LOSS. TAKING A CONSISTENT VIEW AND RELYING ON THE ABOVE C ITED CASE LAW, WE CONFIRM THE ORDER OF LD. CIT(A) AND THIS GROUND OF REVENUE S APPEAL IS DISMISSED. 6. NEXT GROUND RAISED BY REVENUE IS REGARDING THAT THE LD. CIT(A) ERRED IN ALLOWING RELIEF OF INTEREST PAYMENT FOR 78,191/- RELYING LOSS ON TRADING OF DERIVATIVES PRIOR TO 25.01.2006 AS NON-SPECULATION BUSINESS. 7. DURING THE YEAR UNDER CONSIDERATION, AO DISALLOW ED THE INTEREST PAID BY ASSESSEE UP-TO 25.01.2006 ON THE GROUND THAT IT PER TAINS TO SPECULATION BUSINESS. THEREFORE, IT SHOULD NOT BE ALLOWED. HOWE VER, WE FIND THAT LD. CIT(A) HAS ALLOWED THE CLAIM OF INTEREST EXPENSE BY TREATING THE LOSS FROM THE DERIVATIVE TRANSACTIONS AS NON- SPECULATIVE BUSINES S. WE FIND THAT THIS GROUND RELATES TO THE FIRST GROUND OF REVENUES APPEAL REG ARDING TREATING THE TRANSACTION OF DERIVATIVE AS SPECULATIVE BUSINESS U P TO 25.01.2006. IN THE FIRST GROUND OF APPEAL, WE HAVE HELD THE BUSINESS OF THE ASSESSEE AS NON- SPECULATIVE. ACCORDINGLY, THE INTEREST DISALLOWED B Y AO IS ALLOWABLE EXPENSE AGAINST THE NON-SPECULATIVE BUSINESS OF THE ASSESSE E. IN OUR CONSIDERED VIEW, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 8. NEXT GROUND RAISED BY REVENUE IS REGARDING THAT THE LD. CIT(A) ERRED IN ALLOWING RELIEF TO ASSESSEE INSTEAD OF DISALLOWANCE U/S. 14A OF THE ACT. 9. DURING THE YEAR ASSESSEE HAS EARNED A DIVIDEND I NCOME OF 6,45,787/- WHICH IS EXEMPTED FROM TAX UNDER IT ACT. ASSESSING OFFICER FOUND THAT ASSESSEE HAS NOT DISALLOWED ANY EXPENSE IN RELATION TO THE EXEMPT DIVIDEND INCOME BY VIRTUE OF PROVISION OF SPECIFIED U/S 14A OF THE ACT. ON QUESTION PUT ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 8 BY AO, ASSESSEE SUBMITTED THAT THERE IS AN EXPENSE OF 3,854/- TOWARDS DEMAT CHARGE AND OFFERED THE SAME FOR DISALLOWANCE U/S. 14A OF THE ACT. HOWEVER, AO DISREGARDED THE CLAIM OF ASSESSEE AND W ORKED OUT THE DISALLOWANCE AS PROVIDED U/S 14A READ WITH RULE8D O F THE IT RULES, 1962 AS BELOW:- I) DIRECT EXPENSES OF 3,854/- II) INTEREST EXPENSE OF 3,06,617/- III) .5% OF THE AVERAGE VALUE OF INVESTMENT OF 3,53,933/- ACCORDINGLY, AO DISALLOWED THE EXPENSE OF 6,64,404/- AND ADDED IT TO THE INCOME OF ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL BY OBSERVING AS UNDER:- ASSESSEE RELIED UPON MUMBAI HIGH COURT IN GODREJ 7 BOYCE VS. DCIT ON 12 TH AUGUST 2010 ALSO HOLDS THAT THE RULE 8D OF THE INC OME TAX RULES WAS EFFECTIVE FROM 24.03.2008. THE TAX FR EE DIVIDEND RECEIVED WAS RS.6,45,787/-. THE EXPENSES OF RS.3,85 4/- AS DEMAT CHARGES ARE DIRECTLY RELATABLE TO EARNING OF DIVIDE ND INCOME. THE INTEREST DEBITED IN PROFIT AND LOSS ACCOUNT OF RS.6 ,91,194/- PAID TO M/S FORTIS SECURITIES LTD. IS NOT RELATING TO THE DIVID END INCOME AS THE TOTAL SALES CREDITED IN THE P&L A/C WERE FOR RS.41.72 CRO RES AND INTEREST INCOME WAS TO THE EXTENT OF RS.23 LACS AND ASSESSEE HAS SUBSTANTIAL INTEREST FREE FUNDS FOR RS.13.77 CRORES AND SHARE W ORTH RS.5.76 CRORES WERE HELD AS STOCK-IN-TRADE. KEEPING IN VIEW THESE FACTS AND CIRCUMSTANCES NO INTEREST IS ATTRIBUTABLE TO EARNIN G TAX-FREE INCOME AND THE ADMINISTRATIVE EXPENSES IN RELATION TO TAX-FREE INCOME MAY BE TAKEN AS 1% OF THE TOTAL EXEMPT INCOME OF RS.25,14,872/- (LTCG PLUS DIVIDEND) AND AMOUNT DISALLOWABLE U/S. 14A IS QUANT IFIED AT [(RS.25,148/- PLUS DEMAT CHARGES FOR RS.3,854/-) = RS.29,002/-]. THEREFORE THIS GROUND IS PARTLY ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BEFORE US LD. AR SUBMITTED THAT DISALLOWANC E U/S. 14A OF THE ACT CAN BE MADE IF AO, AFTER HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 9 EXPENDITURE IN RELATION TO INCOME WHICH DOES FORM P ART OF TOTAL INCOME UNDER THIS ACT. THE AO IN HIS ORDER HAS NOT RECORDED THE CHARGE OF DISSATISFACTION. BESIDES THIS THE LD. AR SUBMITTED THAT THE PROVISIO N INSERTED UNDER RULE 8D OF IT RULE CAME INTO EFFECT ON 24.03.2008 AND RELEVANT YEAR UNDER APPEAL I.E. AY 2006-07. HENCE THE RULE 8D DOES NOT APPLY TO THE AS SESSEE. THE LD. AR ALSO SUBMITTED THAT INTEREST EXPENSES INCURRED IS NOT RE LATED TO THE DIVIDEND INCOME. LD AR FINALLY PRAYED NOT TO MAKE ANY DISALL OWANCE U/S. 14A R.W.S RULE 8D OF IT RULES. ON THE CONTRARY, LD. DR VEHEM ENTLY RELIED ON THE ORDER OF AO. FROM THE AFORESAID DISCUSSION, WE FIND THAT THOUGH THE RULE 8D OF IT RULE IS APPLICABLE W.E.F 24.03.2008, HOWEVER, SEC. 14A IS APPLICABLE SINCE THE BEGINNING OF INCOME TAX ACT, 1961. THEREFORE, THE D ISALLOWANCE U/S. 14A WAS VERY MUCH APPLICABLE EVEN FOR THE A.Y I.E. 2006-07, HOWEVER, WE FIND FORCE FROM THE SUBMISSION MADE BEFORE US BY LD. AR THAT T HERE WAS SUFFICIENT FUND AVAILABLE FOR AN AMOUNT OF 13.77 CRORES AND INVESTMENT MADE IN THE SHARES HELD AS STOCK-IN-TRADE FOR AN AMOUNT OF 5.76 CRORES. THEREFORE, WE INFER THAT ASSESSEE HAS MADE INVESTMENT IN SHARE HELD AS STOCK -IN-TRADE OUT OF ITS OWN FUND. THEREFORE, THE DISALLOWANCE OF INTEREST AS SP ECIFIED UNDER RULE 8D OF IT RULES IS NOT APPLICABLE IN THE PRESENT CASE. HOWEVE R, SEVERAL COURTS HAVE DECIDED TO DISALLOW THE EXPENSE @ 1% OF THE TOTAL E XEMPT INCOME PRIOR TO INSERTION OF RULE 8D OF THE IT RULE W.E.F. 01.04.20 08. HERE, WE ARE RELYING IN THE ORDER OF HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. R.R. SEN & BROTHERS PVT. LTD. G.A. NO. 3019 OF 2012, ITAT NO. 243 OF 2012 WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE AND RELEVANT EXTRACT IS REPRODUCED BELOW:- THE COURT:- THE ASSESSEE DID NOT SHOW ANY EXPENDIT URE INCURRED BY HIM FOR THE PURPOSE OF EARNING THE MONEY WHICH IS E XEMPTED UNDER THE INCOME TAX. THE TRIBUNAL HAS COMPUTED EXPENDITURE A T 1 PER CENT OF SUCH DIVIDEND INCOME WHICH, ACCORDING TO THEM, IS T HE THUMB RULE APPLIED CONSISTENTLY. WE FIND NO REASON TO INTERFER E. TAKING A CONSISTENT VIEW AND RELYING ON THE DECISIO N OF THIS HON'BLE JURISDICTIONAL HIGH COURT IN ABOVE CITED CASE R..R.SEN & BROTHERS PVT. LTD. (SUPRA) WE FIND THAT THERE WAS NO APPLICABILITY OF RULE 8D IN THE INSTANT ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 10 CASE AS THIS RULE 8D CAME IN FORCE W.E.F. 24.03.200 8. IN VIEW OF ABOVE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT (A) AND THIS GROUND RAISED BY REVENUE IS DISMISSED. COMING TO REVENUES APPEAL IN ITA NO. 878/KOL/2013 FOR A.Y. 2008-09 12. FIRST GROUND RAISED BY REVENUE IS REGARDING THA T LD. CIT(A) ERRED IN GIVING RELIEF TO ASSESSEE BY ALLOWING FOR THE EXPEN SE OF SECURITY TRANSACTION TAX (STT FOR SHORT). 13. DURING THE COURSE OF ASSESSMENT PROCEEDING, AO FOUND THAT ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.7,38,99,101/- UNDE R THE HEAD ADMINISTRATIVE EXPENSES. FROM THE BREAKUP OF ADM INISTRATIVE EXPENSES THE AO FOUND THAT THE ASSESSEE HAS CLAIMED AN EXPEN SE FOR AN AMOUNT OF 39,20,360/- TOWARDS THE TRANSACTION, DEMAT AND SHA RE TRANSFER CHARGES. THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THE EXPENSES AND FOUND THAT THESE EXPENSES ARE THE PAYMENT OF STT. THE AO DISALLOWED THE EXPENSES OF STT BY VIRTUE OF SECTION 40(A)(IB) OF THE ACT. THE EXPE NSE INCURRED ON STT IS NOT ALLOWABLE EXPENSE, THEREFORE, AO DISALLOWED STT EXP ENSE AND ADDED IT TO THE INCOME OF ASSESSEE. 14. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO DELETED THE ADDITION MADE BY AO ON ACCOUNT OF STT BY OBSERV ING AS UNDER:- NEXT GROUND NO.3 RELATES TO ADDITION OF RS.39,20,3 60/- ON ACCOUNT OF STT. ASSESSEE HAS DEBITED EXPENDITURE OF RS.39,61,2 22/- ON ACCOUNT OF TRANSACTION, DEMAT AND SHARE TRANSFER STAMP CHAR GES IN THE P&L A/C. THE DEMAT CHARGES OF RS.40,862/- WERE CONSIDERED BY THE AO IN RELATION TO EARNING OF DIVIDEND INCOME AS ABOVE GRO UNDS. THE BALANCE EXPENSE OF RS.39,20,360/- WERE IN NATURE OF TRANSAC TION CHARGES PAID TO THE STOCK EXCHANGE BROKER. ASSESSEE HAD PAID RS.1,9 3,73,008/- AS STT ON DERIVATIVES, SPECULATIVE TRANSACTIONS AND SHARE TRANSACTIONS SHOWN UNDER THE HEAD BUSINESS INCOME AS PER FORM NO. 10DB FURNISHED (33 FORMS). IT IS PERTINENT TO MENTION THAT THIS STT WA S NOT DEBITED IN THE P&L A/C AND WAS SHOWN AS PART OF SCHEDULE 7 OF TH E BALANCE SHEET UNDER THE HEAD CURRENT ASSETS. KEEPING IN VIEW THE ABOVE FACTS AND CIRCUMSTANCES ADDITION OF RS.39,20,360/- MADE BY AO IS DELETED AS THE ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 11 AO MISCONSTRUED THE NATURE OF THE TRANSACTION. THER EFORE, THIS GROUND OF APPEAL IS ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 15. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. DR VEHEMENTLY RE LIED ON THE ORDER OF AO WHERE AS LD. AR SUPPORTED THE ORDER OF LD. CIT(A). LD. AR SUBMITTED THE COMPUTATION OF TOTAL INCOME AND AUDITED BALANCE SHE ET RUNNING AT PAGES FROM 1 TO 14 FOR THE YEAR UNDER CONSIDERATION AND DREW O UR ATTENTION ON PAGE-5 OF THE BALANCE SHEET, WHEREIN THE STT WAS DULY SHOWN U NDER THE HEAD CURRENT ASSET IN SCHEDULE-7 FOR AN AMOUNT OF 1,38,26,870/-. LD. AR FURTHER DREW OUR ATTENTION ON PAGE 7 OF THE FINANCIAL STATEMENT, WHE REIN TRANSACTION, DEMAT & SHARE TRANSFER STAMP CHARGES UNDER THE HEAD OF AD MINISTRATIVE CHARGES WERE WRITTEN. HENCE THE LD. AR CLAIMED THAT NO EXPE NSE FOR STT HAS BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSES SEE. FROM THE AFORESAID DISCUSSION, WE FIND THAT ASSESSEE HAS NOT DEBITED A NY AMOUNT OF STT IN ITS PROFIT AND LOSS ACCOUNT IN THE YEAR UNDER CONSIDERA TION BUT AO MISUNDERSTOOD FROM THE FINANCIAL STATEMENT SUBMITTED BY ASSESSEE, WHERE TRANSACTION/DEMAT AND SHARE TRANSFER STAMP CHARGES WERE DEBITED. THER EFORE WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) AND THIS GROUND RAISED BY REVENUE IS DISMISSED. 16. NEXT GROUND RAISED BY REVENUE IS REGARDING THAT THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF BY ADJUSTING THE TAX UNDER MAT PROVISION AGAINST THE STT. 17. DURING THE COURSE OF ASSESSMENT PROCEEDING AO F OUND THAT ASSESSEE CLAIMED REBATE U/S 88E OF THE STT PAID WHILE WORKIN G OUT THE TAX UNDER THE PROVISIONS OF MINIMUM ALTERNATE TAX (MAT) AS SPECIF IED U/S 115JB OF THE ACT. THE AO FOUND THAT THERE IS NO SCOPE OF APPLYING THE AVERAGE RATE OF TAX ON THE INCOME FOR THE ADJUSTING THE TAX UNDER THE PROVISIO NS OF MAT UNDER SECTION ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 12 88E(2). SO THERE IS A CLEAR CUT VIOLATION OF SUB-SE CTION 2 OF 88E OF THE ACT. HENCE, THE AO DISALLOWED THE REBATE CLAIMED BY ASSE SSEE OF STT PAID UNDER SECTION 88E OF THE ACT. 18. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO DELETED THE DISALLOWANCE MADE BY AO BY OBSERVING AS UNDER:- NEXT GROUND NOS. 4&5 ARE RELATES TO DEDUCTION U/S. 8E. THE AO ALLOWED REBATE U/S. 88E TO THE EXTENT OF RS.39,20,360/- ON ACCOUNT OF STT PAID WHILE CALCULATING THE TAX ON THE NORMAL COMPUTATION AS PER IT ACT AND DID NOT ALLOW THE REBATE WHILE COMPUTING THE MAT LI ABILITY U/S 115JB. IT WAS CONTENDED BY THE ASSESSEE THAT TOTAL STT PAID A S PER FORM 10DB WAS RS.1,93,73,008/- ON DERIVATIVES, SPECULATIVE TR ANSACTIONS AND SHARES TRANSACTIONS ON ACCOUNT OF BUSINESS AND THE RECEIPT ON ACCOUNT OF ABOVE HEADS WAS DULY CREDITED IN P&L A/C FOR THE FINANCIAL YEAR. THE A/R FURTHER RELIED UPON THE JUDGMENT OF ITAT KOLKAT A IN GANESHAN SECURITIES PVT. LTD. DATED 30.12.2011 TO SUPPORT IS CONTENTION THAT THE ASSESSEE IS ENTITLED TO A DEDUCTION OF STT PAID BY HIM IN RESPECT OF TAXABLE SECURITIES TRANSACTION ENTERED INTO IN THE COURSE OF BUSINESS DURING THE FINANCIAL YEAR WHILE COMPUTING TOTAL INC OME U/S. 115JB OF THE IT ACT. KEEPING IN VIEW THE ABOVE FACTS AND CIRCUMS TANCES THE AO IS DIRECTED TO ALLOW REBATE IN THE MANNER AS PER SECTI ON 88E(2) FOR STT PAID BY THE ASSESSEE WHILE COMPUTING THE TAX LIABIL ITY U/S.115JB OF THE IT ACT TO EXTENT OF TAX LIABILITY SO DETERMINED AS STT IS NON-REFUNDABLE REBATE U/S. 88E. THEREFORE, GROUND NOS. 4 & 5 ARE A LLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 19. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSE E CLAIMED THE REBATE OF TAX WORKED OUT UNDER THE PROVISION OF MAT AS PROVID ED UNDER SECTION 88E OF THE ACT. BUT THE AO DISALLOWED THE SAME ON THE GROU ND THAT THE CONDITION SPECIFIED UNDER SECTION 88E(2) FOR APPLYING THE AVE RAGE RATE OF INCOME TAX WHILE CALCULATING THE REBATE HAS NOT BEEN FULFILLED . WE FIND THAT THE ISSUE OF REBATE/DEDUCTION U/S.88E OF THE ACT IN RESPECT TO C REDIT FOR STT WHILE COMPUTING INCOME BEING MAT PROVISIONS OF SEC. 115JB OF THE ACT, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE AND AGAINST REVENUE BY THE DECISION ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 13 OF BANGALORE BENCH IN THE CASE OF M/S HORIZON CAPITAL LTD (SUPRA), WHEREIN THE TRIBUNAL VIDE PARA 6 HAS HELD AS UNDER:- 6. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE ONLY DISPUTE IS WHETH ER THE REBATE OF STT PAID BY THE ASSESSEE IS ALLOWABLE FROM THE INCOME T AX COMPUTED AGAINST THE TOTAL INCOME COMPUTED UNDER SECTION 115 JB OF THE INCOME TAX ACT, 1961. THE TERM TOTAL INCOME HAS BEEN DEFINED UNDER THE INCOME TAX ACT, 1961 AS THE TOTAL AMOUNT OF INCOME REFERRED TO IN SECTION 5, COMPUTED IN THE MANNER LAID DOWN IN THIS ACT. SECTION 5 OF THE INCOME TAX ACT, 1961 DEFINES THE SCOPE OF TH E TOTAL INCOME OF A RESIDENT OR A NON-RESIDENT PERSON. THE TOTAL INCOME OF THE ASSESSEE HAS TO BE COMPUTED UNDER THE REGULAR PROVISIONS OF THE INCOME TAX ACT, 1961 AND IN THE CASE OF A COMPANY IT CAN BE ARRIVED AT BOTH UNDER THE REGULAR PROVISIONS OF THE INCOME TAX ACT AND UNDER THE DEEMING PROVISION UNDER SECTION 115JB OF THE ACT. IT HAS BE EN PROVIDED THAT WHERE THE INCOME TAX PAYABLE BY THE ASSESSEE ON THE TOTAL INCOME COMPUTED UNDER REGULAR PROVISIONS OF THE ACT IS LES S THAN 7% OF THE BOOK PROFIT PREPARED IN ACCORDANCE WITH THE COMPANI ES ACT, THE HIGHER OF THE TAX I.E. THE BOOK PROFIT SHALL BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE AND TAX PAYABLE BY THE ASSESSEE SHALL BE THE AMOUNT OF INCOME TAX AT THE SPECIFIED RATE. WHEN WE LOOK AT T HE PROVISIONS OF SECTION 77 OF THE INCOME TAX ACT, 1961, WE FIND THA T THE REBATE IS TO BE GRANTED FROM THE AMOUNT OF INCOME TAX CHARGEABLE ON THE TOTAL INCOME OF THE ASSESSEE. THE INCOME TAX IS COMPUTED AFTER A RRIVING AT THE TOTAL INCOME OF THE ASSESSEE AND SECTION 87 OF THE INCOME TAX ACT, 1961 DOES NOT DIFFERENTIATE BETWEEN THE TOTAL INCOME COM PUTED UNDER THE REGULAR PROVISIONS OF THE ACT OR UNDER SECTION 115J B STARTS WITH THE NON- ABSTANTE CLAUSE, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT , WE FIND THAT IT IS ONLY FOR THE COMPUTATION OF T HE TOTAL INCOME AND THE SUB-SECTION (5) OF SECTION 115 JB PROVIDES FOR A SAVING CLAUSE THAT THE REST OF THE PROVISIONS OF TH E INCOME TAX ACT RELATING TO DEDUCTIONS, REBATE, ETC., THE OTHER PRO VISIONS OF THE INCOME TAX ACT SHALL APPLY. THEREFORE IT IS CLEAR THAT THE PROVISION OF SECTIONS 87 AND 88A TO 88E ALSO APPLY AFTER THE TOTAL INCOME IS COMPUTED UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 AND SINCE THE ASSESSEES TOTAL INCOME INCLUDES THE INCOME FROM THE TAXABLE S ECURITIES TRANSACTIONS, THE ASSESSEE IS ENTITLED TO A DEDUCTI ON OF THE AMOUNT EQUAL TO THE STT PAID BY HIM IN RESPECT OF THE TAXA BLE SECURITIES TRANSACTIONS ENTERED INTO IN THE COURSE OF BUSINESS DURING THE PREVIOUS YEAR. THE ASSESSEES APPEAL IS THUS ALLOWED AND THE ASSESSING OFFICER IS DIRECTED TO GIVE REBATE UNDER SECTION 88E FOR TH E STT PAID BY THE ASSESSEE. ITA NO.877-878/KOL/2013 & CO.61/KOL/13 A.Y. 06-07 & 08-09 DCIT CIR-3 KOL. VS. M/S JAROLI VINCOM PVT. LTD. PAGE 14 IN VIEW OF THE ABOVE DECISION, REBATE U/S88E OF THE ACT WAS TO BE ALLOWED FROM THE TAX COMPUTED AS PER PROVISIONS OF SEC.115JB OF THE ACT TO FIND OUT WHETHER AFTER SET OFF OF REBATE U/S.88E OF THE ACT, ANY TAX LIABILITY REMAINED OR NOT. ADMITTEDLY, THE TAX LIABILITY AS PER MAT PROVI SIONS WAS LESS AND REBATE ADMISSIBLE U/S.88E OF THE ACT WAS MORE. THEREFORE, REBATE U/S 88E HAD TO BE ALLOWED EVEN WHEN TOTAL INCOME IS COMPUTED U/S. 115 JB OF THE ACT. RESULTANTLY, THE GROUND TAKEN BY REVENUE IS DISMISS ED. COMING TO ASSESSEES C.O. NO. 61/KOL/2013 FOR A.Y. 2008-09. 20. GROUND RAISED BY ASSESSEE IN ITS CO IS NOT SUPP ORTIVE IN REVENUES APPEAL IN ITA NO.878/KOL/2013. AS WE HAVE ALREADY D ISMISSED THE REVENUES APPEAL, HENCE, CO FILED OF ASSESSEE IS INFRUCTUOUS. 21. IN THE RESULT, BOTH APPEAL OF REVENUE IS DISMISSED AND THAT OF ASSESSEES CO IS DISMISSED AS INFRUCTOUS. ORDER PRONOUNCED IN THE OPEN COURT 16/12/ 2015 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP '#$- 16 /1 2 /2015 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE- M/S JAROLI VINCOM PVT. LTD. 24, HEMANT B ASU SARANI, KOL-01 2. /REVENUE-DCIT, CIRCLE-3, P7, CHOWRINGHEE SQ., AAYKA R BHAWAN, KOL-69 3.#-#./ 0 / CONCERNED CIT KOLKATA 4. 0- / CIT (A) KOLKATA 5.2 3455./, ./!, / DR, ITAT, KOLKATA 6.489:; / GUARD FILE. BY ORDER/ , /TRUE COPY/ /# ./!,