JGA SHAH SHARE BROKERS P.LTD, V. ASST CIT CIR 4(3),

MA 692/MUM/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0367 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 19-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SNJAY C SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI RAJENDRA SINGH, AM & SHRI VIJAY PAL RAO, JM MISCELLANEOUS APPLICATION NO. 692/MUM/2012 ARISING OUT OF ITA NO. 7966 /MUM/2010 (ASST YEAR 2007-08) M/S JGA SHAH SHARE BROKERS PVT LTD OFFICER NO. 7, 3 RD FLOOR, RAJABAHADUR MANSION, 24 HAMAM STREET, FORT, MUMBAI-400023 VS ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE- 4(3) MUMBAI (APPLICANT ) (RESPONDENT) PAN NO. AAACJ3477H ASSESSEE BY SNJAY C.SHAH REVENUE BY SMT. PARMINDER DT.OF HEARING 12 TH APRIL, 2013 DT OF PRONOUNCEMENT 30 TH APRIL 2013 ORDER PER VIJAY PAL RAO, JM THIS MISCELLANEOUS APPLICATION BY THE ASSESSEE IS DIRE CTED AGAINST THE ORDER DATED 26.09.2011 OF THIS TRIBUNAL, WHEREBY THE CROSS APPEALS OF THE ASSESSMENT YEAR 2006-2007 WERE DISPOSED OFF. 2. THE FIRST GRIEVANCE OF THE ASSESSEE AGAINS T THE FINDING OF THIS TRIBUNAL AS GIVEN IN PARA NO. 9.1 WHEREBY THE ALTERNATIVE PLEA OF ASSESSEE REGARDING APPORTIONMENT OF THE EXPENDITURE WAS ACCEPTED BY THE T RIBUNAL AND ACCORDINGLY IT WAS DIRECTED THAT THE APPORTIONMENT OF CO MMON EXPENDITURE SHOULD BE DETERMINED ON THE BASIS OF TURNOVER AND NOT ON T HE BASIS OF INCOME. MA NO. 692/M/2012 2 THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT FOR T HE PURPOSE OF ALLOCATION OF THE COMMON EXPENDITURE, THE TURNOVER OF BROKERAGE ACT IVITY MUST BE AGGREGATED OF TURNOVER MADE BY ALL THE CLIENTS OF ASSE SSEE AND SAME MUST BE COMPARED WITH TURNOVER OF ARBITRAGE ACTIVITY. HE HAS FURTHER SUBMITTED THAT THE TRIBUNAL HAS NOT INDICATED THE MANNER IN WHICH THE TURNOVE R SHOULD BE WORKED OUT FOR THE PURPOSE OF APPORTIONMENT OF THE EXPENSES. A CCORDINGLY, ITS PLEADED THAT SUITABLE ORDER CLARIFYING THE METHOD OF COMPUTATIO N OF TURNOVER OF BROKING ACTIVITY MAY BE PASSED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE IMPUGNED ORDER, WE NOTED THAT THE TRIBUNAL AS DECIDED THIS ISSUE AS PARA 9.1. HOWEVER, WE DO FIND MERITS IN THE ALTERNATIVE PLEA OF THE ASSESSEE THAT APPORTIONMENT OF THE EXPENDITURE SHOULD BASED ON TURNOVE R OF THE DIFFERENT BUSINESS ACTIVITY AND ALSO ONLY WITH RESPECT TO THE COMMON EXPENDITURE WHICH ARE NOT IDENTIFIABLE EXPENDITURE TO T HE SEPARATE BUSINESS ACTIVITY. THUS, THE APPORTIONMENT OF COMMON EXPE NDITURE SHOULD BE BASED ON THE PROPORTIONATE TURNOVER OF THE SEPARATE B USINESS ACTIVITY APART FROM THE EXCLUSIVE EXPENDITURE, WHICH IS IDENTIFI ABLE TO HAVE BEEN INCURRED FOR A SPECIFIC BUSINESS ACTIVITY. HENCE, WE SET ASIDE THE ISSUE OF APPORTIONMENT OF EXPENDITURE FOR THE PURPOSE OF COMPUTI NG THE STT INCOME TO THE RECORD OF THE ASSESSING OFFICER WITH THE DI RECTION THAT THE SAME SHOULD BE DETERMINED ON THE BASIS OF TURNOVER AND NO T ON THE BASIS OF THE INCOME AND ONLY WITH RESPECT TO THE COMMON EXPENDITU RE. 3.1 IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL T HAT THE ISSUE HAS BEEN SET ASIDE TO THE RECORD OF THE ASSESSING OFFICER FOR APPORTIONMENT O F THE COMMON EXPENSES IN THE RATIO OF TURNOVER OF DIFFERENT BUSINESS ACTIVITY OF THE ASSESSEE. SINCE, THE BROKERAGE ACTIVITY TURN OVER BROKERAGE CANNOT BE COMP ARED WITH THE TURNOVER OF TRADING ACTIVITY I.E., ARBITRAGE ACTIVITY. THEREFO RE, IT CLARIFIED THAT THE ASSESSING OFFICER SHALL CONSIDERATION AND PROPER WEIGHTAGE WHIL E DECIDING THIS ISSUE. WE FURTHER CLARIFIED THAT WE DO NOT AGREE WITH THE CONTENTION OF THE ASSESSEE THAT MA NO. 692/M/2012 3 THE ENTIRE TURNOVER OF THE CLIENTS IN THE BROKERAGE ACTIV ITY SHOULD BE CONSIDERED FOR COMPARING WITH THE TRADING ACTIVITY. 4. THE NEXT GRIEVANCE OF THE ASSESSEE IS REGARDI NG THE FINDING OF THE TRIBUNAL IN PARA 10.1 AND 11. WHEREBY THE ISSUE OF ALLOWABLITY O F STT DEDUCTION HAS BEEN ADJUDICATED. 10. THERE IS NO DISPUTE THAT STT PAID ON THE TRANSACTION IS NOT AN ALLOWABLE DEDUCTION; BUT IT IS NOT CLEAR FROM THE REC ORD WHETHER THE GROSS RECEIPTS IN RELATION TO DEALING IN SHARES AND SECURITI ES ARE NET OF STT OR WITHOUT EXCLUSION OF STT PAID BY THE ASSESSEE. THERE IS NO DISPUTE THAT THE ASSESSEE HAS NOT SEPARATELY CLAIMED ANY DEDUCTION ON ACC OUNT OF STT PAID WHILE COMPUTING THE INCOME FROM THE BUSINESS OF D EALING IN SHARES AND SECURITIES; BUT IT IS NOT ASCERTAINABLE FROM THE RE CORDS BEFORE US WHETHER THE SAID GROS RECEIPTS/ INCOME IS TAKEN AFTER EX CLUSION OF STT PAID BY THE ASSESSEE AT THE POINT OF PURCHASE AS WELL AS S ALE OF SHARES AND SECURITIES. IF THE AMOUNT IS WITHOUT DEDUCTION OF STT TAX, SUBJECT TO VERIFY OF THE FACTS WHETHER THE GROSS INCOME SHOWN BY THE ASSESSEE FROM THE BUSINESS OF DEALING IN SHARES AND SECURITIES IS PRIOR TO DEDUCTION OF STT OR AFTER DEDUCTION OF STT, THE ADDITION ON ACCOUNT OF STT P AID IS REQUIRED TO BE CONSIDERED. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THIS ASPECT AND IF THE GROSS INCOME SHOWN BY THE ASSESSEE IS WITHOUT DEDUCTI ON OF TAX, THEN NO ADDITION CAN BE MADE COMPUTATION OF REBATE U/S 88E. 11. SIMILARLY, THE AMOUNT OF STT PAID OF ` 27,36,677/- HAS TO BE CONSIDERED FOR ADDITION IN THE TOTAL INCOME OF THE ASS ESSEE. 5. THE GRIEVANCE OF THE ASSESSEE IS ONLY WITH RESPECT T O THE PARA-11 OF THE IMPUGNED ORDER WHEREIN THE TRIBUNAL HAS CONCLUDED THAT T HE AMOUNT OF STT PAID HAS TO BE CONSIDERED FOR ADDITION IN TOTAL INCOME OF THE ASSESSEE. THE LEARNED AR HAS SUBMITTED THAT THOUGH IN PARA 10.1. THE TRI BUNAL HAS DIRECTED THE ASSESSING OFFICER TO VERIFY THIS ASPECT WHETHER THE GROSS RECEIPTS ARE INCLUSIVE OF STT NET OF STT BUT THE OBSERVATIONS IN PA RA 11 IS IN CONSISTENT WITH THE REASONING AND FINDINGS OF PARA 10.1. 6. WE HAVE HEARD THE LEARNED AR AS WELL AS DR AND CONS IDERED AND PERUSED THE RELEVANT RECORD. AS APPARENT FROM THE PAR A 10.1 AND 11 OF THE IMPUGNED ORDER REPRODUCED ABOVE. THAT THE ISSUE OF D EDUCTION OF STT HAS BEEN ADJUDICATED BY DIRECTING THE ASSESSING OFFICER TO VERIFY WHETHER THE MA NO. 692/M/2012 4 GROSS INCOMES AS SHOWN BY THE ASSESSEE IS WITHOUT DEDUC TION OF STT THEN NO ADDITION CAN BE MADE FOR COMPUTATION OF REBATE U/S 88E . ACCORDINGLY, WE MODIFY PARA 11 OF THE IMPUGNED ORDER AND THE SAME MAY BE READ AS UNDER: 11. ACCORDINGLY THE AMOUNT OF STT PAID ` 27,36,677/- HAS TO BE CONSIDERED AFTER VERIFICATION. 7. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED B Y THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCEMENT IN THE OPEN COURT ON 30 TH APRIL, 2013. SD/- SD/- ( RAJENDRA SINGH) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH APRIL 2013 PRAMD* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDE DY /AR, ITAT, MUMBAI