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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER:
The present appeal is directed against the order passed by the CIT(A)-1, Mumbai dated 10.03.2016, which in itself arises from the order passed by the A.O under Sec. 143(3) r.w. Sec. 263 of the Income tax Act, 1961 (for short „Act‟), dated 04.01.2013. The revenue had assailed before us the order passed by the CIT(A) on the following grounds of appeal:-
P a g e | ACIT(LTU) Vs. M/s SBI Capital Markets Ltd. “i. On the facts and in the circumstances of the case and in l a w, th e Ld . C IT ( A) h as e r r e d in d ir e c tin g to a l l o w Rs.25,20,772/- as rebate u/s 88E being STT paid on securities resulting in profit, ignoring the fact that the end result of total transactions together, for the year under consideration, resulted in loss. ii. The appellant prays that the order of the ld. CIT(A) on the above grounds be set-aside and that of the Assessing Officer restored. iii. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary.
Briefly stated, the facts of the case are that the assessee which is engaged in the business as that of a merchant banker had e-filed its return of income for AY: 2007-08 on 30.10.2007 declaring total income of Rs.66,46,54,263/-. The case of the assessee was selected for scrutiny assessment and order under Sec. 143(3) of the Act was passed on 16.11.2009 assessing the income at Rs.69,09,93,622/-. The CIT (Large Taxpayer Unit) passed an order under Sec. 263 of the Act on 07.03.2012, wherein he directed the A.O to disallow the claim of rebate of Rs.38,89,772/- raised by the assessee under Sec. 88E of the Act.
The A.O in order to give effect to the order passed by the CIT under Sec.263 issued a notice under Sec. 143(2). The A.O during the course of the assessment proceedings going by the directions of the CIT in his order passed under Sec. 263, rejected the claim of rebate of Rs.38,89,772/- raised by the assessee.
Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee submitted that the order passed by the CIT under Sec. 263 was carried in appeal before the Tribunal. It was submitted by the assessee that though the Tribunal while disposing of the appeal of the assessee against the order passed by the CIT under Sec.263, had vide its order dated 29.07.2015 confirmed the action of the CIT in invoking the provisions of Sec. 263 of the Act, but however, had P a g e | ACIT(LTU) Vs. M/s SBI Capital Markets Ltd. allowed the alternative claim raised by the assessee and granted rebate under Sec. 88E in respect of the Securities Transactions Tax (for short „STT‟) of Rs.25,20,772/- that was paid by the assessee in respect of the sale transactions on which profit was earned.
The CIT(A) deliberating on the contentions raised by the assessee, observed that the Tribunal vide its order dated 29.07.2015 had decided the issue under consideration and had directed the A.O to calculate the rebate under Sec.88E in respect of the business transactions of the assessee. The CIT(A) keeping in view the aforesaid observations of the Tribunal directed the A.O to give effect to the aforesaid observations of the Tribunal.
The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Departmental Representative (for short „D.R‟) submitted that the CIT(A) had erred in directing the A.O to allow the rebate in respect of the STT paid on securities resulting in profit, ignoring the fact that the end result of total transactions together for the year under consideration had resulted in loss. Per contra, the ld. Authorized Representative (for short „A.R‟) for the assessee relied on the order of the CIT(A) and submitted that as he had only directed the A.O to follow the directions of the Tribunal, therefore, no infirmity did emerge from his order. The ld. A.R placed on record the copy of the order passed by the Tribunal in its case for the year under consideration, marked as dated. 29.07.2015.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that on an appeal by the assessee against the order passed by the CIT(A) under Sec. 263, a coordinate bench of P a g e | ACIT(LTU) Vs. M/s SBI Capital Markets Ltd. the Tribunal, viz. ITAT, “E” Bench, Mumbai, had vide its order dated 29.07.2015 had though upheld the validity of the initiation of the revision proceedings, but however, had directed the A.O to allow the rebate under Sec. 88E in respect of the business transactions of the assessee by observing as under:
From the scheme of the Act, it becomes clear that there are extensive machinery provisions for computing the total income of an assessee and the tax payable thereon, The tax as determined is subject to rebate as may be available under Chapter VIII-A of the Act. Section 87(1) of the Act provides that the rebate as available under sections 88, 88A, 88B, 88C, 88D and 88E will be allowed to an assessee in computing the Income-tax payable by him on the total income of the assessee. There is a clear distinction between the scope of Chapter VIII-A of the Act and that of other provisions which specify deductions that are available to an assessee in computing his total income. Whereas deductions allowed in computing the total income are a part of the machinery to determine the total income of the assessee, the rebates under Chapter VIII-A of the Act provide for certain deductions from the tax payable as computed on the total income of an assessee. The purpose of section 88E of the Act is to grant an assessee, to a limited extent, credit in tax on account of securities transaction tax already borne by him in respect of the business carried out by him in dealing in securities. In other words Section 88E provides for remission of tax to the extent of securities transaction tax as paid by the assessee provided the condition specified therein is satisfied, namely, the income of the assessee includes income chargeable under the head “Profits and gains of business or profession , arising from taxable securities transactions, an assessee is entitled to a deduction to the extent of the securities transaction tax borne by it during the course of business in the relevant previous year. So the assessee would not be entitled to rebate if the income is arising under the head income from capital gains. In the case before us there was loss under the head capital gains, therefore, the assessee was not entitled to claim rebate u/s. 88 of the Act. As the A.O had not made any inquiry in that regard, so, in our opinion the CIT had rightly invoked the provisions of section 263 and had issued the revisionary notice. But, as far as quantum of rebate is concerned we hold that the alternate claim made by the assessee needs to be considered. Therefore, allowing the appeal filed by the assessee in part, we direct the A.O to calculate the 88E rebate for the business transactions i.e. the alternate ground raised by the assessee has to be given effect.” We have given a thoughtful consideration to the issue before us and are of the considered view that as the CIT(A) had only directed the A.O to follow the aforesaid observations of the Tribunal, therefore, no infirmity emerges from his order. We are of the considered view that as