DCIT 4(1)(1), MUMBAI vs. D GAS SHARE AND STOCK BROKERS P.LTD, MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that rebate available to an assessee u/s 88E of the Act was liable to be adjusted while computing tax liability u/s 115JB of the Act by relying on the decision of A.Y. 2008-09 Hon’ble Karnataka High Court, which is not the jurisdictional one, in the case of M/s Horizon Capital Ltd.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that STT paid is not analogous to taxes such as TDS or advance tax or self assessment tax paid under the IT Act, and thus, if tax payable after allowing rebate u/s 88E is less than 10% of its book profit, provision of section 115JB are applicable.

3. The appellant craves leave to amend or alter any ground or add new ground which may be necessary.”

3. The brief facts of the case are that the assessee filed its return of income for the A.Y. 2008-09 on 28.08.2008 declaring total income to the tune of Rs.5,69,17,715/-. The case was selected for scrutiny and assessment u/s 143(3) of the I.T. Act, 1961 was completed on 26.04.2010 determining the total income to the tune of Rs.5,74,77,530/-. The assessee company is a member of Stock Exchange and engaged in the business of stock broking, share trading and investor in shares. During the year under consideration, it was observed that the assessee company was dealing in trading of shares and allowed rebate u/s 88E of the Act of Rs.1,54,26,582/-. After allowance of rebate u/s 88E of the I.T. Act, the net tax payable was determined @ Rs.9,10,959/- under the normal provision of income tax. However, the tax liability of the assessee u/s 115JB of the I.T. Act worked out to the tune of Rs.57,08,045/- (10% of (57548735 + 528892 – 997172) in view of the provision u/s 115JB of the Act. The assessee was not under obligation to pay the income tax at least to the extent of 10% of its book profit. Since the assessee failed to comply the said provision, therefore, an amount of Rs.57,08,045/- was assessed to the income of the assessee in view of the provision u/s ITA. No. 153/M/2016 A.Y. 2008-09 115JB of the Act and tax liability was determined to the tune of Rs.64,67,214/- u/s 115JB of the Act. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.

ISSUE NO.1 & 2:- 4. Issue No. 1 & 2 are inter-connected therefore, are being taken up together for adjudication. Under these issues the revenue has challenged the allowance of claim u/s 88E of the Act in computing the tax liability u/s 115JB of the I.T. Act, 1961. Before going further it is necessary to advert the finding of the CIT(A) on record.:-