Deputy Commissioner Of Income Tax v. Salasar Stock Broking Limited

Mahavir Singh, J.M:— This appeal filed by the Revenue is arising out of the order of ld. Commissioner of Income Tax (Appeals), Central-1, Kolkata in Appeal No. 35.CC-V-CIT (A) C-I/Kol/11-12 dated 28.09.2012 for assessment year 2008-09.

2. The only issue involved in this appeal of Revenue is against the order of ld. CIT (Appeals) allowing the rebate under section 88E of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) while computing the profit under section 115JB of the Act.

3. We have heard the rival contentions and gone through the facts of the case. We find that the only issue is whether the assessee is eligible for rebate under section 88E of the Act while computing the tax liability under the book profit provisions of section 115JB of the Act. This issue has been deliberated by the ld. CIT (Appeals) vide para 5 as under:—

“5. I have perused the assessment order. I have also considered the submissions made on behalf of the appellant and the judicial pronouncements relied upon. By AO's own finding, the appellant was eligible for rebate u/s 88E of Rs. 3,44,09,794/- on tax calculated under normal provisions of Income Tax Act, 1961. For, the AO has allowed such rebate in his assessment order while computing the tax liability under the normal provisions of the IT Act. The only dispute is whether the appellant is eligible for rebate u/s 88E from the tax liability calculated u/s 115JB. I find that the issue is squarely covered in favour of the appellant by the decisions of various courts including the Hon'ble Bench of the jurisdictional ITAT in the case of ITO -v.- Advent Stock Broking Limited [ITA No. 12 76.Kol/2010] and Ori Finance Ltd., Kolkata -v.- Department of Income Tax [ITA No. 387.Kol/2011]. Thus, in view of the facts of the case, and also, the various judicial pronouncements, I am of the opinion that the AO was not justified in not allowing rebate u/s 88E on the tax calculated on book profit as per the provisions of section 115JB. The rebate u/s 88E is allowable on the tax calculated on book profit as per the provisions of section 115JB. The AO is directed accordingly. Ground No. 1 and 2 is allowed”.

4. ld. Counsel for the assessee stated that this issue has been considered by the coordinate Benches of this Tribunal in the cases of Horizon Capital Limited v. ITO in ITA No. 592(Bng.)/2010; ITO v. Advent Stock Broking Private Limited in ITA No. 1276.Kol/2010; Ori Finance Limited v. Department of Income Tax in ITA No. 387.Kol/2011; SK Stock Broking Private Limited v. Department of Income Tax in ITA No. 1074.Ahd./2011; Touchstone Capital Market v. Department of Income Tax in ITA No. 6031.Mum/2011; & DCIT v. MBL & Co. Limited in ITA No. 2478.Del./2010. Further, Hon'ble Karnataka High Court has also confirmed the decision of the Tribunal in the case of Horizon Capital Limited, Bangalore in ITA No. 434 of 2010 alongwith Miscellaneous Civil No. 6629 of 2011 vide order dated 24.10.2011 vide paras 16 & 17 as under:—

“16. Therefore, it is clear that the assessee is liable to pay securities transaction tax when he enters into securities transaction. Tax is payable simultaneously after realizing the consideration. However, if that transaction is included in the total income of the assessee where the total income is assessed either under the provisions of the Act or under section 115JB when tax chargeable on such income is arrived at, he is given the benefit of tax deductions of the amount, which he has paid under section 88E by virtue of section 87. When under section 82A, the assessee is made liable to pay tax with an assurance that it will be deducted and 87 of the Act gives effect to such promise made under the statute. That is the reason why the word used is rebate. The amount paid is handed back to the assessee. In other words, payment of tax twice on the same income is avoided.

17. Therefore, the contention that this benefit is not available to the assessee whose total income is assessed under section 115JB has no substance. In other words, when the total income is assessed and tax chargeable is computed, it is from that tax which is chargeable, the tax paid under section 88E is given deduction, by way of rebate, under section 87 of the Act. 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 back at the time of final computation. Therefore, the judgment referred by the Tribunal is strictly in accordance with law and does not suffer from any legal infirmity, which called for interference. We do not see any substantial question of law involved in this appeal, which merits admission. The appeal is dismissed”.

5. As the issue is squarely covered in favour of the assessee and against the revenue by various judicial pronouncements by the Tribunal as well as the judgment of the Hon'ble Karnataka High Court in the case of Horizon Capital Limited (supra), we confirm the order of ld. CIT (Appeals).

6. In the result, the appeal filed by the Revenue stands dismissed.