TMI Blog2013 (11) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... or under Section 115JB when tax chargeable on such income is arrived at - The tax paid u/s 88E is given deduction, by way of rebate, u/s 87 - Decided against the Revenue. - ITA No. 1491/Mum/2012, ITA No. 1466/Mum/2012 - - - Dated:- 26-3-2013 - Shri Vijay Pal Rao And Shri Rajendra,JJ. For the Petitioner : Shri Abhinay Kumbhar For the Respondent : Shri Bharat Soni ORDER Per Rajendra, A. M. Cross appeals have been filed by the Assessing Officer (AO) and the assessee against the order dated 30-12-2011 of the CIT(A)-8 Mumbai. GROUNDS OF APPEAL FILED BY THE AO READS AS UNDER: 1. (a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the disallowance u/s. 14A of Rs. 20,77,972/- made by the Assessing Officer. (b) As the gross interest incurred by the assessee has to be taken for working out the disallowance under Rule 8(D)(ii). 2. (a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the rebate u/s. 88E. (b) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing Rebate u/s. 88E while computing tax liability under the MAT Provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verage investment, he made a disallowance of Rs. 41. 69 Lakhs u/s. 14A of the Act. 3. Assessee preferred an appeal before the First Appellate Authority (FAA). After considering the submissions of the assessee and the assessment order, he held that the AO had justifiably invoked the provisions of Rule 8D to determine the quantum of expenses which had to be dis-allowed u/s. 14A, that the assessee had not maintained separate accounts of expenses incurred for earning of exempt income as well as for earning dividend income, that from perusal of the balance of assessee's own funds in the Balance Sheet it could not be held that no borrowed funds had ever been utilised for the purpose of making investments or undertaking transactions, that the appellant had failed to produce any Cash Flow Statement or any other material to establish its claim, that borrowed funds had not been utilised for earning of exempt income, that assessee being a share trader, undertook transaction of shares which included those transactions that subsequently yield a dividend/capital gain that the expenses debited to P L A/c had been incurred for undertaking transactions of shares which also included such transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in the value of investment, that the average value of stock in trade should not be considered for working out the disallowance as per formula provided in Rule 8D, that only the investment should be considered for the purpose of disallowance, that during the course of assessment, assessee had offered the sum of Rs. 25,000/- as estimated expenditure incurred for the purpose of earning exempt income, that AO neither considered the same nor had expressed any dissatisfaction on the same before invoking the provisions of Rule 8D, that AO and FAA earned any applying provisions of Rule 8D, without providing reasons for dissatisfaction over expenses estimated by the assessee,that addition made u/s. 14A r. w. Rule 8D should be restricted to Rs. 25,000/- as estimated by the assessee. He relied upon the cases of CCI Ltd. , [TS-226- HC-2012 (Kar)],Prescient Securities Pvt. Ltd. ,Auchtel Products Ltd. (ITA No. 3185/Mum/2011) and Jindal Photo Limited (ITA No. 814/Delhi). DR relied upon the orders of the FAA for the disallowance made. He supported the order of the AO with regard to deletion of disllowance of Rs. 20. 77 Lakhs by the FAA. 6. We have heard the rival submissions and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal raised by the AO is about allowing rebate u/s. 88E of the Act,while computing tax liability under the Minimum Alternate Tax (MAT) provisions. During the assessment proceedings, AO found that assessee had paid tax under the normal provisions of the Act and same worked out Rs. 5. 84 Crores before rebate u/s. 88E. He found that while arriving at the Book Profit, assessee had not added Securities Transactions Tax (STT) of Rs. 5. 50 Crores to its Books Profit. AO directed the assessee to justify the computation of MAT u/s. 115JB of the Act and also to explain as to why tax should not be taken as per MAT provisions. 7. 1. After considering the submissions of the assessee-company,AO held that provisions of Section 115JB were made to ensure collection of Corporate Tax targets year over year from the corporate assessees having earned profit as per book results but the tax liability. Under the normal provisions of Act was much less, that the provisions of Section 115JB dealt with payment of Income Tax in contrast to computation of Income Tax chargeable u/s. 87(1), that the provisions of Section 87 allowed rebate u/s. 88 in respect of L. I. P. and P. F. etc. , that payment of STT qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 434/2010). 8. We have heard the rival submissions and perused the material put before us. We find that issue is squarely covered by the decisions relied upon by the FAA and the order of the Hon'ble High Court of Karnataka. In the said judgment Hon'ble High Court has observed as under: "Section 115JB provides that if the tax payable on the total income is less than 7. 5 per cent of the book profit, the tax payable under this provision shall be the amount of income tax at the rate of 7. 5 per cent of book profit. In other words, if computation of income is done under the provisions of the Act and if the tax payable is less than 7. 5 per cent of the book profit and the assessee is a company, then the minimum tax payable by such a company is 7. 5 per cent of the book profit. Except to that extent, all other provisions in the Act are applicable in respect of both type of assessment. As is clear from sections 87 and 88E, the said provision does not give any indication as to its applicability to the computation of amount of income tax on the total income of an assessee under any particular provision of law under the Act. If after such computation of the amount of the income tax pa ..... 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