TMI Blog2019 (6) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... s a reasonable claim. Merely, because income on which rebate U/s 88E was not allowable was only 3.32% of the total income, such allocation of expenses cannot denied. The opinion expressed by the AO as well as Ld. CIT(A) that such incomes would not require expenditure of substantial amounts is not based on any credible materials. Neither the AO nor the CIT(A) has supported this view, on the basis of facts of the case. We disapprove this approach adopted by the AO and CIT(A), in refusing to allocate any expenses towards incomes on which rebate u/s 88E was not allowed to the assessee. Direct the AO to allocate expenses to incomes on which rebate u/s 88E has been denied to the assessee and re-compute the rebate U/s 88E, accordingly. For this limited purpose, we are setting aside the order of the Ld. CIT(A) and remanding the matter to the file of the AO. - Appeal of the assessee is partly allowed for statistical purposes - ITA No:- 3500/Del/2015 - - - Dated:- 7-6-2019 - Shri K.N. Chary, Judicial Member And Shri Anadee Nath Misshra, Accountant Member For the Assessee : Shri R.K. Kapoor, CA For the Revenue : Shri Manoj K. Chopra, Sr. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of ₹ 72,23,087/- earned by the appellant, which income could not have been earned except by incurring expenditure of at-least 75% of such income. (B) Although, there are seven grounds of appeal, but effectively the issue involved in the grounds of appeal is only one, relating to assessee s claim of rebate U/s 88E of Income Tax Act, 1961 ( I.T. Act , for short). As per provisions of section 88E of I.T. Act, rebate U/s 88E of I.T. Act is admissible in respect of income of an assessee, chargeable under the head Profits and gains of business or profession , arising from taxable securities transaction. For ready reference, the provisions of section 88E of I.T. Act are reproduced as under: [ Rebate in respect of securities transaction tax. 88E. (1) Where the total income of an assessee in a previous year includes any income, chargeable under the head Profits and gains of business or profession , arising from taxable securities transactions, he shall be entitled to a deduction, from the amount of income-tax on such income arising from such transactions, computed in the manner provided in sub-section (2), of an amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to be earned. (B.2) The Ld. CIT(A) agreed with the AO and rejected the request of the assessee for allocation of expenses on proportionate basis. Aggrieved, the assessee has filed this appeal in Income Tax Appellate Tribunal ( ITAT , for short). During the appellate proceedings in ITAT, the assessee filed a synopsis, relevant portion of which is reproduced as under: Section 88E of the Income Tax Act as it stood for the relevant assessment year, allowed tax rebate from income tax liability of an amount equal to STT paid in respect of taxable securities transactions entered into by the assessee during the course of his business of taxable security transactions. There is no dispute that assessee is eligible to this tax rebate as deduction from the income tax liability u/s 88E of the Income Tax Act. During the course of assessment proceedings, the AO required the assessee to recompute its rebate under the said section by excluding other income such as brokerage, interest received etc. from the business income for the purpose of computing the rebate u/s 88E. The assessee had returned the taxable income under the head Profit Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced at Page 6 7 of CIT(A) s Order and no faults have been found or can be found with such computation, the same may kindly be allowed to the assessee by holding that assessee would be eligible to rebate u/s 88E to the extent of ₹ 6,34,04,046/-. Without prejudice to this since AO himself accepts that expenses against the brokerage income could have been claimed by the assessee it may please be held that proportionate expenses should be allocated to earning of brokerage income in the ratio of STT paid income and non-STT paid income by including at least brokerage income into the non-STT income. Although the AO has claimed non-STT income as other income, but finally the same has been assessed as business income, therefore it would be unfair to tax whole of the non-STT income business income on gross basis without allocating any expense to the same. Therefore, on the basis also, the allocation done by the assessee at Page 6 7 of CIT(A) s order is prayed to be upheld. (C) At the time of hearing before us, the Ld. Authorized Representative ( AR , for short) reiterated the submissions made in the aforesaid synopsis. He ..... X X X X Extracts X X X X X X X X Extracts X X X X
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