2016 (12) TMI 303 - AT - Income Tax

Rebate u/s 88E - Held that - Assessee is also having a positive income from sale of shares and the net speculation loss was merely because of notional adjustment on diminishing value of rate of shares held in stock in trade treated as speculation loss. Therefore, in our view assessee is eligible for rebate u/s 88E - Decided in favour of assessee

Summary

Issues involved:
Appeal against the order of ld. CIT(A) for not allowing rebate u/s 88E of the IT Act, 1961.

Detailed Analysis:

Issue 1: Claim for rebate u/s 88E
The appellant contested the rejection of the claim for rebate u/s 88E for a sum of ?3,33,568. The appellant argued that the entire amount of rebate should be allowed under section 88E. The appellant's income included profits from taxable security transactions, making them eligible for the rebate. The appellant referred to relevant case laws to support their claim, emphasizing that the rebate is allowable on income chargeable under the head of profits and gains of business or profession arising from taxable security transactions.

Issue 2: Tribunal's Consideration
The Tribunal examined the computation of income, observing that the appellant had shown speculation income from the sale of shares subject to security transaction tax. Despite a net speculation loss due to adjustments for diminishing value/write-off of shares, the Tribunal noted that there was a positive income from business and profession. The Assessing Officer denied the rebate, citing the net speculation loss. However, the Tribunal referred to precedents where similar situations were decided in favor of the assessee, emphasizing that the rebate should be granted based on the income from taxable security transactions.

Issue 3: Precedents and Legal Interpretation
The Tribunal referenced a previous case where the Assessing Officer's denial of rebate was overturned, highlighting that the deduction under section 88E should be granted based on the clear language of the provision. The Tribunal stressed that the income from taxable security transactions, which had already been subjected to tax, should be considered for the rebate. The Tribunal also mentioned another case where the denial of rebate due to speculation loss was deemed incorrect, as the claim is allowable from the business income irrespective of speculative nature.

Issue 4: Tribunal's Decision
Considering the precedents and legal interpretations, the Tribunal concluded that the appellant was eligible for the rebate u/s 88E. The Tribunal set aside the order of ld. CIT(A) and allowed the appellant's ground for claiming the rebate. The appeal of the appellant was allowed based on the eligibility for the rebate under section 88E.

In conclusion, the Tribunal's decision favored the appellant's claim for rebate u/s 88E, emphasizing the importance of considering the income from taxable security transactions for granting the rebate. The judgment highlighted the applicability of relevant case laws and legal provisions in determining the eligibility for the rebate, ultimately allowing the appellant's appeal.