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2020 (1) TMI 311 - AT - Income TaxRebate u/s 88E while calculating the tax liability of the assessee for minimum alternative tax under section 115JB of the income tax act on the book profit - HELD THAT:- Issue decided in HORIZON CAPITAL LTD. [2011 (10) TMI 489 - KARNATAKA HIGH COURT] 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 section 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. 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 the 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. - Decided against revenue Disallowance of interest expenditure on the ground that the certain loan amount was utilized for acquiring the property - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] that interest free funds were available to assessee which were sufficient to meet its investment in subsidiaries, appellate authorities were justified in allowing assessee's claim for deduction. In the present case the assessee has issued subscribed and paid-up share capital of 19705200/– and reserves and surplus of INR 6 8624247/– which is far more than investment in the answer Plaza shop of INR 1 9009105. Thus following the decision of the honourable Supreme Court, the above addition cannot be sustained. Hence, we direct the learned assessing officer to delete the same. Disallowance of interest paid on loan - Addition deleted by the learned CIT – A - HELD THAT:- CIT – A has considered each and every item of the interest expenditure and held that same is related to the business of the assessee and further the learned departmental representative could not point out any of the expenditure of interest which is on account of diversion of fund and not for the purposes of the business, we uphold the order of the learned CIT – A. Disallowance on account of charges paid to National stock exchange and securities and Board of India treated as the same being penal in nature - HELD THAT:- We find that the above issue is squarely covered in favour of the assessee by the decision of the coordinate bench in Goldcrest capital markets Ltd vs ITO [2009 (1) TMI 553 - ITAT, MUMBAI] and ITO vs Reliance share and stockbrokers private limited. [2014 (10) TMI 781 - ITAT MUMBAI]. Thus, we find no infirmity in the order of the learned CIT – capital and deleting the above addition. Denial of rebate u/s 88E on the interest income - HELD THAT:- CIT – A has allowed the claim of the assessee based on the decision of [2005 (3) TMI 93 - KARNATAKA HIGH COURT] which has been reversed by the honourable Supreme Court in [2007 (12) TMI 271 - SUPREME COURT]. Therefore we set aside whole issue back to the file of the learned CIT – A to re-examine the claim of the assessee in view of the decision of the learned assessing officer on the merits in accordance with the law. Accordingly ground number 5 of the appeal of the learned assessing officer is set aside to the file of the learned CIT – A. Thus this ground of appeal is allowed with above direction. TDS u/s 194J - disallowance u/s 40 (a) (ia) on account of payment to National stock exchange of security exchange Board of India charges paid by the assessee for non-deduction of tax - HELD THAT:- Above issue has been squarely covered by the decision of the honourable Supreme Court in CIT vs Kotak securities Ltd [2016 (3) TMI 1026 - SUPREME COURT] wherein it has been held that Service made available by Bombay Stock Exchange [BSE Online Trading (BOLT) System] for which transaction charges are paid by members of BSE are common services that every member of Stock Exchange is necessarily required to avail of to carry out trading in securities in Stock Exchange; such services do not amount to 'technical services' provided by Stock Exchange, not being services specifically sought for by user or consumer and, therefore, no TDS would be deductible under section 194J on payments made for such services. Disallowance u/s 14A - HELD THAT:- Claim of the assessee is that only investment yielding the exempt income should be considered to workout the average value of investment for the purpose of disallowance of the expenditure. Before us the assessee has submitted the opening and closing balance of investments which yielded dividend income which are placed at page number 38 of the paper book and the assessee has worked out the total disallowance of INR 1 0404/-thereon. The above details were not available with the assessing officer and therefore we direct the assessee to submit the above details before the assessing officer, who may verify and consider the argument of the assessee that only the investments which have yielded the exempt income should be included for the purpose of working out disallowable expenditure as per rule 8D of the income tax rules under section 14 A. Such is the mandate of the honourable Delhi High Court in case of CIT vs Inter Global Enterprises Ltd [2016 (9) TMI 552 - DELHI HIGH COURT] - Ground number 2 of the appeal of the assessee is allowed with above direction.
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