TMI Blog2013 (7) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... e on such income is arrived at & it is from that tax which is chargeable, the tax paid u/s 88E is given deduction, by way of rebate, u/s 87. This is the legislative intent of giving deduction of the tax already paid - Decided against the Revenue. - ITA No.4394/Del/2011 - - - Dated:- 26-4-2013 - U B S Bedi and T S Kapoor, JJ. For the Appellant : Ms Sumana Sen, DR For the Respondent : Shri Ajay Wadhva, Adv. ORDER:- Per: T S Kapoor: This is an appeal filed by the revenue against the order of Ld CIT(A) dated 26.7.2011. The grounds raised by the revenue are as under:- 1. The order of the Ld CIT(A) is erroneous and contrary to facts and law. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in directing that net interest expense of Rs.37,14,466/-in place of gross interest expense of Rs.52,81,634/- be taken for the purpose of computing disallowance in terms of Rule 8D(2) (ii) despite the fact that the rule does not provide computing the disallowance having regard to net interest expended. 3. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in holding that tax rebate u/s 88E sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arately considered for the purpose of income u/s 115JB without allowing rebate u/s 88E of the Act. The assessee relaying upon the provisions of section 88E and further relying upon the computation of tax liability as laid down in Part-B of return of Income tax submitted that the claim of 88E against the tax payable under section 115JB was fully as per provisions of law. However, the Assessing Officer did not accept the contention of the assessee and relying upon the provisions of section 115JB calculated the tax payable by assessee u/s 115JB of the Act without giving benefit of rebate u/s 88E of the Act. Dissatisfied with the order, the assessee filed appeal before Ld CIT(A) and Ld CIT(A) after going through the various submissions submitted by the assessee deleted the above two additions by holding as under:- with respect of disallowance u/s 14A of the Act:- With respect of disallowance under section 14A of the Act: I have carefully considered the findings recorded by the Id. AO and the submissions made on behalf of the appellant company. On consideration, I find that the appellant company though claims that no expenditure in relation to making investment in share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a situation where the appellant company will end up being charged to tax at a rate which is higher than what it is liable to pay as tax on the total income computed under normal provisions of the Act. This was surely not the intent of the Legislature in section 115JB and when it approved the provisions regarding Securities Transaction Tax. To put it in numbers, the AO's interpretation implies that the appellant company is liable to tax of Rs. 424931/- as per normal provisions of the Act, however, simply because after rebate' u/s 88E on account of STT payment, there is a tax liability of Rs 4014 payable by the company it would be subjected to MAT at 10% of its books profits amounting to Rs. 120860/- in addition to the normal tax payable and paid by the company. Taken together the tax payment by the company under normal provisions and under MAT totals upto Rs.545971/-(Rs. 424931 + Rs. 128606). The implication of such an interpretation is that the appellant company is subjected to taxation at a rate higher than even the rate prescribed under normal provisions of the Act. It is my considered opinion that this was not the intent of the Legislature either with regard to provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. We are of the considered opinion that while making disallowance u/s 14A, the amount of expense is to be considered and in the present case, the amount of expense on account of interest cannot be said to be of gross amount as there is interest income also. Therefore, the assessee can be said to have incurred net interest only. Moreover the interest income was also taxed as business income and not as income from other sources. Therefore, the Ld CIT(A) has rightly accepted the contentions of assessee and we do not find any infirmity in the order of Ld CIT(A). Hence, ground No.2 is dismissed. 11. As regards ground No.3, we find that this issue is already covered in favour of the assessee. The Tribunal in I.T.A. No.4113/Del/2010 has relied on the decision of Bangalore Bench A in the case of Horizon Capital Ltd. v. ITO which has been further confirmed by the Hon'ble Karnataka High Court. The extract of findings of Hon'ble Tribunal as noted in I.T.A. No.4113/Del/2010 is reproduced below:- We have heard both the sides and after hearing both the sides, we hold that this issue is covered by the decision of ITAT, Delhi Bench E in the case of DCIT vs. M/s. MBL Co. Ltd., cite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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