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TMI Blog2011 (4) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant craves leave to add, to alter or amend any grounds of the appeal raised above at the time of the hearing." 2. The assessee company is a member of National Stock Exchange and Bombay Stock Exchange doing business of trading in shares on its own account and on behalf of its clients. The return of income for assessment year 2007-08 was filed on 30.9.2007 declaring income of Rs. 8,12,68,281/- on which the tax payable was Rs. 2,43,80,484/-. Against this tax payable, the rebate u/s 88E pertaining to Securities Transaction Tax (STT) was claimed by the assessee. The STT credit available to the assessee was Rs. 3,37,07,299/-. This claim was refused by the Assessing Officer which the CIT (A) has granted by holding as under :- "3.11 I have carefully read the assessment order, the arguments of the Ld. Counsel and the provisions of law. Both the AO and the Ld. Counsel have drawn attention to the provisions of section 115JB, section 87(1) and section 88E of the Act. The crux of the matter is how to work out the tax liability of the company under normal provisions of the Act and under section 115JB and what are the rebates allowable to the appellant in computing the amount of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax payable on the 'book profit' calculated in accordance with the provisions of section 115JB. The concept of 'tax due' is not relevant for the purposes of applicability of section 115JB. While dealing with the issue of computation of book profit under section 115J-Special provisions relating to certain companies- in the case of Apollo Tyres vs. CIT [2002] 255 ITR 273, the Hon'ble Supreme Court held that while computing income under section 115J, the AO has only the power of examining whether the books of accounts are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. In other words, the AO does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J. In the instant case, the company has worked out tax payable on deemed total income u/s 115JB at Rs. 81,75,847/- on Book Profit as per section 115JB of Rs. 8,17,58,465 and tax payable at normal rates at Rs. 2,43,80,484/- on income as per normal provisions of the Act of Rs. 8,12,68,281/-. The calculation of the company with regard to MAT or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a win-win situation for all concerned" The charging provision of STT is section 111A. The provision reads as below : 111A. (1) Where the total income of an assessee includes any income chargeable under the head "Capital gains", arising from the transfer of a short-term capital asset, being an equity share in a company or a unit of an equity oriented fund and - (a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No.2) Act, 2004 comes into force; and (b) such transaction is chargeable to securities transaction tax under that Chapter, Sub section 3 of section of section 111 A provides for the rebate to be allowed from the tax on total income and reads as below : "Where the total income of an assessee includes any short-term capital gains referred to in sub-section (1), the rebate under section 88 shall be allowed from the income-tax on the total income as reduced by such capital gains." From the above, it is clear that SIT was introduced to address the vexed questions of the definitions of Ion -term and shortterm ca ital gains arising from capital market transactions, and the differential tax tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant under normal provisions is Rs. 2,43,83,654/- whereas STT paid by the appellant is Rs. 3,37,07,299/-. Since the appellant is to be allowed credit for STT payment against any tax liability, the levy of tax on the disallowance of Rs. 10,566/- is not in order. The A.O. is directed to adjust STT already paid by the appellant." 3. Learned DR fairly conceded on the proposition of learned AR that this issue is covered in favour of the assessee by the decision of ITAT, Bangalore 'A' Bench in the case of M/s. Horizon Capital Limited vs. ITO in ITA No.592 (BNG)/10 dated 16.7.2010. In this order, the ITAT Bangalore 'A' Bench has held as under :- "6. Having heard both the parties and having considered the rival contentions, we find that the only dispute is whether the rebate of STT paid by the assessee is allowable from the income tax computed against the total income computed under section 115JB of the Income Tax Act, 1961. The term 'total income' has been defined under the Income Tax Act, 1961 as "the total amount of income referred to in section 5, computed in the manner laid down in this Act." Section 5 of the Income Tax Act, 1961 defines the scope of the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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