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TMI Blog2016 (6) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... -09 vide his separate orders both dated 23.12.2011. 2. The only common issue in these two appeals of assessee is against the order of CIT(A) in restricting the disallowance made by AO in respect to rebate claimed by assessee u/s. 88E of the Act. The facts and circumstances are exactly identical in both the years and hence, we reproduce the grounds as raised in ITA No. 1447/Kol/2012 for AY 2007-08, which reads as under: "1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in sustaining the disallowance to the extent of Rs. 2,66,654/- out of the total disallowance of Rs. 6,87,921/- made by the Assessing Officer on account of rebate claimed by the assessee u/s. 88E." 3. Briefly stated facts rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee exclusively against the brokerage income and on perusal of detail, the AO was not satisfied that the expenses both direct and indirect have been allocated on the basis of turnover whereas they ought to have been allocated on the basis of income arising from such turnover because the provision of section 88E of the Act requires rebate be allowed only to the extent of income arising out of such chargeable transaction of STT. Therefore, the AO after re-computing the same, made disallowance of rebate claimed u/s. 88E of the Act amounting to Rs. 6,87,921/-. Aggrieved, assessee preferred appeal before CIT(A), who after considering the allocation of expenses restricted the disallowance at Rs. 2,66,654/- by observing in para 5 as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the payment of interest is allocable to both SIT paid and non STT paid income. Further, I find no force in the submission of the appellant that certain indirect expenses as mentioned above are deductible from non STT paid income only, because, in the case of composite business activities it cannot be said that such expenses are related to one activity only and not the other. On this point also I agree with the view of the AO that these expenses are allocable between both types of activities. However, I am of the opinion that the view taken by the AO that the expenses as per profit and loss account are allocable in the ratio of income from STT paid and non STT paid transactions, is not correct. In the case of composite business activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: Destiny Securities Ltd. A.Y 2007-08 Particulars Non STT STT Turnover 41540012233.63 28503579582.15 Ratio of Turnover 59% 41% Allocation of Direct Expenses Direct Expenses Non STT STT Transaction Fees 714440 Vasat Expense 127750 Lease Line Expenses 153396 Client Intro fees 1712352 Pledge Charges 85978 Total 2079476 714440 In view of above, the AO is directed to allow credit of rebate u/s. 88E at Rs. 35,01,403/- i.e. (Rs.1,16,49,947 / Rs. 1,61,24,025) x Rs. 48,46,092/-. The ground no.2 is partly allowed." Aggrieved, now assessee is in appeal before Tribunal. 4. Before us Ld. Counsel for the assessee filed copy of Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shment expenses towards assessee's own transaction and 75% are allocated towards client's transaction i.e. non STT income in respect of establishment expenses. The Tribunal has adjudicated this issue vide para 10.1 as under: "10.1. Ld. DR has submitted that merely because in subsequent year the AO has accepted 15% expenses towards STT transactions that cannot automatically be applied for current year. After considering submissions of both the parties and taking into consideration the explanation reproduced earlier, we are of the opinion that there is considerable force in the argument of Ld. Counsel of assessee that assessee could enter into own transactions even without having such huge infrastructure. However, it cannot be ignored that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to the extent of 41% whereas brokerage/clients' transactions are at 59%. In view of this ld. Counsel for the assessee argued that the disallowance of indirect expenses and disallowance in respect to interest income the disallowance of STT can be attributed at 5 to 10%. On the other hand, the Ld. Sr. DR also agreed that the issue can be decided in term of the decision of M/s. Millennium Stock Broking (P) Ltd., supra. 6. We have heard rival submissions and gone through facts and circumstances of the case. We find that the above facts are undisputed and only issue before us for our adjudication in this case is that how much percentage of disallowance of STT rebate is to be given. In view of the above facts as discussed above, the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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