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2016 (7) TMI 685 - ITAT MUMBAI

2016 (7) TMI 685 - ITAT MUMBAI - [2016] 49 ITR (Trib) 108 - Disallowance under section 14A made in respect of expenditure incurred for earning exempt income - Held that:- From the record, we found that the Assessing Officer has correctly computed the disallowance as per rule 8D, in so far as the relevant assessment year under consideration is the assessment year 2008-09. Accordingly, we direct the Assessing Officer to reduce the disallowance by the amount of ₹ 14,03,562 being disallowance .....

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ecurities transaction of ₹ 5,12,87,746 instead of the taxable income on the taxable securities transaction under the head "Profits and gains of business or profession" which is ₹ 5,74,89,989. Further, while computing the average rate of tax, the Assistant Commissioner of Income-tax has divided the total income- tax by the gross total income whereas the assessee claims that for the purpose of section 88E, the average rate of tax should be computed by dividing the tax on income under h .....

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nt year 2007-08, against which the Revenue is not in appeal before us. No merit in the action of the lower authorities for reducing the assessee's claim of deduction under section 88E as done by the Assessing Officer. - I. T. A. No. 69/Mum/2012 - Dated:- 27-4-2016 - R. C. Sharma (Accountant Member) And Ram Lal Negi (Judicial Member) For the Appellant : Sanjeev M. Shah For the Respondent : Vivek Batra ORDER R. C. Sharma (Accountant Member) 1. This is an appeal filed by the assessee against the or .....

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t year under consideration is the assessment year 2008-09. Accordingly, we direct the Assessing Officer to reduce the disallowance by the amount of ₹ 14,03,562 being disallowance of expenses already offered by the assessee in the return of income. We direct accordingly. 4. Ground No. 2 of the appeal is regarding reducing rebate under section88E to ₹ 1,15,39,743 from ₹ 1,95,40,847 was pressed by the learned authorised representative. 5. Rival contentions have been heard and reco .....

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88E of the Act. In course of assessment the Assessing Officer observed that the average rate of tax in the case of the assessee is 22.5 per cent. (18,85,32,671 x 100/83,84,11,184) while for calculating the rebate the assessee has taken the average rate of tax as 33.3 per cent. The tax on share trading profit at 22.5 per cent. comes to ₹ 1,15,39,743 (5,12,746 x 22.5/100). Hence, the rebate under section 88E was restricted to tax on share trading income at an average rate of tax, i.e., S .....

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section has the following ingredients (a) the total income of the assessee includes the income chargeable under the head 'Profits and gains of business' ; (b) such income is arising from taxable securities transactions ; (c) deduc tion under the section is allowable from the amount of Income-tax on such income arising from such transaction. Thus, the total income used in this section cannot be given a general meaning and has to be ascribed the meaning as contemplated in the context in wh .....

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are that unless the context otherwise requires. Therefore, the total income as contemplated under section 88E is not the same as contemplated under section 2(45). It has been considered in entirely different context in section 88E. The term 'total income' as interpreted by various decisions relied upon by the learned counsel cannot be made applicable to the facts of the case which is in the context to section 88E. Therefore, we do not find any reason to interfere with the order of the le .....

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ge loss the assessee had admittedly not paid any Income-tax. Therefore, if the assessee's plea is accepted then it would lead to double relief to the assessee firstly, by allowing the set off under section 70 against the securities transaction tax income and then allowing the rebate from Income-tax. This is definitely not the intention of the Legislature." 7. We have considered the rival contentions and found that during the year the assessee-company has paid the securities transaction .....

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he taxable securities transactions is not allowable as a deduction from the business income of the assessee-company. The assessee-company has the net taxable income of ₹ 5,74,89,989 (after adding back the securities transaction tax to the profits of ₹ 5,12,87,746 from the taxable securities transaction and reducing the expenses in relation thereto. The same was provided from the taxable securities transaction which is chargeable to tax under the head "Profits and gains of busine .....

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