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TMI Blog2016 (9) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... No.6602/Mum/12:- 3. In this appeal, Revenue has raised the following Grounds of appeal:- "On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below:- 1. The order of the CIT(A) is opposed to law and facts of the case. 2(a) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the proceedings of re-assessment u/s 148 holding that no new fact had come to the notice of the AO and that there is no escapement of income thereby overlooking the judicial pronouncement in the decision of jurisdictional High Court in the case of IPCA Laboratories Vs DCIT 251 ITR 420 which clearly applies to - the present case". 2(b) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the provisions contained in Explanation 2(c)(ii) to section 147 which are clearly applicable in the present case. " 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in granting rebate under section.88E of the IT Act thereby, overlooking the crucial fact that Securities Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 148 of the Act but also the merits of the action of the Assessing Officer. The CIT(A) has considered both the pleas and found it is expedient to set-aside the action of the Assessing Officer. Firstly, with regard to reasons for initiation of reassessment under section 147/148 of the Act, the CIT(A) records a finding that neither any new facts came to the notice of the Assessing Officer and nor any escapement of income was established in law, and therefore, the notice issued under section 148 of the Act was liable to be quashed. According to the CIT(A) the initiation of proceedings was based on a wrong interpretation of the provisions of section 115JB of the Act and accordingly he has quashed the assessment. Even on merits, the claim of the assessee has been upheld. In this manner, the Revenue is in appeal before us. 5. At the outset, the Ld. Representative for the respondentassessee pointed out that an identical controversy came up before the Tribunal in the case of M/s. R.R.Chokhani Stock Brokers Private Limited, in ITA No.1491/Mum/2012 dated 26/3/2013, wherein the Tribunal by relying on the judgment of the Hon'ble Karnataka High Court in the case of M/s. Horizon Capital Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Income Tax in contrast to computation of Income Tax chargeable u/s. 87(1), that the provisions of Section 87 allowed rebate u/s. 88 in respect of L.I.P. and P.F. etc., that payment of STT qualify for tax by way of rebate of similar footing as for payment of L.I.P. etc., and not at par with TDS or advance tax which were treated as payment of tax u/s. 199 and 219 of the Act, that the provisions of Section 88E applied only to those cases where the total income of the assessee included income chargeable under the head 'Profits and Gains of Business/Profession arising from Taxable Securities Transaction', that provisions of Section 115JB were applicable to an assessee, being a company irrespective of the head of the income chargeable. 7.2.Assessee preferred an appeal before the FAA. After considering the submissions, he held that from ITR 6 (where taxable worked out under normal provisions of the Act or under the MAT) entries of far ITR 6 had to be considered while calculating, income u/s. 115JB of the Act, that there was no prohibition in claiming rebate in respect of STT paid against Income Tax payable under MAT under the provisions of Section 115JB. He finally held that com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putation of amount of income tax on the total income of an assessee under any particular provision of law under the Act. If after such computation of the amount of the income tax payable on the total income of the assessee under the Act, if such an assessee has paid tax under the aforesaid provisions mentioned in the said section to the extent of the tax paid under that section is deductible as rebate. Under section 88E, where the total income of an assessee in a previous year includes any income, chargeable under the head 'profits and gains of business or profession', arising from taxable securities transactions, he shall be entitled to a deduction, from the amount of income-tax on such income arising from such transactions. Therefore, it is clear that the assessee is liable to pay securities transaction tax when he enters into securities transaction. The 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 chargeble on such income is arrived at, he is given the benefit of tax deductions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "5. I have considered the facts of the case and submissions of the assessee. Section 115JB clearly states that 10% of the book-profit will be taken as income of the assessee if it is higher than the income-tax payable on total income computed under the Act. Gross Income-tax payable is to be considered for comparison with 10% of book-profit without any adjustment of advance payment of tax or any other rebate which may be available to the assessee against any tax payable which is in the same nature as advance payment of tax or TDS etc. The A.O. wants to compare the net tax payable after reduction of STT with 10% of book-profit, but such a comparison is not warranted u/s. 115JB because STT is like any other tax paid and it is not to be reduced from the tax liability before comparison with 10% of book-profit. STT is allowed deduction from income-tax payable whether it is calculated and payable under the normal provisions of the Act or payable u/s.115JB and, therefore, the tax liability is to be considered under the normal provisions of the Act before deduction of STT, it is also clear from the return of income form - the relevant part B of form No. 6, which is as follows : A. "Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief about the escapement of income. Section 88E of the Act provides for a rebate in respect of STT paid. Ostensibly, such rebate is available against the income-tax payable by an assessee subject to other conditions specified in the section. If we read the relevant provisions, it is quite clear that Section 88E of the Act does not envisage any distinction between total income computable under the normal provisions of the Act and that computable under Section 115JB of the Act so far as it relates to the granting of rebate against the amount of income-tax payable. Therefore, in our view, it would not be wrong to conclude that the interpretation sought to be placed by the Assessing Officer even at the time of formation of belief for issuance of notice under section 147/148 of the Act was not borne out of the bare provisions of the Act. Of course, the stand of the Assessing Officer is also contrary to the judgment of the Hon'ble Karnataka High Court in the case of M/s. Horizon Capital Ltd. (supra), but that decision is of a date later than the date on which the Assessing Officer initiated the proceedings under section 147/148 of the Act. Be that as it may, in our view, the CIT(A) has s ..... 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