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2016 (12) TMI 303 - ITAT AHMEDABAD

2016 (12) TMI 303 - ITAT AHMEDABAD - TMI - Rebate u/s 88E - Held that:- Assessee is also having a positive income from sale of shares and the net speculation loss was merely because of notional adjustment on diminishing value of rate of shares held in stock in trade treated as speculation loss. Therefore, in our view assessee is eligible for rebate u/s 88E - Decided in favour of assessee - ITA No. 2125/Ahd/2013 - Dated:- 16-11-2016 - Shri R.P. Tolani, JM and Shri Manish Borad, AM. For The Appell .....

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n rejecting the claim of the appellant for rebate u/s 88E for a sum of ₹ 3,33,568/-. The learned C1T(A) erred in law and on facts in confirming the same. Your appellant submits that in the facts and circumstances of the case, the entire amount of rebate of ₹ 3,33,568/- is allowable to the appellant u/s 88E and the same may please be directed to be allowed. Your appellant prays for leave to add, alter and/or amend all or any of the grounds before the final hearing of appeal. 3. Briefl .....

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ssessee got part relief in appeal before ld. CIT(A). 5. Now assessee is in appeal before the Tribunal raising solitary ground against the order of ld. CIT(A) not allowing rebate u/s 88E of the Act at ₹ 3,33,568/-. Ld. AR submitted that assessee had positive income from sale of shares (subject to security transaction tax) security at ₹ 39,54,393/-. In computation of income business loss in the form of diminishing in the value of shares at ₹ 74.66.955/- as well as of loss from tr .....

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ness or profession which had arisen from taxable security transaction is ₹ 39,34,393/- and therefore, assessee was eligible u/s 88E of the Act. Ld. AR also submitted that rebate is allowable on income chargeable under the head profits and gains of business or profession arising from taxable security transaction and therefore, ld. CIT(A) erred in not allowing the claim of rebate u/s 88E of the Act. Ld. AR referred and relied on the decision of the Tribunal, Mumbai Bench in ITA No.2138/Mum/2 .....

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he rival contentions and perused the record. Solitary issue raised before us by assessee is against the order of ld. CIT(A) confirming the action of Assessing Officer for not allowing rebate u/s 88E of the Act of ₹ 3,33,568/-. From perusal of the computation of income available at page 3 to 5 of the Paper Book dated 29.8.2016 we observe that gross total income of ₹ 85,17,532/- includes income from business and profession at ₹ 84,80,457/-. Income from business or profession at & .....

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count available at page 2 of the paper book. We further observe that for the purpose of computation of income assessee has subtracted loss from transaction of the commodities at ₹ 9,602/- and also reduced notional figure ₹ 74,66,955/- on account of diminishing value/write off of shares held as stock in trade and treating it as deemed speculation loss as a result of which under the head speculation income net loss of ₹ 35,32,164/- has been disclosed. Further out of the tax payab .....

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that merely for reducing speculation income by diminishing value on the shares held as stock in trade leading to a net speculation loss cannot deprive the assessee from claiming rebate u/s 88E of the Act. We further observe that similar types of facts wherein assessee had a positive income from transactions subject to STT in its profits and loss account but at the time of preparing computation of income the income was reduced to loss due to brought forward loss or due to speculation loss, assess .....

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Officer found that though the assessee had applied the average rate on income but the average rate was adopted before setting off business loss of earlier years. The Assessing Officer held that the total income of the assessee is ₹ 5,94,71,620, which includes ₹ 3,34,49,474 (after setting of business loss of ₹ 1,62,36,858 brought forward from the year 2007-08), which is chargeable under the head "Profits and gains of business or profession" arising from taxable securi .....

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atisfied. The only issue was how this deduction and in terms of the provision has to be computed. The Assessing Officer has ignored completely the quantum of income from taxable securities transactions, the tax that is leviable thereon and which has to be deducted in terms of sub-section (2) of section 88E. So long as the stipulation under sub-section (2) is adhered to and followed, namely, the amount of income-tax on the income arising from the taxable securities transactions referred to in sub .....

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transactions has already been subjected to tax. The security transactions are taxable. Therefore, from the amount of income-lax on such income arising from such transactions, the deduction has to be computed and that is an amount equal to the securities transactions tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during that previous year. The proviso contemplates that deduction can be allowed only if the assessee furnishes, a .....

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of deduction. There was no warrant in the light of the clear language of this provision then to take into consideration the brought forward losses. It is the taxable securities transactions, the income derived from such taxable securities transactions and they being taxable, the tax paid thereon, which has to be deducted. That is how the section has been understood and applied to the given facts and circumstances. We do not think that any larger controversy arises for determination and considera .....

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ibunal may have distinguished its order and the decision of the coordinate Bench rendered in the case of Oasis Securities Ltd (supra), but, pertinently, it was held that the surplus from share dealing of market/future and option segment may not be there, but there is net income after setting off of losses. There was an over all profit for the assessment year under consideration and the rebate had to be allowed. Before the Assessing Officer or the Commissioner as well, the issue was not as much o .....

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far as that sum is concerned or quantum has been granted. We do not think that the Tribunal's order can be interfered with. The Tribunal's view is imminently possible in the backdrop of the facts and circumstances peculiar to the assessee. In any event by sub-section (3) of section 88E it has been clarified that no deduction under section 88E shall be allowable in, or after, the assessment year beginning on the 1st day of April, 2009, i.e., because a deduction which is contemplated by th .....

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