2013 (3) TMI 714 - AT - Income Tax

Summary

Issues involved: Appeal by Revenue against CIT(A)'s order allowing Rebate u/s 88E while computing tax liability under MAT provision and comparison between tax determined under Normal Provision and provisions u/s 115JB.

Issue 1 - Rebate u/s 88E and tax liability under section 115JB:
The Revenue contended that the tax liability under section 115JB was higher than the normal tax, as the assessee did not allow credit of securities transaction tax from tax payable under section 115JB. The assessee argued that tax rebate is applied after determining income tax payable on total income computed as per applicable provisions including MAT. The CIT(A) upheld the assessee's contention citing decisions of ITAT in similar cases. The CIT(A) stated that the comparison between tax determined under normal provisions and under section 115JB should be made before allowing rebate u/s 88E, and the rebate would be available against tax payable under section 115JB. The ITAT upheld the CIT(A)'s decision based on previous rulings and dismissed the Revenue's appeal.

Issue 2 - Interpretation of tax provisions:
The AO's view was that provisions of section 115JB ensure tax collection where the tax liability under normal provisions was much less. The AO relied on Circular No.13 of 2011 and argued that income tax u/s 115JB shall be 10% of the book profit if the tax payable on total income computed under the Act was less than 10% of the book profit. The CIT(A) and ITAT, however, supported the assessee's interpretation, emphasizing the comparison between tax liabilities under normal provisions and section 115JB before allowing rebate u/s 88E. The ITAT cited previous decisions and upheld the CIT(A)'s ruling in favor of the assessee.

Conclusion:
The ITAT Mumbai upheld the CIT(A)'s decision to allow rebate u/s 88E against tax payable under section 115JB, based on the comparison between tax liabilities under normal provisions and section 115JB. The ITAT dismissed the Revenue's appeal, citing previous rulings and maintaining the decision in favor of the assessee.