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2010 (5) TMI 651 - AT - Income TaxRebate under the provisions of s. 88E in respect of Securities Transaction Tax assessee contended that once the AO noted that the STT was paid on share trading operations of the appellant and income from these transactions was assessed under the head Profits and gains of business and the appellant furnished evidence in prescribed Form 10DB then the AO should not have disallowed the claim for rebate which was statutorily granted under s. 88E - Held that - in the case Berger Paints (India) Ltd. (2002 -TMI - 12957 - CALCUTTA High Court) ratio laid down in the decision is squarely applicable to the Present case as well Since in the present case the appellant had furnished evidence in support of payment of STT in prescribed Form 10DB in the course of assessment there was sufficient compliance to provisions of s. 88E AO is directed to allow the rebate as Prescribed in s. 88E in respect of STT paid in respect of the share trading income which has been assessed under the head Profits and gains of business no infirmity in the aforesaid order of the learned CIT(A) and the same is hereby upheld appeal of the Revenue is dismissed
Issues:
- Claim for rebate of tax under section 88E for Securities Transaction Tax (STT) not claimed in the return of income. - Disallowance of STT as business expenditure under section 40(a)(ib). - Requirement of furnishing evidence of payment of STT in prescribed form with the return. - Allowance of rebate under section 88E in respect of STT paid for share trading income assessed under the head 'Profits and gains of business'. Analysis: Claim for rebate of tax under section 88E not claimed in the return of income: The appeal was against the order granting rebate of Rs. 6,62,005 under section 88E for STT paid, which was not initially claimed by the assessee in the return of income. The AO disallowed the claim as evidence of payment of STT was not furnished with the return. However, the CIT(A) directed the AO to allow the rebate as the STT was paid on share trading operations and evidence was submitted during assessment proceedings. The Tribunal upheld the CIT(A)'s decision, emphasizing that the appellant should not be deprived of the alternate claim for rebate under section 88E despite the initial misconception of law. Disallowance of STT as business expenditure under section 40(a)(ib): The AO disallowed the STT of Rs. 6,62,005 claimed as business expenditure by the assessee, invoking section 40(a)(ib) which does not allow deduction for STT paid. This disallowance led to the assessee seeking rebate under section 88E. The Tribunal noted that once the primary claim for business expenditure in respect of STT was disallowed, it was necessary for the AO to consider the alternate claim for rebate under section 88E, especially when evidence of STT payment was furnished during the assessment. Requirement of furnishing evidence of payment of STT in prescribed form with the return: The AO contended that the rebate under section 88E can only be allowed when evidence of payment is furnished with the return of income. However, the Tribunal held that while furnishing evidence is a mandatory requirement, it can be complied with at any time till the completion of assessment. The Tribunal cited precedents to support the view that furnishing evidence during assessment proceedings is sufficient compliance with the procedural requirement, even if not submitted with the return. Allowance of rebate under section 88E in respect of STT paid for share trading income: The Tribunal upheld the CIT(A)'s decision to allow the rebate under section 88E in respect of STT paid for share trading income assessed under the head 'Profits and gains of business'. The Tribunal emphasized that the appellant had paid STT and submitted evidence of payment during assessment, meeting the requirements for claiming the rebate. The Revenue's failure to produce evidence to challenge the CIT(A)'s finding led to the dismissal of the appeal. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the order granting rebate under section 88E for STT paid in the context of share trading income assessed under the head 'Profits and gains of business'.
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