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2013 (5) TMI 669 - HC - Income TaxRebate in respect of securities transaction tax u/s 88E - whether was liable to be adjusted from the tax as payable for the purpose of Section 115JB or is not relevant/material? - MAT - ITAT allowed the claim - Held that - U/S 88E where the total income of an assessee in a previous year includes any income chargeable under the head Profits and gains of business of 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. Section also provides the limit to which deductions shall be given. Therefore, it is clear that the assessee is liable to pay Securities Transaction Tax when he enters into securities transaction. 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 chargeable on such income is arrived at, he is given the benefit of tax deductions of the amount, which he has paid under section 88E by virtue of Section 87. When under Section 82A, the assessee is made liable to pay tax with an assurance that it will be deducted and Section 87 gives effect to such promise made under the statute. That is the reason why the word used to rebate. The amount paid is handed back to the assessee. Thus payment of tax twice on the same income is avoided. Therefore, the contention that this benefit is not available to the assessee whose total income is assessed under Section 115JB has no substance. As when the total income is assessed and the tax chargeable is computed, it is from that tax which is chargeable, the tax paid u/s 88E is given deduction, by way of rebate, u/s 87. This is the legislative intent. That is a promise to give deduction of the tax already paid. This is the mode in which tax already paid is handed back at the time of final computation. Therefore, the judgment referred by the Tribunal i.e. CIT V/S Horizon Capital Ltd. 2011 (10) TMI 489 - KARNATAKA HIGH COURT strictly in accordance with law and does not called for interference. No substantial question of law involved in this appeal - In favour of assessee.
Issues Involved:
1. Applicability of rebate under Section 88E of the Income Tax Act, 1961, to tax computed under Section 115JB (Minimum Alternative Tax or MAT) of the Act. Detailed Analysis: 1. Applicability of Rebate under Section 88E to Tax Computed under Section 115JB: The core issue in these appeals was whether the rebate available under Section 88E of the Income Tax Act, 1961, could be adjusted against the tax computed under Section 115JB (Minimum Alternative Tax or MAT) of the Act. Case Background: - The assessee companies, members of the National Stock Exchange and the Bombay Stock Exchange, engaged in the business of dealing in shares and securities, filed returns declaring incomes and claimed rebates under Section 88E for Security Transaction Tax (STT) paid. - The Assessing Officer (AO) denied the rebates under Section 88E against the tax computed under Section 115JB, asserting that such rebates were only applicable to taxes computed under the normal provisions of the Act. Tribunal and CIT(A) Decisions: - The CIT(A) and the Income Tax Appellate Tribunal (ITAT) ruled in favor of the assessees, holding that the rebate under Section 88E was available against the tax computed under Section 115JB. - The Tribunal emphasized that Section 87 of the Act did not differentiate between total income computed under regular provisions or under Section 115JB, and Section 115JB provided an alternative method of calculating taxable income and tax payable thereon. Legal Provisions: - Section 115JB: Provides for the computation of tax for companies where the income-tax payable on the total income as computed under the Act is less than a specified percentage of the book profit. - Section 87: Allows for rebates in computing income-tax, including under Section 88E. - Section 88E: Provides for a rebate in respect of STT paid by an assessee on taxable securities transactions. Court's Analysis: - The court reviewed the legislative intent behind the MAT scheme, introduced to ensure that profitable companies pay a minimum tax on their book profits. - It examined the scheme of the Income Tax Act, noting that while deductions under various sections are part of the machinery for computing total income, rebates under Chapter VIIIA (including Section 88E) provide for deductions from the tax payable. - The court found no rationale to limit the rebate under Section 88E only to tax computed under normal provisions and not to tax computed under Section 115JB. Judgment: - The court held that the rebate under Section 88E is available to an assessee on the tax computed under Section 115JB, as well as under the normal provisions of the Act. - It endorsed the view that Section 88E's purpose is to grant credit for STT paid by the assessee, applicable to tax computed under both normal provisions and MAT. - The court referenced the Karnataka High Court's decision in Commissioner of Income Tax v. M/s Horizon Capital Ltd., which supported the availability of the rebate under Section 88E against tax computed under Section 115JB. Conclusion: - The court concluded that the ITAT was correct in holding that the provisions of Sections 87 and 88E apply to the total income computed under Section 115JB. - The appeals were dismissed, and the question was answered against the revenue, affirming that the rebate under Section 88E is applicable to tax computed under Section 115JB.
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