2013 (11) TMI 3 - AT - Income Tax

Rebate u/s 88E allowable in the book profit computed u/s 115JB of the Income Tax Act Held that - Comparison between tax determined under normal provisions of the income tax act and that determined under section 115JB shall be made for the purpose of determining applicability of the provisions of section 115JB, on gross basis before allowing rebate u/s 88E from the income tax determined under normal provisions of income tax Act and rebate u/s 88E would also be available to the assessee against the tax payable u/s. 115JB of the Income tax Act. The appellant shall be required to make payment of higher of the two amounts. Such proposition is inevitable from the format of the Return of Income (ITR-6) as prescribed Decided against the Revenue.

Summary

Issues involved:
Allowance of rebate u/s. 88E from tax payable on book profit; Computation of tax liability under MAT provisions; Comparison of tax liability under normal provisions and MAT provisions for determining applicability of section 115JB.

Analysis:
1. Rebate u/s. 88E: The appeal concerned the allowance of rebate u/s. 88E from the tax payable on book profit. The Assessing Officer (AO) calculated tax liability under MAT provisions without considering the rebate under section 88E, resulting in a higher tax liability under MAT provisions compared to the tax computed under normal provisions of the Income Tax Act. The assessee contended that the rebate under section 88E should be available even while computing tax liability under MAT provisions. The CIT(A) accepted the assessee's contention, citing decisions of the ITAT supporting the availability of the rebate under section 88E for tax liability under MAT provisions.

2. Judicial Precedents: The CIT(A) relied on previous decisions of the ITAT in cases of M/s. Horizon Capital Ltd. and M/s. MBL & Co. Ltd., where it was held that the rebate u/s. 88E should be allowed for computing tax under MAT provisions. The CIT(A) emphasized that the decisions of the ITAT were binding as they were decisions of a superior judicial authority. Additionally, the CIT(A) referred to the judgment of the Hon'ble Karnataka High Court in the case of CIT vs. Horizon Capital Ltd., which supported the assessee's position regarding the allowance of rebate u/s. 88E against tax payable under MAT provisions.

3. Appellate Tribunal's Decision: The Appellate Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal. The Tribunal noted that the Revenue failed to provide any contrary decisions from High Courts or the Supreme Court to challenge the CIT(A)'s decision. Consequently, the Tribunal affirmed the CIT(A)'s order, stating that there was no need for interference in the matter. The appeal filed by the Revenue was ultimately dismissed, and the order of the CIT(A) allowing the rebate u/s. 88E for tax liability under MAT provisions was upheld.

In conclusion, the judgment emphasized the availability of rebate u/s. 88E for computing tax liability under MAT provisions, relying on judicial precedents and statutory provisions. The decision of the Appellate Tribunal affirmed the CIT(A)'s order, highlighting the importance of consistent interpretation of tax laws and judicial decisions in determining tax liabilities under different provisions of the Income Tax Act.