2014 (1) TMI 1398 - AT - Income Tax

Re-opening order u/s 147 of the Act quashed Escapement of income or not Rebate u/s 88E of the Act allowed Tax liability u/s 115JB of the Act Held that - The decision in ACIT v/s Shreepati Holdings and Finance Pvt. Ltd 2014 (1) TMI 1262 - ITAT MUMBAI followed - Under section 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. When the total income is assessed and the tax chargeable is computed it is from that tax which is chargeable - the tax paid under section 88E is given deduction by way of rebate under section 87 of the Act - This is the legislative intent - That is a promise to give deduction of the tax already paid - This is the mod in which tax already paid is handed back at the time of final computation - the assessee is liable for rebate under section 88E even if the assessment is to be made after computing the book profit under section 115JB validity of re-opening under section 147 is purely an academic thus not discussed - Decided against Revenue.

Summary

Issues:
Challenging impugned order dated 20th June 2011 and 21st June 2011 for assessment years 2007-08 and 2008-09 respectively. Dispute over quashing reopening order, rebate under section 88E, and power to reopen assessment under section 147.

Analysis:
The Revenue appealed against the order passed by the Commissioner (Appeals)-IV, Mumbai, for assessment years 2007-08 and 2008-09. The primary issues raised by the Revenue were the quashing of the reopening order, allowance of rebate under section 88E, and the Assessing Officer's authority to reopen assessments under section 147. The Tribunal consolidated the appeals for convenience. The facts of one appeal were presented to understand the implications. The Revenue contended that there was an escapement of income during the previous year and challenged the CIT(A)'s decision on reopening the assessment.

The assessee, a commodity broker also dealing in shares and securities, computed income under normal provisions higher than under section 115JB. The assessment was reopened under section 147, disputing the tax liability and rebate under section 88E. The CIT(A) held that the provisions of section 115JB were not applicable as the tax under normal computation was higher, thus allowing the rebate under section 88E. The Tribunal referenced the decision in Horizon Capital Ltd. v/s ITO, supporting the allowance of rebate under section 88E even when assessed under section 115JB.

The Tribunal upheld the CIT(A)'s decision, stating that the assessee was liable to pay tax under the normal provisions, and the rebate claimed under section 88E should be set-off. It further confirmed that the assessee was entitled to rebate under section 88E, even if the assessment was made under section 115JB. The Tribunal dismissed the Revenue's grounds, stating that the issue of re-opening assessment under section 147 became academic due to the findings on merits. The appeals for both assessment years were treated as dismissed, applying the decision made for the assessment year 2007-08 to 2008-09 as well.

In conclusion, the Tribunal affirmed the allowance of rebate under section 88E and rejected the Revenue's challenges regarding the reopening order and computation under section 115JB. The decision highlighted the legislative intent behind rebate provisions and emphasized the consistency in applying the law across similar cases.