9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (1) TMI 311 - AT - Income TaxRebate u/s 88E while calculating the tax liability of the assessee for minimum alternative tax under section 115JB of the income tax act on the book profit - HELD THAT - Issue decided in HORIZON CAPITAL LTD. 2011 (10) TMI 489 - KARNATAKA HIGH COURT 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 of the Act gives effect to such promise made under the statute. That is the reason why the word used is rebate. The amount paid is handed back to the assessee. In other words payment of tax twice on the same income is avoided. The contention that this benefit is not available to the assessee whose total income is assessed under Section 115JB has no substance. In other words 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 mode in which tax already paid is handed back at the time of final computation. - Decided against revenue Disallowance of interest expenditure on the ground that the certain loan amount was utilized for acquiring the property - HELD THAT - This issue is squarely covered in favour of the assessee by the decision of Reliance Industries Ltd. 2019 (1) TMI 757 - SUPREME COURT that interest free funds were available to assessee which were sufficient to meet its investment in subsidiaries appellate authorities were justified in allowing assessee s claim for deduction. In the present case the assessee has issued subscribed and paid-up share capital of 19705200/ and reserves and surplus of INR 6 8624247/ which is far more than investment in the answer Plaza shop of INR 1 9009105. Thus following the decision of the honourable Supreme Court the above addition cannot be sustained. Hence we direct the learned assessing officer to delete the same. Disallowance of interest paid on loan - Addition deleted by the learned CIT A - HELD THAT - CIT A has considered each and every item of the interest expenditure and held that same is related to the business of the assessee and further the learned departmental representative could not point out any of the expenditure of interest which is on account of diversion of fund and not for the purposes of the business we uphold the order of the learned CIT A. Disallowance on account of charges paid to National stock exchange and securities and Board of India treated as the same being penal in nature - HELD THAT - We find that the above issue is squarely covered in favour of the assessee by the decision of the coordinate bench in Goldcrest capital markets Ltd vs ITO 2009 (1) TMI 553 - ITAT MUMBAI and ITO vs Reliance share and stockbrokers private limited. 2014 (10) TMI 781 - ITAT MUMBAI . Thus we find no infirmity in the order of the learned CIT capital and deleting the above addition. Denial of rebate u/s 88E on the interest income - HELD THAT - CIT A has allowed the claim of the assessee based on the decision of 2005 (3) TMI 93 - KARNATAKA HIGH COURT which has been reversed by the honourable Supreme Court in 2007 (12) TMI 271 - SUPREME COURT . Therefore we set aside whole issue back to the file of the learned CIT A to re-examine the claim of the assessee in view of the decision of the learned assessing officer on the merits in accordance with the law. Accordingly ground number 5 of the appeal of the learned assessing officer is set aside to the file of the learned CIT A. Thus this ground of appeal is allowed with above direction. TDS u/s 194J - disallowance u/s 40 (a) (ia) on account of payment to National stock exchange of security exchange Board of India charges paid by the assessee for non-deduction of tax - HELD THAT - Above issue has been squarely covered by the decision of the honourable Supreme Court in CIT vs Kotak securities Ltd 2016 (3) TMI 1026 - SUPREME COURT wherein it has been held that Service made available by Bombay Stock Exchange BSE Online Trading (BOLT) System for which transaction charges are paid by members of BSE are common services that every member of Stock Exchange is necessarily required to avail of to carry out trading in securities in Stock Exchange; such services do not amount to technical services provided by Stock Exchange not being services specifically sought for by user or consumer and therefore no TDS would be deductible under section 194J on payments made for such services. Disallowance u/s 14A - HELD THAT - Claim of the assessee is that only investment yielding the exempt income should be considered to workout the average value of investment for the purpose of disallowance of the expenditure. Before us the assessee has submitted the opening and closing balance of investments which yielded dividend income which are placed at page number 38 of the paper book and the assessee has worked out the total disallowance of INR 1 0404/-thereon. The above details were not available with the assessing officer and therefore we direct the assessee to submit the above details before the assessing officer who may verify and consider the argument of the assessee that only the investments which have yielded the exempt income should be included for the purpose of working out disallowable expenditure as per rule 8D of the income tax rules under section 14 A. Such is the mandate of the honourable Delhi High Court in case of CIT vs Inter Global Enterprises Ltd 2016 (9) TMI 552 - DELHI HIGH COURT - Ground number 2 of the appeal of the assessee is allowed with above direction.
Issues Involved:
1. Confirmation of addition towards interest expenses. 2. Disallowance under section 14A read with Rule 8D. 3. Calculation of tax liability under MAT and denial of rebate under section 88E. 4. Disallowance of interest paid on loan. 5. Disallowance of charges paid to NSE. 6. Denial of rebate under section 88E on interest income. 7. Disallowance under section 40(a)(ia). Detailed Analysis: 1. Confirmation of Addition towards Interest Expenses: The assessee challenged the confirmation of the addition of Rs. 12,63,849 towards interest expenses, arguing that the loan was used for purchasing a property for business expansion. The CIT(A) and AO disallowed the interest expenses, stating the property was not for business purposes. The Tribunal, referencing the Supreme Court decision in Reliance Industries Ltd., found that the assessee had sufficient interest-free funds to cover the investment and directed the AO to delete the addition, allowing the assessee's appeal. 2. Disallowance under Section 14A read with Rule 8D: The AO disallowed Rs. 2,25,174 under section 14A, which was confirmed by the CIT(A). The assessee argued that no separate funds were used for earning exempt income and the disallowance exceeded the exempt income earned. The Tribunal directed the AO to verify the investments yielding exempt income and compute the disallowance accordingly, allowing the assessee's appeal with directions. 3. Calculation of Tax Liability under MAT and Denial of Rebate under Section 88E: The AO disallowed the rebate of Rs. 60,48,942 under section 88E while calculating MAT under section 115JB. The CIT(A) allowed the rebate, citing the Karnataka High Court decision in Horizon Capital Limited. The Tribunal upheld this decision, dismissing the AO's appeal. 4. Disallowance of Interest Paid on Loan: The AO disallowed Rs. 1,60,71,237 as interest paid on a loan, arguing it was for non-business purposes. The CIT(A) deleted the disallowance, verifying that the interest expenses were related to the business. The Tribunal upheld the CIT(A)'s decision, dismissing the AO's appeal. 5. Disallowance of Charges Paid to NSE: The AO disallowed Rs. 50,000 paid to NSE, treating it as a penalty. The CIT(A) deleted the addition, relying on the Tribunal's decision in Goldcrest Capital Markets Ltd. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the AO's appeal. 6. Denial of Rebate under Section 88E on Interest Income: The AO disallowed the rebate of Rs. 2,67,208 on interest income earned from fixed deposits. The CIT(A) allowed the rebate, referencing a Kerala High Court decision. The Tribunal, noting the Supreme Court's reversal of the Kerala decision, remanded the issue back to the CIT(A) for re-examination. 7. Disallowance under Section 40(a)(ia): The AO disallowed Rs. 19,61,579 under section 40(a)(ia) for non-deduction of tax on payments to NSE. The CIT(A) allowed the claim, citing Tribunal decisions in Angel Broking Ltd. and Sonal Shares & Stock Brokers Pvt. Ltd. The Tribunal upheld the CIT(A)'s decision, dismissing the AO's appeal. Conclusion: The Tribunal partly allowed the appeals of the assessee and the revenue, providing specific directions for re-examination and verification of certain claims. The detailed analysis preserved the legal terminology and significant phrases from the original judgment, ensuring a comprehensive understanding of the issues and decisions involved.
|
