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TMI Blog2010 (9) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax liability for an amount maximum of STT paid - Brought forward speculation loss was set off to the tune of Rs.1.92 crore thereby leaving no income in respect of such transactions - It shows that there was no liability to pay any income-tax in the current year on such transactions - Decided against the assessee - ITA No. 2534/Mum/2009 - - - Dated:- 30-9-2010 - R.S. Padvekar Judicial Member J. R.S. Syal Accountant Member J. Appellant by : Shri Prakash Jotwani Respondent by : Shri P.N.Devadasan ORDER Per R.S.Syal (AM) : This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals) on 31.03.2009 in relation to the assessment year 2006-2007. 2. The first ground is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of which STT was paid. This income was totally set off against brought forward speculation losses leaving no taxable income from security transactions. It was, therefore, held that the rebate u/s.88E would not be allowed to the assessee . 5. We have heard the rival submissions and perused the relevant material on record. From the computation of total income of the assessee, a copy of which has been placed on record, it is seen that income from speculation business of purchase and sale of shares was declared at Rs.1.92 crore and the same was set off against brought forward speculation loss thereby reducing income from speculation business to rupees Nil. There is some other nominal business income of Rs.9.30 lakhs, which is not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax. Section 88E has its residence in part A of this Chapter, which has only three sections existing in the relevant year, viz, 87, 88 and 88E. Section 87(1) provides that in computing the amount of income tax on the total income of an assessee with which he is chargeable for any assessment year, there shall be allowed from the amount of income tax (as computed before allowing the deductions under this Chapter), in accordance with and subject to the provisions of sections 88 and 88E the deductions specified in those sections. Sub-section (2) of section 87 provides that the aggregate of amount of deductions u/ss. 88 or 88E shall not, in any case, exceed the amount of income-tax (as computed before allowing the deduction under this Chapter) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income is computed in the manner discussed above as per the provisions which are prior to section 80, which defines gross total income. It is thus manifested that any brought forward loss is liable to be firstly adjusted against the income of the current year under separate heads as per the relevant provisions and only thereafter gross total income is determined. It is impossible to conceive gross total income without first giving effect to brought forward losses as per law. 10. Coming back to section 88E(1), which has been reproduced above, and whose interpretation is chiefly before us, we find that it has following essential ingredients: (i) there should be income chargeable under the head `Profits and gains of business or profes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay income-tax on such transactions should co-exist so as to become eligible for relief under this section. Our view is reinforced when we have a glance at the second proviso to sub-section (1) of section 88E which provides that `the amount of deduction under this sub-section shall not exceed the amount of income-tax on such income . On a conjoint reading of section 88E in juxtaposition to sections 87 and 80B(5), it becomes abundantly patent that there should be some liability to pay income tax on transactions on which STT has been paid, only in that situation and further to the extent of liability to pay income tax on such transactions, there shall be allowed rebate u/s 88E. 12. The learned A.R. has placed reliance on the order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 88E. 14. It is simple and plain that rebate can be allowed only when there is some liability to income-tax. If there is no such liability according to the relevant provisions, the otherwise eligible rebate becomes unavailable. This position can be viewed from another angle also. Section 88, which also falls under part A of the same Chapter provides for rebate on life insurance premium and contribution to provident fund etc. Under this section an assessee is entitled to deduction of an amount equal to twenty percent of the payment of eligible sums, subject to rupees one lac. This rebate is allowable against the amount of income-tax on the total income of the assessee. This provision is similar to section 88E, to the extent of providin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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