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TMI Blog2013 (5) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... into consideration or is not relevant/material?" 2. As the issue involved in both these appeals is similar they are being disposed of together. 3. In ITA No.573/2012, the assessee company is a member of the National Stock Exchange and the Bombay Stock Exchange and is, inter-alia, engaged in the business of dealing in shares and securities listed on the two Stock Exchanges. The assessee filed a return of income for the assessment year 2007- 2008 declaring an income of Rs. 3,66,77,400/- which was calculated as per normal provisions of the Act. The tax payable on such income was calculated at Rs. 3,17,981/- under the Act. The assessee had during the year paid Security Transaction Tax amounting of Rs. 1,07,19,814/- and hence claimed a rebate as per the provisions of Section 88E of the Act on that count. Accordingly, the net tax payable was claimed to be Nil. The profit and loss account of the assessee disclosed an income of Rs. 3,55,71,182/- and under the Minimum Alternative Tax scheme, the tax payable as per section 115JB of the Act was calculated at Rs. 35,57,118/-. The assessee claimed that even if tax was computed under the provisions of Section 115JB of the Act, no tax was paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits of the assessee were higher and the income liable to tax under the MAT scheme was disclosed as Rs. 8,17,58,465/-. The assessee had borne Security Transaction Tax of Rs. 3,37,07,299/- whereas the tax payable under the normal computational provisions of the Act worked out to be Rs. 2,43,80,484/-. The tax payable in terms of Section 115JB of the Act was computed as Rs. 81,75,847/-. Since the Security Transaction Tax borne by the assessee exceeded the tax payable as computed under the normal provisions of the Act as well as under Section 115JB of the Act, the assessee declared that it was not liable to pay any tax. The Assessing Officer passed an Assessment Order dated 22.12.2009 for the relevant assessment year, 2007-2008, holding that the rebate under Section 88E was not available to the assessee while determining the tax payable as computed under the provisions of Section 115JB. An appeal was preferred by the assessee before CIT (Appeals) challenging the aforesaid view of the Assessing Officer, which was allowed by the order dated 29.03.2010. The revenue preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal upheld the decision of the CIT (Appeals) and found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided that no deduction under this sub-section shall be allowed unless the assessee furnishes alongwith the return of income, evidence of payment of securities transaction tax in the prescribed form: Provided further that the amount of deduction under this subsection shall not exceed the amount of income-tax on such income computed in the manner provided in sub-section (2). (2) For the purposes of sub-section (1), the amount of incometax on the income arising from the taxable securities transactions, referred to in that sub-section, shall be equal to the amount calculated by applying the average rate of income-tax on such income. Explanation.-For the purposes of this section, the expressions, "taxable securities transaction" and "securities transaction tax" shall have the same meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004.'' 8. Minimum Alternate Tax (MAT) scheme was introduced by inserting section 115J in the Act by the Finance Act, 1987. The Finance Minister in his speech indicated the object of introducing the said scheme as under: ''It is only fair and proper that the prosperous should pay at least some tax. the phenomenon of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and certain entities whose incomes are not liable to be included in the total income which is eligible to tax. Chapter IV of the Act provides for computation of income under various heads of income. Chapter V of the Act provides for income of the persons which are to be clubbed while computing the income of an assessee. Chapter VI of the Act provides for the aggregation set off and carry forward of losses. Chapters IV, V and VI of the Act thus provide for the machinery provision for computing the total income of an assessee. Chapter VI A of the Act provides for deduction which are allowable from the total income of an assessee as computed under the Chapters IV, V and VI of the Act. The resulting income is taxable under the Act. The Act has other machinery provisions in aid for computing, collection and recovery of tax. Chapter VIII of the Act provides for rebate and reliefs in respect of tax payable by an assessee. It can be seen from the scheme of the Act that there are extensive machinery provisions for computing of total income of an assessee and the tax payable thereon. The tax as determined is subject to rebate as may be available under the Chapter VIIIA of the Act. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, to a limited extent, credit in tax on account of Security Transaction Tax already borne by him in respect of the business carried out by him in dealing in securities. This rebate would be equally applicable to tax as computed under Section 115JB of the Act as under the normal provisions of the Act. A division bench of the High Court of Karnataka has, in the case of Commissioner of Income Tax v. M/s Horizon Capital Ltd.: ITA No.434/2010 decided on 24.10.2011, held that the rebate under Section 88E of the Act would be available to tax as payable under Section 115JB of the Act. The relevant extract from the said judgment is quoted below:- 15. 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. 16. Therefore, it is clear that the assessee is liable to pay Securities Transaction Tax when he enters into securities transaction. Tax is payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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