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TMI Blog2016 (7) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 88E in respect of the securities transaction tax to ₹ 1,95,40,847 as against the actual payment of the securities transaction tax of ₹ 4,38,91,830 - Held that:- However, the Assistant Commissioner of Income-tax has applied the average rate of Income-tax to only direct income from the taxable securities transaction of ₹ 5,12,87,746 instead of the taxable income on the taxable securities transaction under the head "Profits and gains of business or profession" which is ₹ 5,74,89,989. Further, while computing the average rate of tax, the Assistant Commissioner of Income-tax has divided the total income- tax by the gross total income whereas the assessee claims that for the purpose of section 88E, the average r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has correctly computed the disallowance as per rule 8D, in so far as the relevant assessment year under consideration is the assessment year 2008-09. Accordingly, we direct the Assessing Officer to reduce the disallowance by the amount of ₹ 14,03,562 being disallowance of expenses already offered by the assessee in the return of income. We direct accordingly. 4. Ground No. 2 of the appeal is regarding reducing rebate under section88E to ₹ 1,15,39,743 from ₹ 1,95,40,847 was pressed by the learned authorised representative. 5. Rival contentions have been heard and record perused. The facts in brief are that during the year under consideration the assessee has earned ₹ 5,12,87,746 as income from share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains of business' ; (b) such income is arising from taxable securities transactions ; (c) deduc tion under the section is allowable from the amount of Income-tax on such income arising from such transaction. Thus, the total income used in this section cannot be given a general meaning and has to be ascribed the meaning as contemplated in the context in which section 88E has been inserted by the Finance Act, 2004, with effect from April 1, 2005. The object of section 88E clearly is to protect the assessee from double taxation. Firstly, by way of payment of securities trans action tax and, secondly, by way of Income-tax on the income earned from the securities transaction tax transaction. The concept of total income as contemplated under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival contentions and found that during the year the assessee-company has paid the securities transaction tax (STT) of ₹ 4,38,91,830 in respect of purchase and sale of securities on recognised stock exchanges (hereinafter referred to as taxable securities transaction (TST) ) in the course of its share trading business. In the computation of taxable income, this sum of ₹ 4,38,91,830 paid as securities transaction tax has been added back while computing income under the head Profits and gains from business or profession . Thus, the securities transaction tax paid on the taxable securities transactions is not allowable as a deduction from the business income of the assessee-company. The assessee-company has the net taxable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the same principle, the average rate of Income-tax should be applied to ₹ 5,74,89,989 while computing the maximum ceiling on the amount of rebate under section 88E in respect of the securities transaction tax. It is also a matter of record that a similar claim of the assessee was accepted by the Commissioner of Income-tax (Appeals) in the assessment year 2007-08, against which the Revenue is not in appeal before us. 8. In view of the above, we do not find any merit in the action of the lower authorities for reducing the assessee's claim of deduction under section 88E as done by the Assessing Officer. 9. In the result, the appeal of the assessee is allowed in part. Order pronounced in the open court on this April 27, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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