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TMI Blog2016 (9) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer even at the time of formation of belief for issuance of notice under section 147/148 of the Act was not borne out of the bare provisions of the Act. Of course, the stand of the Assessing Officer is also contrary to the judgment of the Hon’ble Karnataka High Court in the case of M/s. Horizon Capital Ltd. (2011 (10) TMI 489 - KARNATAKA HIGH COURT ), but that decision is of a date later than the date on which the Assessing Officer initiated the proceedings under section 147/148 of the Act. Be that as it may, in our view, the CIT(A) has succinctly brought out that the interpretation made by the Assessing Officer to form the belief about escapement of income is not supported by the bare provisions of the Act also, which we hereby affirm. As a consequence, we affirm the action of CIT(A) in treating the initiation of proceedings under section 147/148 of the Act as invalid. Thus, on this aspect also Revenue fails. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... orated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of dealing in shares and securities. For assessment year 2007-08, assessee company filed a return of income on 27/10/2007 declaring an income of ₹ 3,15,37,230/-. The tax payable by the assessee was computed at ₹ 11,666/- by claiming the rebate of STT under section 88E of the Act. The return of income filed by the assessee was subject to scrutiny assessment under section 143(3) of the Act dated 11/9/2009, wherein the only additions made were on account of section 14A of ₹ 817530/- and under section 94(7) of the Act of ₹ 10,848/-. Subsequently, the Assessing Officer issued notice under section 148 of the Act and reopened the assessment on the ground that assessee was liable to pay tax as per the provisions of section 115JB of the Act as the book profits of the assessee was ₹ 3,14,98,344/- and the resultant tax thereon would be higher than the tax determined under the normal provisions of the Act. In the ensuing assessment, assessee, inter-alia, objected to the initiation of reassessment proceedings on the ground that there is no escapement of income. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by the said precedent. In this context, we find that in the case of M/s. R.R.Chokhani Stock Brokers Private Limited (supra) one of the Grounds of appeal raised read as under:- "2. (a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the rebate u/s. 88E. (b) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing Rebate u/s. 88E while computing tax liability under the MAT Provisions and in making the comparison between the tax determined under Normal Provisions of the I.T. Act and provisions u/s.115JB for the purpose of determining applicability of the Provisions of Section 115JB on gross before allowing Rebate u/s. 88E of the Income Tax Act, 1961 from the Income Tax determined under Normal Provisions of the Act and Rebate u/s. 88E would also be available to the assessee against the tax payable u/s.115JB of the Act." The said controversy was addressed by the Tribunal in the following words:- 7. Next Ground of Appeal raised by the AO is about allowing rebate u/s. 88E of the Act,while computing tax liability under the Minimum Alternate Tax (MAT) provisions.During the assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax payable u/s. 115JB. He relied upon the orders of M/s. Horizon Capital Ltd.,(ITA No. 592/Bangalore/10 AY. 2005-06);M/s.MBL & Co. Ltd.,(ITA No. 2478/ Del /2010 AY. 2007-08) and Naman Securities & Finance Pvt. Ltd., 7.3.Before us, Departmental Representative (DR) relied upon the order of the AO.AR submitted that tax rebate was a step which would arise after determining income tax payable on total income computed as per applicable provisions including MAT, that comparison u/s. 115JB was between Income tax payable on total income and 10% on Book Profit had to be carried out, that same view emerged from the Income Tax return (ITR 6) prescribed by the Central Board of Direct Taxes wherein the gross tax liability before claim of rebate u/s. 88E was first to be confirmed with the tax computed under MAT. He further stated that the decision of the Bangalore Tribunal in the case of M/s. Horizon Capital Ltd., (supra) had been upheld by the High Court of Karnataka vide judgment dt. 24-10-2011 (ITA No.434/2010). 8.We have heard the rival submissions and perused the material put before us. We find that issue is squarely covered by the decisions relied upon by the FAA and the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wice on the same income is avoided. Therefore, 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. 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. Therefore, the order passed by the Tribunal is strictly in accordance with law and does not suffer from any legal infirmity, which called for interference. No substantial question of law is involved in this appeal, which merits admission. The appeal is dismissed." Respectfully following the above decision of the Hon'ble Karnataka High Court and the orders of the coordinating benches we decide Ground no.2 against the AO. 6. Quite clearly, the aforesaid decision of the Tribunal is based on the judgment of the Hon'ble Karnataka High Court(supra) and no decision to the contrary has been cited before us, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115JAA of tax paid in earlier years (if 1 is more than 2c) (7 of Schedule MATC) 5 Tax payable after credit under section 115JAA [(3-4)] 6 Rebate under section 88E (4 of Schedule-STTC) 7 Balance tax payable (5-6) 8 Surcharge on 7 9 Education Cess on (7+8) 10 Gross tax liability (7+8+9) 11 Tax relief a. Section 90 b. Section 91 c. (11a + 11b) It is clear in the above mentioned part B of the return of income that at Point No. 3 the tax payable under the normal provisions of law and the deemed income u/s. 115JB i.e. 10% of book-profit are to be compared before any rebate for STT u/s. 88E at Point 6 of the form. Therefore, it is clear that neither any new fact had come to the notice of the A.O. nor there was any escapement of income and it was merely a wrong interpretation of the provisions of section 115JB which resulted in the belief of the A.O. for issue of notice u/s. 148, but as discussed above there is no escapement of income, therefore, there was no basis for issue of notice u/s. 148, hence the assessment made pursuant to notice u/s. 148 is quashed and the grounds of appeal of the assessee are allowed." 8. In the course of hearing, the Ld. DR defended the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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