COMMISSIONER OF INCOME TAX Vs. MANISH D. INNANI

JUDGEMENT

(1.) The Tribunal's order dated August 1, 2012, in Income Tax Appeal No. 861/Mum/2012 (Manish D. Innani v. Asst. CIT,2014 21 ITR 404) is challenged by the Revenue in this appeal. The assessment year is 2008-09. Mr. Malhotra, appearing for the Revenue, submits that the substantial question of law is that the Tribunal was not justified in allowing the rebate of Rs. 1.01 crores under section 88E of the Income-tax Act, 1961, against the rebate of Rs. 75.07 lakhs allowed by the Assessing Officer.

(2.) The facts pertaining to this ground and question have been noted in both, the memo of appeals before the Commissioner of Income-tax (Appeals) and the Tribunal as also in this court. The assessee is individually engaged in the business of derivative trade in shares and investment. The return of income was filed by the assessee for the previous year ended on March 31, 2008. The assessee declared a total income at Rs. 5,94,71,620. He claimed rebate under section 88E at Rs. 1,01,87,300. He also furnished the working of disallowance under section 14A during the assessment proceedings. The assessment was completed under section 143(3) of the Income-tax Act, 1961, by order dated December 28, 2010, determining a total income at Rs. 27,17,31,090.

(3.) The Assessing Officer made addition and we are concerned in this case with the calculation of the rebate under section 88E of the Income-tax Act, 1961, at Rs. 75,07,274, The argument of the assessee before the Commissioner as also the Tribunal was that the rebate in respect of securities transaction tax and admissible under section 38E has not been granted in terms of the section and the entitlement of the assessee thereunder. The assessee's representative contended that the deduction under section 88E in accordance with the formula prescribed under sub-section (2) of section 88E does not rule out brought forward loss of Rs. 1,62,36,858 from the assessment year 2007-08. That is set off against the income from the taxable securities of Rs. 4,95,93,132 earned during the assessment year 2008-09. It was submitted that the taxable securities transactions, meaning thereby the tax on the securities transactions, which are taxable, will have to be computed on this entire figure. Therefore, the benefit in terms of Section 88E ought to be granted in full and there was no warrant for taking into consideration the brought forward loss for the earlier assessment year. The Assessing Officer erroneously took that into account and consideration and reduced the rebate accordingly. The Commissioner dealt with this argument and in paragraph 5.4 held that the Assessing Officer has rightly worked the average rate of tax as per section 88E. He upheld the working by the Assessing Officer and dismissed the assessee's appeal.