Appellate Tribunal rules tax under section 115JB should not consider rebate for securities transactions.

The Appellate Tribunal upheld the CIT(A)'s decision that tax under section 115JB of the Income Tax Act should be computed without considering the rebate u/s. 88E for securities transactions. The Tribunal ruled that the tax payable under section 115JB is the gross tax payable, not the tax after rebate. As the tax on income computed under normal provisions exceeded 10% of book profit, the Minimum Alternate Tax provision did not apply. The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s findings.

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Issues:
1. Interpretation of provisions of section 115JB of the Income Tax Act, 1961 regarding computation of tax on normal income before rebate u/s. 88E for applying provisions of section 115JB.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata arose from the order of CIT(A), VI, Kolkata regarding the assessment framed by DCIT, Circle-VI, Kolkata for the Assessment Year 2007-08. The specific issue in this appeal was the direction given by CIT(A) to compute tax on normal income before rebate u/s. 88E for applying provisions of section 115JB of the Act. The primary contention raised by the revenue was against the order of CIT(A) in this regard. The Tribunal considered the facts and circumstances of the case, where the assessee had filed a return of income declaring income under normal computation, which included a rebate u/s. 88E. The Assessing Officer charged tax as per Minimum Alternate Tax (MAT) u/s. 115JB of the Act since the tax under normal computation was lower due to the rebate. The CIT(A) allowed the claim of the assessee, emphasizing that section 115JB applies only when tax payable under normal computation is less than 10% of Book Profit and not when any credit is granted u/s. 88E of securities tax. The CIT(A) analyzed the computation of income tax, surcharge, education cess, and interest, concluding that the tax payable under section 115JB is the gross tax payable and not the tax after rebate under other provisions.

The Tribunal further explained the provisions of section 115JB, which mandate a minimum alternate tax for companies, requiring them to pay at least 10% of their book profit as corporate tax. If the tax liability under regular provisions exceeds this amount, the MAT provision does not apply. The assessee is eligible for rebate u/s. 88E, which allows deduction from the income tax on securities transactions. The Tribunal concurred with the CIT(A)'s interpretation that the tax payable under section 115JB is the gross tax payable, and in the present case, the tax on income computed under normal provisions exceeded 10% of book profit, thereby justifying the CIT(A)'s decision. Consequently, the Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s findings within the provisions of the Act. The judgment was pronounced on 09.09.2011, with the revenue appeal being dismissed.

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