2013 (12) TMI 647 - AT - Income Tax

Appellate tribunal rules for assessee on dividend income & STT rebate in assessment.

M/s. Ambit Securities Broking P. Ltd. Versus The Additional Commissioner of Income Tax

M/s. Ambit Securities Broking P. Ltd. Versus The Additional Commissioner of Income Tax - TMI Issues:1. Disallowance u/s 14A for dividend income from shares held as stock-in-trade.2. Applicability of provisions of section 115JB vis-`a-vis rebate u/s 88E of the Act.Issue 1: Disallowance u/s 14A for dividend income from shares held as stock-in-trade:The appeal concerns the disallowance u/s 14A amounting to Rs. 21,54,498/- for the assessment year 2008-09. The first issue revolves around whether the dividend income of Rs. 1,80,613/- from shares held as stock-in-trade should be subject to disallowance u/s 14A. The appellant contended that all dividend-yielding shares were held as stock-in-trade, not as investments, supported by relevant financial schedules. The appellant relied on the judgment of the Hon'ble Karnataka High Court in the case of M/s. CCI Ltd. vs. JCIT, stating that no expenditure should be deducted from dividend income earned without incurring any expenditure. The tribunal concurred, emphasizing that the appellant was engaged in the purchase and sale of shares as stock-in-trade, making the provisions of section 14A inapplicable to the dividend income from unsold shares. Consequently, the grounds raised by the assessee on this issue were allowed.Issue 2: Applicability of provisions of section 115JB vis-`a-vis rebate u/s 88E of the Act:The second issue pertains to invoking section 115JB of the Act and the allowance of rebate u/s 88E. The Assessing Officer contended that the rebate under section 88E was not allowable while computing the assessment under section 115JB. However, the appellant argued that the tax paid u/s 88E should be credited, citing the judgment of the Hon'ble Karnataka High Court in the case of CIT & Another vs. M/s. Horizon Capital Ltd. The tribunal noted that the issue was resolved in favor of the assessee in the case of M/s. Naman Securities Finance Pvt. Ltd., where it was established that the assessee could claim a deduction equal to the STT paid on taxable securities transactions while computing income under section 115JB. Consequently, the tribunal upheld the order of the Ld CIT (A) and allowed the grounds raised by the assessee on this issue. The appellant's appeal was allowed based on the settled position that the assessee is entitled to claim deduction of STT paid in respect of share trading transactions while computing income under section 115JB.In conclusion, the appellate tribunal ruled in favor of the assessee on both issues, allowing the appeal and providing detailed justifications for the decisions made on the disallowance u/s 14A and the applicability of provisions of section 115JB vis-`a-vis rebate u/s 88E of the Act.