2014 (2) TMI 943 - AT - Income Tax

Tribunal allows set-off of speculation loss, grants rebate on STT under Income Tax Act

Deputy Commissioner of Income-tax Versus M/s. Suryasakti Advisory Pvt. Ltd.

The Tribunal upheld the CIT(A)'s decision to allow the set-off of speculation loss against the profit of the same business, emphasizing the inclusive ... Setting off of speculation loss – Loss of earlier years to be set off against the profit of the same business – Held that:- CIT(A) was of the view that there has not been any change in the nature of the transactions during the year under consideration as compared to the preceding year - The nature of transactions in shares and securitìes as carried out by the appellant company is admittedly speculative –Relying upon CIT v. Soorajmall Baijnath Agencies (P) Ltd.[ 2004 (7) TMI 25 - CALCUTTA High Court ] - Section 73(2) prescribes that loss of the speculation business of a particular year can be carried forward to the subsequent previous year and be set off or be adjusted against the income of any speculation business of the said previous year – The loss of AY 2006-07 was allowed to be carried forward to be set off of subsequent years' speculation business profit against this speculation loss - In AY 2007-08, there is no objection on the part of the revenue – the revenue has treated this loss in AY 2006-07 as speculation loss arising out of the same business - the assessee is carrying on share trading activity in share business which is a speculation business in term of explanation to Section 73 of the Act – thus, there was no infirmity in the order of CIT(A) – Decided against Revenue. Rebate on account STT – Calculation of MAT u/s 115JB of the Act – Allowability of Rebate u/s 88E of the Act – Held that:- The decision in CIT Vs. M/s. Winro Commercial India Ltd [2013 (10) TMI 1223 - CALCUTTA HIGH COURT] and CIT Vs. M/s. Todi Securities (P) Ltd. [2013 (10) TMI 1223 - CALCUTTA HIGH COURT] followed - 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 of the Act - This is the legislative intent - This 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 – the order of the CIT(A) upheld – Decided against Revenue. Issues Involved:1. Allowance of speculation loss set-off against business profit.2. Rebate on account of STT from tax calculated under section 115JB of the Income Tax Act.Issue 1: Allowance of Speculation Loss Set-off:The appeal by the revenue concerns the order of CIT(A) allowing the setting off of speculation loss of earlier years against the profit of the same business. The revenue contended that as per the Income Tax Act, such loss can only be set off against 'any other' speculation business, not against the same business. However, CIT(A) allowed the claim of the assessee, stating that there was no change in the nature of transactions compared to the preceding year, and the past history supported the claim. CIT(A) relied on the Explanation under section 73(2) of the Act, emphasizing that the word 'any' is inclusive, allowing set-off against the same speculation business. The Tribunal upheld CIT(A)'s decision, noting that the loss was treated as speculation loss arising from the same business, and thus, the set-off was justified.Issue 2: Rebate on Account of STT from Tax Calculated under Section 115JB:The revenue appealed against the order of CIT(A) allowing rebate on account of STT from the tax calculated under section 115JB of the Act. The revenue argued that the rebate under section 88E is only allowable from tax on normal total income, not from MAT tax. However, the Tribunal referenced decisions of the Hon'ble Calcutta High Court, which held that the rebate under section 88E is admissible even when income is assessed under the concept of minimum alternative tax under section 115JB. The Tribunal, following the High Court's decision, upheld CIT(A)'s order, dismissing the revenue's appeal.In conclusion, the Tribunal dismissed the revenue's appeal concerning both issues, affirming CIT(A)'s decisions based on the provisions of the Income Tax Act and relevant judicial precedents.