Tribunal upholds CIT(A) order on section 88E disallowance. Correct rebate calculation crucial. Appeal dismissed.

The Tribunal affirmed the order of the ld.CIT(A), dismissing the appeal of the assessee regarding the disallowance under section 88E of the Income Tax Act, 1961. The correct calculation of rebate under section 88E was crucial in determining the taxable amount, and the Tribunal found that the AO had correctly applied the formula as prescribed in the Act. The appeal was therefore dismissed, and the order was pronounced in open court on 29.6.2016.

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Issues:
Confirmation of disallowance under section 88E of the Income Tax Act, 1961.

Analysis:
The appeal was filed challenging the order of the ld.CIT(A)-29, Mumbai, for assessment year 2006-07. The main issue raised was the confirmation of disallowance under section 88E of the Income Tax Act, 1961. The assessee argued that the disallowance was incorrect as the Short Term Capital Gains (STCG) were taxable at 10%, and the rebate under section 88E was calculated at an average rate of tax inclusive of STCG tax. The AO observed that the rebate under section 88E was wrongly allowed in excess, leading to a short levy of tax, and passed an order under section 154 to rectify the excess rebate allowed. The ld.CIT(A) dismissed the appeal, stating that the AO's calculation of the rebate under section 88E was correct based on the figures provided by the assessee in the return of income.

The provisions of section 88E were discussed, highlighting that an assessee is entitled to a rebate where the total income includes income chargeable under the head "Profits and gains of business or profession" from taxable securities transactions. The amount of rebate is calculated by applying the average rate of income tax on such income. The assessee claimed that the rebate was rightly calculated and claimed, while the AO and ld.CIT(A) contended that the excess claim of rebate was rightly withdrawn. The Tribunal agreed with the AO and ld.CIT(A), upholding the reduction of rebate under section 88E to the correct amount and dismissing the appeal of the assessee.

In conclusion, the Tribunal affirmed the order of the ld.CIT(A), dismissing the appeal of the assessee regarding the disallowance under section 88E of the Income Tax Act, 1961. The correct calculation of rebate under section 88E was crucial in determining the taxable amount, and the Tribunal found that the AO had correctly applied the formula as prescribed in the Act. The appeal was therefore dismissed, and the order was pronounced in open court on 29.6.2016.

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