TaxTMI 
TaxTMI 
2010 (5) TMI 651
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....ee was engaged in the business of share trading. In the return of income, the assessee did not claim rebate under s. 88E. During the course of assessment proceedings, the AO noted that in its P&L a/c, the assessee has accounted for purchases and sales of shares, net of STT. From the information furnished by the assessee, the AO found that the assessee has paid STT of Rs. 6,62,005 in respect of share trading transactions conducted during the relevant year and has claimed it as business expenditure while computing the business income. As the provisions of s. 40(a)(ib) do not allow deduction for STT paid, the AO disallowed the STT of Rs. 6,62,005. However, in the course of assessment proceedings, the assessee raised a plea that if the deductio....
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....s deduction, as per the provisions of s. 40(a)(ib) of the IT Act, 1961. He also contended s. 88E clearly states that STT "shall" be allowed as rebate only when the assessee furnishes evidence of payment with the return of income. What to speak of furnishing evidence of payment (Form 10DB) the assessee even did not claim the same in the return of income as well as computation filed with it. After giving the effect to the order of learned CIT(A), the self-assessment tax and other prepaid taxes paid by the assessee firm will be refunded. The assessee never claimed for any refund of prepaid taxes in the return of income. He also stated that in spite of various cases cited by the assessee before learned CIT(A), the assessee could not cite any pr....
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.... respect of such payment. The AO was justified in disallowing the claim by invoking s. 40(a)(ib). However, once the AO noted that the STT was paid on share trading operations of the appellant and income from these transactions was assessed under the head 'Profits and gains of business' and the appellant furnished evidence in prescribed Form 10DB, then the AO should not have disallowed the claim for rebate which was statutorily granted under s. 88E. It is not in dispute that the appellant carried on share trading business during the relevant year and has paid STT in respect of its trading transactions. It is also not denied by the AO that, in the course of assessment, the appellant had submitted before him evidence in support of STT paid by ....
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....urn. If an assessee altogether omits or fails to furnish requisite certificate, report, etc., till the completion of assessment, then the AO is Justified in making disallowance for non-compliance of the statutory requirement. The Courts have, however, held that if in the course of assessment, the assessee furnishes before the AO supporting evidence in the form of certificate, audit report, etc., as prescribed by the rules, then Wing of such certificates, report, etc., in the course of assessment is sufficient compliance to the procedural requirement of law and deduction cannot be denied merely on the ground that the report, certificate, etc., was not filed along with the return. This proposition is laid down by the Jurisdictional High Court....