TaxTMI 
TaxTMI 
2011 (10) TMI 614
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....ment when the order passed by the AO was neither erroneous nor prejudicial to the interest of revenue and both the conditions to invoke sec. 263 were not present. 4. For that the Ld. C.I.T erred in holding that receipt of share capital was not properly investigated when the AO duly examined the capital and the Ld. CIT cannot impose his own view of the manner in which enquiry was to be conducted. 5. For that the Ld. C.I.T erred in holding that the assessee was not entitled to the credit u/s. 88E while determining tax liability U/s. 115JB when the same was correctly allowed by the AO in accordance with law and in any case two views were always possible with regard to the allowability thereof. 6. For that the Ld. C.I.T erred in invoking provisions of sec. 263 for payment of the staff salary when the salary paid was quite fair and reasonable considering the volume of the business and even otherwise the same was duly certified by the Auditor to have been incurred for business purposes and there was no evidence on record that the claim was not genuine. 7. For that the Ld. CIT erred in invoking the provisions of Sec. 263 when all the investment in Mutual Funds were duly....
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.... lakhs or more for purchase of Mutual Funds from - (i) Sundaram BNP Paribas Mutual Fund; and (ii) ICICI Prudential Mutual Fund." The CIT, Kol-II noted that Assessing Officer has not verified the source of funds in respect of the abovementioned investment during the course of assessment proceedings and inaction on the part of Assessing Officer rendered the impugned assessment order erroneous and prejudicial to the interest of revenue. In respect to first show cause notice, the assessee replied that the assessee is eligible for rebate or deduction of tax u/s. 88E of the Act even though income is computed under provisions of MAT u/s. 115JB of the Act. He stated that section 88E of the Act provides that the assessee shall be entitled to deduction from the amount of income tax on such income which arises from profits and gains from business or profession on account of security transaction. He stated that section 88E of the Act simply allows credit for Security Transaction Tax paid against income on which tax is payable by assessee and here same is not in dispute. In respect to other show cause notice the assessee contended that in so far as share capital raised during year is concern....
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....ome being MAT provisions of section 115JB of the Act, the issue is squarely covered in favour of assessee and against revenue by the decision of Bangalore Bench in the case of M/s. Horizon Capital Limited (supra), wherein the Tribunal vide para 6 has held as under: "6. Having heard both the parties and having considered the rival contentions, we find that the only dispute is whether the rebate of STT paid by the assessee is allowable from the income tax computed against the total income computed under section 115JB of the Income Tax Act, 1961. The term 'total income' has been defined under the Income Tax Act, 1961 as "the total amount of income referred to in section 5, computed in the manner laid down in this Act." Section 5 of the Income Tax Act, 1961 defines the scope of the total income of a resident or a non-resident person. The total income of the assessee has to be computed under the regular provisions of the Income Tax Act, 1961 and in the case of a company it can be arrived at both under the regular provisions of the Income Tax Act and under the deeming provision under section 115JB of the Act. It has been provided that where the income tax payable by the assessee....
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.... of shareholders as well as genuineness of transactions entered into. We find from paper book filed before us that the Assessing Officer has issued verification notices u/s. 133(6) of the Act to (i) Bothra Finvest Pvt. Ltd., (ii) B. S. Promoters Pvt. Ltd., (iii) Zipper Mercantiles Private Ltd., (iv) Midpoint Marketing Pvt. Ltd., (v) Nihar Viniyod Private Limited, and (vi) Nandan Mercantiles Pvt. Ltd. and all of them submitted information u/s. 133(6) of the Act to Assessing Officer as is evident from the letters available on record. Even the Assessing Officer in his assessment order recorded fact that "Notices u/s. 133(6) of the I. T. Act, 1961, were issued to various parties for verification of share capital introduction. Replies received from them are test checked and kept on record." 7. We find that CIT has given reasoning for revision in assessment framed by Assessing Officer u/s. 143(3) that mere issue of notices u/s. 133(6) of the Act does not absolve the Assessing Officer from his responsibility of verification of replies furnished by prospective shareholders rather this inaction on the part of Assessing Officer not to verify this information and accor....