TaxTMI 
TaxTMI 
2016 (6) TMI 880
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....h reads as under: "1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in sustaining the disallowance to the extent of Rs. 2,66,654/- out of the total disallowance of Rs. 6,87,921/- made by the Assessing Officer on account of rebate claimed by the assessee u/s. 88E." 3. Briefly stated facts relating to this issue are that the assessee has claimed rebate u/s. 88E of the Act of Rs. 38,23,686/- against the income from business of shares and securities which were chargeable to Securities Transaction Tax (STT). During the course of assessment proceedings, the assessee company filed tabular chart disclosing computation of segment wise profit from its income which are charged to STT and the profits which are not charged to STT. The AO finally disallowed credit for rebate u/s. 88E of the Act to the extent of Rs. 6,87,921/- in respect to the claim made on account of clients' turnover. The assessee in the calculation provided in the said tabular chart shown an amount of its turnover i.e. trading in shares and securities and transactions in F&O segment on its own. The said turnover was amounting to Rs. 2850,35,79,582/-. The assessee also....
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....ents as well as its own account. Hence, whatever expenses were incurred by the appellant are attributable to this composite activity and, therefore, allocable to both STT and non STT paid receipts, unless an expenditure may be linked directly to a specific category of income. The appellant company cannot say that the FORs were taken out of the borrowed money only and that the benefit of such FORs was taken only to execute the transactions on behalf of its clients. Hence, I agree with the view of the AO that the payment of interest is allocable to both SIT paid and non STT paid income. Further, I find no force in the submission of the appellant that certain indirect expenses as mentioned above are deductible from non STT paid income only, because, in the case of composite business activities it cannot be said that such expenses are related to one activity only and not the other. On this point also I agree with the view of the AO that these expenses are allocable between both types of activities. However, I am of the opinion that the view taken by the AO that the expenses as per profit and loss account are allocable in the ratio of income from STT paid and non STT paid transactions, ....
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....f M/s. Millennium Stock Broking (P) Ltd. Vs. DCIT, ITA No. 670/Kol/2011 & ITA No. 677/Kol/2011 & ITA No. 676/Kol/2011 for AYs 2006-07 and 2007-08 dated 29.09.2015 wherein the proportion of assessee's own transaction was at 83% whereas transaction belonging to the clients was only 17%. He referred to para 4.2 of the Tribunal's order, which reads as under: "He, accordingly, observed that the transactions were assessee's own transactions and only 17% were transactions belonging to the clients. Thus, he observed that the substantial portion of the transactions were assessee's own transaction and it was wrong for the ae to claim that it mainly maintain its establishment for its clients. He pointed out that out of the total expenses, other than the STT charges debited in the profit and loss account only the expenses for stamp duty charges amounting to Rs. 22,31,939/- could be said to be fully related to client's transactions. All remaining expenses had been incurred both for assessee's own transactions as well as the transactions of the clients. Therefore, out of total expenses of Rs. 1,66,63,904/-, the common expenses were at Rs. 1,44,31,965/- (1,66,63,904 - 22,....
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..... Ld. Counsel for the assessee for this referred to assessment order and stated that assessee's self transaction i.e. own transactions are only to the extent of 41% whereas brokerage/clients' transactions are at 59%. In view of this ld. Counsel for the assessee argued that the disallowance of indirect expenses and disallowance in respect to interest income the disallowance of STT can be attributed at 5 to 10%. On the other hand, the Ld. Sr. DR also agreed that the issue can be decided in term of the decision of M/s. Millennium Stock Broking (P) Ltd., supra. 6. We have heard rival submissions and gone through facts and circumstances of the case. We find that the above facts are undisputed and only issue before us for our adjudication in this case is that how much percentage of disallowance of STT rebate is to be given. In view of the above facts as discussed above, the assessee's self transactions are to the tune of 41% and brokerage/clients' transactions pertained to 59%. The proposition of law laid down by this Coordinate bench in the case of M/s. Millennium Stock Broking (P) Ltd., supra, if we go by that then at the best revenue can disallow rebate u/s. 88E of the Act qua brok....