TaxTMI 
TaxTMI 
2019 (6) TMI 473
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....) has grossly erred in law and on facts and in the circumstances of the appellant's case in upholding the action of the AO in restricting the rebate u/s 88E at Rs. 6,16,44,627/- as against Rs. 6,45,33,420/- claimed by the appellant. 2. That the learned CIT(A) has failed to appreciate that if the other income included in the 'profits and gains of business' was to be excluded, then the proportionate corresponding expenses attributable to the same were also to be excluded. 3. That the learned CIT(A) has grossly erred in law and on facts by not accepting the claim of the appellant for proportionate allocation of business expenses between income arising from the taxable securities transactions and other income (not arising from....
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.... to assessee's claim of rebate U/s 88E of Income Tax Act, 1961 ("I.T. Act", for short). As per provisions of section 88E of I.T. Act, rebate U/s 88E of I.T. Act is admissible in respect of income of an assessee, chargeable under the head "Profits and gains of business or profession", arising from taxable securities transaction. For ready reference, the provisions of section 88E of I.T. Act are reproduced as under: "[Rebate in respect of securities transaction tax. 88E. (1) Where the total income of an assessee in a previous year includes any income, chargeable under the head "Profits and gains of business or profession", arising from taxable securities transactions, he shall be entitled to a deduction, from the amount of i....
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....T. Act in respect of other income also, in addition to income under the head "Profits and gains of business or profession". The AO asked the assessee to explain why the claim U/s 88E of I.T. Act should not be restricted to the profits and gains of business arising from taxable security transaction only. In response, the assessee filed revised working of claim U/s 88E of I.T. Act during assessment proceedings. However, in the revised working submitted by the assessee, the assessee claimed that proportionate expenses should also be allocated against the incomes which have been excluded from the profits of the business for computing the rebate U/s 88E of I.T. Act. The AO, however, did not accept the request of the assessee, stating that the ot....
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....f rebate was done as per AO's directions and the amount of rebate u/s 88E was re-worked at Rs. 6,16,44,627/- as against Rs. 6,45,33,420/- which was made in the return of income. While working out this revised claim u/s 88E as per the directions of the AO, it was pointed out that whole of the income is taxable under the head 'Business Income' and has also been taxed by the AO under the head 'Business Income' yet if some part of income is to be excluded from the nature of business income to which section 88E is applicable, then corresponding expenses should also be excluded. Various submissions which were made before the Ld. AO as well as before the Ld. CIT(A) are reproduced by the Ld. CIT(A) in his order. The operating expenses for ....
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....n be found with such computation, the same may kindly be allowed to the assessee by holding that assessee would be eligible to rebate u/s 88E to the extent of Rs. 6,34,04,046/-. Without prejudice to this since AO himself accepts that expenses against the brokerage income could have been claimed by the assessee it may please be held that proportionate expenses should be allocated to earning of brokerage income in the ratio of STT paid income and non-STT paid income by including at least brokerage income into the non-STT income. Although the AO has claimed non-STT income as other income, but finally the same has been assessed as business income, therefore it would be unfair to tax whole of the non-STT income business income on gross ....
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....ssee in a previous year, chargeable under the head "Profits and gains of business or profession", arising from taxable securities transactions. Therefore, orders of the lower authorities, namely Ld. CIT(A) and AO, restricting the rebate U/s 88E to income chargeable under the head "Profits and gains of business or profession", arising from taxable security transaction, is upheld. However, the assessee's claim to allocate expenses against such incomes which had been excluded from the profits of the business in computing rebate U/s 88E of I.T. Act, is a reasonable claim. Merely, because income on which rebate U/s 88E of I.T. Act was not allowable was only 3.32% of the total income, such allocation of expenses cannot denied. Moreover, the opini....