ITO, Ward - 34(3), Kolkata, Kolkata v. M/s. Chunilal T. Mehta, Kolkata

ITA 227/KOL/2010 | 2006-2007
Pronouncement Date: 28-05-2010

Appeal Details

RSA Number 22723514 RSA 2010
Bench Kolkata
Appeal Number ITA 227/KOL/2010
Duration Of Justice 3 month(s) 25 day(s)
Appellant ITO, Ward - 34(3), Kolkata, Kolkata
Respondent M/s. Chunilal T. Mehta, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 28-05-2010
Date Of Final Hearing 20-05-2010
Next Hearing Date 20-05-2010
Assessment Year 2006-2007
Appeal Filed On 03-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI D. K. TYAGI JM & HONBLE SRI C. D. RAO AM] I.T.A. NO.227/KOL/2010 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER WD-34(3) KOLKATA -VS- M/S. CH UNILAL T. MEHTA (PA NO.AADFC 7995 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI P. KOLHE RESPONDENT BY : SRI M. D. SHAH O R D E R PER D. K. TYAGI JM: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE LD. CIT(A) KOLKATA DATED 23 RD NOVEMBER 2009 FOR ASSESSMENT YEAR 2006-07 ON THE SOLE GROUND OF GRANTING REBATE OF RS.6 62 005/- UNDER TH E PROVISIONS OF SECTION 88E IN RESPECT OF SECURITIES TRANSACTION TAX (STT) PAID. . 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FIRM FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.1 99 730/-. THE ASSE SSEE WAS ENGAGED IN THE BUSINESS OF SHARE TRADING. IN THE RETURN OF INCOME THE ASSES SEE DID NOT CLAIM REBATE U/S. 88E. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT IN ITS P & L ACCOUNT 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 TRANSACTI ONS CONDUCTED DURING THE RELEVANT YEAR AND HAS CLAIMED IT AS BUSIESS EXPENDITURE WHILE CO MPUTING THE BUSINESS INCOME. AS THE PROVISIONS OF SECTION 40(A)(IB) DO NOT ALLOW DEDUCT ION FOR STT PAID THE AO DISALLOWED THE STT OF RS.6 62 005/-. HOWEVER IN THE COURSE O F ASSESSMENT PROCEEDINGS THE ASSESSEE RAISED A PLEA THAT IF THE DIRECTIONS FOR STT IS NOT ALLOWED AS BUSINESS EXPENDITURE THEN ALTERNATIVELY THE ASSESSEE SHOUL D BE GRANTED REBATE U/S. 88E IN RESPECT OF STT PAID. THE AO DID NOT ALLOW THE REBATE U/S. 88E ON THE GROUND THAT THE DEDUCTION WAS NOT PERMISSIBLE UNLESS THE ASSESSEE H AD FURNISHED EVIDENCE OF PAYMENT OF STT IN THE PRESCRIBED FORM ALONG WITH THE RETU RN. SINCE THE ASSESSEE NEITHER CLAIMED THE REBATE IN THE RETURN NOR FILED EVIDENCE IN FORM 10DB ALONG WITH THE RETURN THE AO DISALLOWED THE ASSESSEES CLAIM FOR REBATE U /S. 88E OF THE ACT. IN APPEAL THE LD. 2 CIT(A) DIRECTED THE AO TO ALLOW THE REBATE AS PRESC RIBED IN SECTION 88E IN RESPECT OF STT PAID IN RESPECT OF THE SHARE TRADING INCOME WH ICH HAS BEEN ASSESSED UNDER THE HEAD PROFITS & GINS OF BUSINESS. AGGRIEVED BY THE SAID ORDER NOW THE REVENUE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US THE LD. DR HEA VILY RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT THE CLAIM FOR REBATE OF TAX U /S 88E FOR SECURITIES TRANSACTION TAX (STT) WAS NEITHER CLAIMED IN THE RETURN OF INCO ME NOR IN THE COMPUTATION OF INCOME FILED WITH THE RETURN OF INCOME. FORM 10DB W AS ALSO NOT FILED WITH THE RETURN OF INCOME AS EVIDENCE FOR PAYMENT OF STT. EVEN IN THE PROFIT & LOSS A/C. & BALANCE SHEET FILED NO MENTION OF PAYMENT OF S.T.T WAS THE RE. ONLY DURING THE ASSESSMENT PROCEEDINGS ON CAREFUL EXAMINATION OF PURCHASES I T WAS SEEN THAT PURCHASES INCLUDED STT. HENCE THE SAME WAS NOT RIGHTLY ALLOWED BY THE AO AS DEDUCTION AS PER THE PROVISIONS OF SECTION 40(A)(IB) OF THE I. T. ACT 19 61. HE ALSO CONTENDED SECTION 88E CLEARLY STATES THAT STT SHALL BE ALLOWED AS REBAT E 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 CLAI M THE SAME IN THE RETURN OF INCOME AS WELL AS COMPUTATION FILED WITH IT. AFTER GIVING THE EFFECT TO THE ORDER OF LEARNED CIT (APPEALS) THE SELF ASSESSMENT TAX & OTHER PREPAID TAXES PAID BY THE ASSESSEE FIRM WILL BE REFUNDED. THE ASSESSEE NEVER CLAIMED FOR AN Y REFUND OF PREPAID TAXES IN THE RETURN OF INCOME. HE ALSO STATED THAT IN SPITE OF V ARIOUS CASES CITED BY THE ASSESSEE BEFORE LEARNED CIT (APPEAL) THE ASSESSEE COULD NOT CITE ANY PRECEDENT WHERE IT IS MENTIONED THAT REBATE U/S 88E CAN BE ALLOWED IF IT IS NEITHER CLAIMED IN THE RETURN OF INCOME NOR IN REVISED RETURN OF INCOME (IF ANY). H E ALSO SUBMITTED THAT IT IS THE LAW OF THE LAND AS DECLARED BY THE HONOURABLE APEX COURT I N CASE OF GOETZE (INDIA) LTD. VS. CIT [2006] 284 ITR 323 (S.C) THAT DEDUCTION CLAIMED AFTER FILING OF RETURN CANNOT BE ALLOWED (IF REVISED RETURN IS NOT FILED)..REVISED R ETURN WAS NEVER FILED. HE CONCLUDED HIS ARGUMENT BY PRAYING THAT THE ORDER OF THE LD. CIT(A ) MAY BE SET ASIDE AND THAT OF AO BE RESTORED. 4. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE RELIED ON THE ORDER OF THE LD. CIT(A) AND URGED BEFORE THE BENCH TO CONFIRM THE SA ME. 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) GAVE RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER : 7. I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDE RED THE SUBMISSION OF THE APPELLANT. I HAVE ALSO CONSIDERED THE VARIOUS JUDIC IAL DECISIONS RELIED UPON BY THE APPELLANT. IN THE PRESENT CASE THE FACTS ARE NOT D ISPUTED BY EITHER PARTIES. IN THE RETURN THE APPELLANT HAS DECLARED BUSINESS INCOME OF RS.1 99 730/- WHICH WAS ARRIVED AT AFTER CLAIMING DEDUCTION FOR STT PAID. AS PER THE TRADING ACCOUNT SUBMITTED WITH THE RETURN THE BUSINESS PROFITS WERE DECLARED AFTER CLAIMING S TT AS BUSINESS EXPENDITURE. AND SINCE THE APPELLANT HAD CLAIMED STT PAID AS BUSINES S EXPENDITURE HE DID NOT CLAIM REBATE U/S 88E IN RESPECT OF SUCH PAYMENT. THE AO W AS JUSTIFIED IN DISALLOWING THE CLAIM BY INVOKING SECTION 40(A)(IB). HOWEVER ONCE THE AO NOTED THAT THE STT WAS PAID ON SHARE TRADING OPERATIONS OF THE APPELLANT AND IN COME FROM THESE TRANSACTIONS WAS ASSESSED UNDER THE HEAD PROFITS & GAINS OF BUSINES S AND THE APPELLANT FURNISHED EVIDENCE IN PRESCRIBED FORM-1ODB THEN THE AO SHOUL D NOT HAVE DISALLOWED THE CLAIM FOR REBATE WHICH WAS STATUTORILY GRANTED U/S 88E. I T IS NOT IN DISPUTE THAT THE APPELLANT CARRIED ON SHARE TRADING BUSINESS DURING THE RELEVA NT 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 FILING FORM-1ODB. AND ONCE THE PRIMARY CLAIM FOR B USINESS EXPENDITURE IN RESPECT OF STT WAS FOUND DISALLOWABLE U/S 40(A)(IB) THEN IT W AS NECESSARY FOR THE AO TO ADJUDICATE ON THE ALTERNATE CLAIM FOR REBATE U/S 88 E OF THE ACT. MERELY BECAUSE UNDER MISCONCEPTION OF LAW THE APPELLANT CLAIMED DEDUCTI ON FOR STT PAID AS BUSINESS EXPENDITURE WHICH WAS LATER ON FOUND TO BE NOT ALLO WABLE U/S 40(A)(IB) HE COULD NOT BE DEPRIVED OF ALTERNATE CLAIM FOR REBATE U/S 88E. IT IS NOT IN DISPUTE THAT THE APPELLANT HAD ACTUALLY PAID STT AND CLAIM WAS SUPPORTED BY FORM-1 ODB AS EVIDENCE OF TAX PAYMENT FOR WHICH CREDIT WAS ALLOWABLE BY THE TAX AUTHORITI ES. THE SUBSTANTIVE PROVISION OF LAW FOR CLAIMING CREDIT OR AVAILING TAX REBATE IS MAKIN G ACTUAL PAYMENT OF TAX TO THE CREDIT OF THE EXCHEQUER. FURNISHING EVIDENCE IN SUPPORT OF THE PAYMENT MADE IS ONLY A PROCEDURAL REQUIREMENT AND NOT A SUBSTANTIVE REQUIR EMENT THE HONBLE COURTS HAVE HELD THAT FURNISHING OF CERTIFICATES AUDIT REPORTS ETC ALONG WITH THE RETURN IS ONLY A PROCEDURAL REQUIREMENT AND NOT A SUBSTANTIVE REQUIR EMENT IT MAY BE NOTED THAT FURIRNSHING OF THE REQUISITE EVIDENCE OR CERTIFICAT E OR REPORT BEFORE THE AO IS A MANDATORY REQUIREMENT HOWEVER SUCH MANDATORY REQU IREMENT CAN BE COMPLIED WITH AT ANY TIME TILL THE COMPLETION OF ASSESSMENT. THE COU RTS HAVE DRAWN DISTINCTION BETWEEN NON-FIFING OF THE REPORT CERTIFICATE ETC. AT ANY STAGE AND NOT FURNISHING OF THE CERTIFICATES REPORT ETC. ALONG WITH THE RETURN. IF AN ASSESSEE ALTOGETHER OMITS OR FAILS TO FURNISH REQUISITE CERTIFICATE REPORT ETC. TIL L THE COMPLETION OF ASSESSMENT THEN THE AO IS JUSTIFIED IN MAKING DISALLOWANCE FOR NON-COMP LIANCE OF THE STATUTORY REQUIREMENT. THE COURTS HAVE HOWEVER HELD THAT IF IN THE COURS E OF ASSESSMENT THE ASSESSEE FURNISHES BEFORE THE AO SUPPORTING EVIDENCE IN THE FORM OF CERTIFICATE AUDIT REPORT ETC. AS PRESCRIBED BY THE RULES THEN FILING OF SU CH CERTIFICATES REPORT ETC. IN THE COURSE OF ASSESSMENT IS SUFFICIENT COMPLIANCE TO THE PROCE DURAL REQUIREMENT OF LAW AND DEDUCTION CAN NOT BE DENIED MERELY ON THE GROUND TH AT THE REPORT CERTIFICATE ETC. WAS NOT FILED ALONG WITH THE RETURN. THIS PROPOSITION I S LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF BERGER PAINTS LTD VS CIT (126 TAXMAN 435). ALTHOUGH THE DECISION OF THE HONBLE CALCUTTA HIGH COURT WAS IN THE CONTE XT OF NON FILING OF AUDIT REPORT ALONG WITH THE RETURN IN SUPPORT OF DEDUCTION CLAIM ED U/S 32AB OF THE ACT THE RATIO LAID DOWN IN THE DECISION IS SQUARELY APPLICABLE TO THE PRESENT CASE AS WELL. SINCE IN THE PRESENT CASE THE APPELLANT HAD FURNISHED EVIDENCE I N SUPPORT OF PAYMENT OF STT IN PRESCRIBED FORM-1ODB IN THE COURSE OF ASSESSMENT T HERE WAS SUFFICIENT COMPLIANCE TO 4 PROVISIONS OF SECTION 88E. IN VIEW OF THE ABOVE TH E AO IS DIRECTED TO ALLOW THE REBATE AS PRESCRIBED IN SECTION 88E IN RESPECT OF STT PAID IN RESPECT OF THE SHARE TRADING INCOME WHICH HAS BEEN ASSESSED UNDER THE HEAD PROFITS & G AINS OF BUSINESS. GROUND NO. 4 IS ALLOWED. SINCE THE REVENUE DID NOT CONTROVERT THE AFORESAID FINDING OF THE LD. CIT(A) BY PRODUCING ANY COGENT MATERIAL/EVIDENCE BEFORE US W E DO NOT FIND ANY INFIRMITY IN THE AFORESAID ORDER OF THE LD. CIT(A) AND THE SAME IS H EREBY UPHELD. THEREFORE THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28. 5.10 SD/- SD/- (C. D. RAO) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28TH MAY 2010 COPY TO : 1. ITO WARD-34(3) KOLKATA. 2. M/S. CHUNILAL T. MEHTA 8 LYONS RANGE KOLKATA-700 001. 3. CIT(A) KOLKATA. 4. CIT KOLKATA. 5. D.R. ITAT KOLKATA. TRUE COPY BY ORDER DEPUTY REGISTRAR JD.(SR.P.S.) I.T.AT. KOLKATA