By Ajay R. Singh, Advocate
Commissioner
of Income Tax-III, Pune vs. V. Raj Enterprises. [Income tax Appeal no 1335 of
2014 dt : 31/01/2017 (Bombay High Court)].
[V. Raj
Enterprises vs. Commissioner of Income Tax, [dated 30/09/2013 ; A Y: 2007-08
.Pune ITAT ]
The Assessee is
engaged in the business of arbitrage and jobbing through various share broking
firms. For the subject AY in its ROI, assessee returned an income of Rs.2.10
crore. The AO by an order dated 30/11/2009 u/s. 143(3) of the Act, determined
the income at Rs.2.11 crore.
Thereafter, the
CIT in exercise of its powers u/s. 263 of the Act, by order dated 30/3/2012
revised the assessment order. The CIT held that the Assessee was not entitled
to rebate u/s. 88E of the Act in respect of STT (Security Transaction Tax) paid
as it was a share broker. Moreover, it helds that this aspect was not examined
by the AO while passing the Assessment Order.
Being aggrieved,
the Assessee carried the issue in appeal to the Tribunal. The Tribunal held
that the AO while passing the Assessment Order u/s. 143(3) of the Act had
verified and examined the Contract Notes, Bills of respective brokers etc.,
before granting the rebate of STT paid u/s. 88E of the Act as claimed by the
Assessee. Further, on same set of facts, the Assessee’s claim for rebate u/s.
88E of the Act had been allowed by the Revenue in the earlier Assessment Years.
Further, the order also notes that the CIT while revising the order of
Assessment proceeded on an incorrect assumption of fact that the Assessee is a
share broker. This is contrary to the facts on record as the Assessee was doing
the work of jobbing through different share brokerage firm. Thus, for the above
reasons, the Tribunal allowed the appeal and set aside the CIT order dated
30/3/2012 , passed in exercise his powers u/s. 263 of the Act.
The grievance
of the Revenue in appeal before High Court was that the Assessee is not
entitled to the benefit of rebate of STT u/s. 88E of the Act. The High Court
noted that the issue arising in the appeal was a jurisdictional issue of the
powers of the CIT to exercise his powers of Revision u/s. 263 of the Act in the
present facts. The grievance of Revenue on merits of the dispute would merit
examination only if the exercise of jurisdiction u/s. 263 of the Act, is
proper. As noted by the Tribunal, the entire basis of exercising jurisdiction
u/s. 263 of the Act is on the basis of assumption of incorrect fact that the
Assessee is a share broker. This, in fact, is not so. Where the basic facts
have been misunderstood by the CIT, the exercise of powers of Revision is not
sustainable.
Moreover, the
same issue also arose for the earlier AYs i.e. 2005-06 and 2006-07. The Revenue
had accepted the Assessee’s claim for rebate u/s. 88E of the Act to the extent
STT is paid. Last but not the least, Revenue is not able to dispute the fact
that the AO while passing the Assessment Order dated 30th November,
2009 had granted the claim of the Petitioner for benefit u/s. 88E of the Act on
examination and verification of the Contract Notes, Bills of respective brokers
etc. Thus, on the basis of the records available and examination by the
AO, a view has been taken by the AO and it is not open to CIT to revise it
merely because his view on the same facts, is different, as held by the Apex
Court in Malbar Industrial Co. Ltd., vs. CIT 243 ITR 83 (SC).
In view of the
above, the revenue Appeal was dismissed.
