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2016 (4) TMI 910 - AT - Income TaxNSE liability for alleged short-deduction of Security Transaction Tax [STT] - transaction of FIIs for which higher rates are applicable being delivery based transaction in respect of both purchases as well as sales - Held that:- The SEBI issued the Circular to the National Stock Exchange for using two client codes, One for sale and Second for purchase transaction for those investors whose transactions are to be settled through delivery only, specifically in the case of FIIs. If the broker or the member have not taken any separate client code, then the assessee cannot held responsible, because the assessee has already intimated / circulated that each and every broker or member should in such cases take two client codes. Any failure cannot be ascribed to the assessee, because, it is an undisputed fact that the client code is not provided by the assessee, but by the member brokers In case where the two separate client codes have not been taken for purchase and sale of shares for the same day and there in only one client code, then transactions are settled in the netted settlement mode, that is, squaring of the transaction and STT is calculated as per the netted settlement mode as prescribed under Rule 3. This netting off mode is not applicable in the case of FIIs in terms of SEBI regulations and Circular. If in some cases, there has been default by the Members brokers for not taking two separate client codes, then so far as assessee is concerned, it has not comitted any default under the provisions of the STT Act r.w. relevant rules, because what assessee is required to see is whether the transactions of purchase and sale has undertaken through particular client codes or not. Here in this case, the assessee has admittedly complied with this statutory requirement hence, we do not find any reason to ascribe any fault to the assessee or hold that be assessee committed and default to collect the correct STT. Thus, it is under the Statute NSE is not liable for any alleged short-deduction of STT. Accordingly, the addition which has been sustained by the CIT(A) to the extent stands deleted. - Decided in favour of assessee
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