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2017 (10) TMI 101 - HC - Income TaxTDS u/s 194C or 194J - payment to National Stock Exchange in the nature of transfer charges - payments of demat charges and other charges levied by NSDL and CDSL - Held that:- The Tribunal while reversing the view of the Commissioner of Income Tax (Appeals) observed that there were no elaborate reasons recorded to hold that the TDS was required to be deducted under section 194J and not under section 194C of the Act. The Tribunal noted that the stock exchange provides services to the assessee company for purchase and sale of shares of their clients. Such charges are merely in the nature of recovery of expenses of the exchange and cannot be termed as charges for providing any professional or technical service. We are broadly in agreement with the view of the Tribunal. The Stock Exchange cannot be termed as providing professional or technical services. This question is therefore not required to be considered. Disallowance of lease line charge paid u/s.40(a)(ia) - Held that:- This issue has been decided by the Supreme Court in case of Commissioner of Income Tax vs. Kotak Securities Ltd. reported in [2016 (3) TMI 1026 - SUPREME COURT] in which held that the brokers make payment to the stock exchange for the facilities of faceless screen based transactions made available at the stock exchange which was compulsory for the brokers to use. In the opinion of the Supreme Court, this was not a payment of fee for technical service rendered by the stock exchange inviting deduction at source under section 194J of the Act. Deduction of tax for payments of demat charges and other charges levied by NSDL and CDSL - Held that:- Tribunal was of the opinion that such charges were in the nature of recovery of cost or expenses at large and not for providing any professional or technical service. To this extent, we are concur with the view of the Tribunal. While rejecting this question, we should not be seen to be confirming the Tribunal's further observation that even if there was a shortfall in tax collection at source, section 40(a)(ia) of the Act for disallowance cannot be invoked. We will examine such an issue in an appropriate case.
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