TMI Blog2010 (2) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... the result of improved technology. That does not mean that stock exchange is providing technical services. Members of the stock exchange and the public at large are beneficiaries of these technical improvements. Stock exchanges are not the owner of this technology to provide them for a fee to prospective use. They are themselves consumers of the technology. As far as transaction charges paid to stock exchange are concerned, the decision of the Mumbai ITAT in the case of Kotak Securities Ltd. (supra) relied upon by the learned CIT(A) supports the plea of the assessee. CIT(A) was right in holding that the payment in question is not fee for technical services rendered. order of learned CIT(A) confirmed and dismiss this appeal of the revenue - IT Appeal No. 744/(Mum.) of 2009 - - - Dated:- 23-2-2010 - P.M. Jagtap, N.V. Vasudevan, JJ. Sameer Dalal for the Appellant S. Pal for the Respondent JUDGEMENT N.V. Vasudevan, Judicial Member:- 1. This is an appeal by the revenue against the order dated 18-11-2008 of learned CIT(A)-IV, Mumbai relating to assessment year 2005-06. 2. The issue raised in this appeal is with regard to transaction charges and VSAT c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l services and where he has not deducted tax at source on such fees for technical services, then, no deduction of such expenditure will be allowed while computing his total income. According to the Assessing Officer, sum of Rs. 21,02,011 paid by the assessee to the stock exchange was a fee for technical services and, therefore, the assessee ought to have deducted tax at source on which payment. Since, the assessee had not deducted tax at source on such payment, the aforesaid sum claimed as deduction was disallowed by the Assessing Officer. According to the Assessing Officer, trading in stock exchange is carried on through computer terminals, which are connected to NSE and BSE and various stock brokers, who are members of various stock exchanges. VSAT activity enables the brokers over the length and breadth of the country to get connected with each other and do trading. VSAT and leasline are provided by the stock exchanges and they charge fees for doing so. Thus, it was not a case of providing a simple service for a fee. It was a payment of a fees of a technical services rendered. The assessee had relied on the decision of Hon'ble Madras High Court in the case of Sky cell Communicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual to five per cent of such sum as income-tax on income comprised therein:- Explanation:- For the purposes of this section,- (a) "professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section; (b) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;" The provisions of section 9(1)(vii) Explanation 2 is as follows:- "Explanation 2:- For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries"." As can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is used to make life easier is the result of scientific invention or development and involves the use of technology. On that score, every provider of every instrument or facility used by a person cannot be regarded as providing technical service. When a person hires a taxi to move from one place to another, he uses a product of science and technology, viz., an automobile. It cannot on that ground be said that the taxi driver who controls the vehicle, and monitors its movement is rendering a technical service to the person who uses the automobile. Similarly, when a person travels by train or in an aeroplane, it cannot be said that the railways or airlines is rendering a technical service to the passenger and, therefore, the passenger is under an obligation to deduct tax at source on the payments made to the railway or the airline for having used it for travelling from one destination to another. When a person travels by bus, it cannot be said that the undertaking which owns the bus service is rendering technical service to the passenger and, therefore, the passenger must deduct tax at source on the payment made to the bus service provider, for having used the bus. The elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the products of modern technology, such as, use of the telephone fixed or mobile, the cable T.V., the internet, the automobile, the railway, the aeroplane, consumption of electrical energy, etc. Such facilities which when used by individuals are not capable of being regarded as technical service cannot become so when used by firms and companies. The facility remains the same whoever the subscriber may be - individual, firm or company. "Technical service" referred in section 9(1)(vii) contemplates rendering of a "service" to the payer of the fee. Mere collection of a "fee" for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been received for technical services." 9. We have already given nature of VSAT charges and transaction charges paid by the assessee. Stock exchanges as measures of providing infrastructure to its members provide VSAT facilities to its members to enable screen based trading in shares. Fees collected in this regard is nothing but fee paid for use of facilities provided by the stock exchange. Such facilities are available for use by any member. Satellite based trading enables trading member to trade on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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