TMI Blog2012 (7) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 9,09,083/- under section 14A r.w.rule 8D of the Act, made by the AO. 2. (i) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance of ₹ 5,79,525 made u/s.40(a)(ia) in respect of NSE settlement Leaseline charges paid to Stock Exchange, without appreciating the facts that these were composite charges for professional and technical services rendered by the stock exchange to its members and the assessee has failed to deduct TDS thereon. . ii. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that these services are essential in nature as they can only be availed by members of Stock Exchange. iii. On the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) @ 5% of the dividend against the disallowance made by the Assessing Officer at ` 9,90,083, as it has not preferred appeal against the order passed by the learned Commissioner (Appeals). 3. In view of the smallness of the matter and also the fact that the learned Commissioner (Appeals), after considering the fact, has restricted the disallowance @ 5% of the dividend on the basis of certain decisions of the Tribunal, we decline to interfere in the order passed by the learned Commissioner (Appeals) and dismiss the ground raised by the Revenue. 4. Ground no.2, was stated to be covered in favour of the assessee by the decision of a co ordinate bench of the Tribunal in ACIT v/s DICGC Ltd., ITAs no.2361 2524/Mum./2011, order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at sec. 194J was not applicable, then fault cannot be found for not deducting tax and accordingly it was held that in that case tax was not deductible and accordingly there was no justification for invocation of sec. 40(a)(ia). In the case before us also, for many years, the Revenue never raised objection for deduction of VSAT charges and transaction charges. Therefore, now, all of a sudden, the provisions of sec. 40(a)(ia) cannot be invoked. Secondly, he submitted that since the payee has already paid tax, therefore, non-deduction of tax by the assessee will not alter the situation. In this regard, he referred to page 5 of the paper book, which is copy of the Certificate issued by the Clearing Corporation of India which certifies that tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax laws in the case of CIT vs. Sodra Devi (32 ITR 615). The ld. counsel of the assessee has invited our attention to the explanatory memorandum explaining the provisions of the Finance Bill (No.2) 2004 (268 ITR 174) (Statutes) wherein at page 190 it is clearly mentioned that section 40(a)(ia) is being introduced to augment the compliance of TDS provisions. Therefore, it is not a levy of separate taxation and the only idea is that TDS provisions should be strictly followed. Therefore, as per the existing law, there was no provision for disallowing the expenditure if TDS was not deducted and the mischief was in many cases tax was not being deducted and some people going scot free. Therefore, through the Amending Act i.e. Finance Bill (No.2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the submission i.e. since the person to whom the payment was made has already offered the same for taxation, hence provisions of sec.40(a)(ia) cannot be invoked. This is not correct. Because the decision in the case of Hindustan Coca Cola Beverage (P.) Ltd. vs. CIT [supra] was rendered under the provisions of sec.201. Secondly, the Hon'ble Supreme Court vide para-10 has clearly mentioned that in view of Circular No.275/201/95-IT(Clause (b) of Explanation 1 to sec.115JB) dated 29-1-1997 no demand u/s.201[1] could be enforced after the deductor has satisfied the officer that taxes due have been paid by the deductee assessee. There is no such circular in case of disallowances to be made u/s.40[a][ia]. Similarly, the decision in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y 2008-09 because by that time revenue has already invoked the provisions of sec.40[a][ia] and this fact was known to the assessee. Therefore, in our opinion, in view of para-31 of the decision of the Hon'ble Bombay High Court in the case of Kotak Securities Ltd., provisions of sec.40[a]ia] are not applicable for A.Y 2007-08 whereas the same are applicable in A.Y 2008-09. 5. It is observed that on similar charges, the Assessing Officer has applied the provisions of section 40a(ia) of the Act, on which the co ordinate bench has held that those charges are not liable to be deduction of tax, therefore, disallowance cannot be made under section 40a(ia). In this way of the situation, after hearing both the parties, as no contrary decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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