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Asst. Commissioner of Income-tax, Circle, 4 (2) , Mumbai Versus M/s. Padmakshi Financial Services Pvt. Ltd.

I.T.A. No.5943/Mum/2009 - Dated:- 9-7-2010 - SHRI D.K. AGARWAL (J.M.) AND SHRI R.K. PANDA (A.M.). Appellant by Shri Devadasan. Respondent by Shri Jitendra Jain. ORDER PER R.K. PANDA, AM: This appeal filed by the Revenue is directed against the order dated 24.08.2009 of CIT(A)-IV, Mumbai, relating to Assessment Year 2005-06. 2. In ground of appeal no.1, the Revenue has challenged the order of the CIT(A) in deleting the addition of ₹ 39,522/- made by the Assessing Officer on account of penal .....

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to sec.37 is not correct. Aggrieved with such order of CIT(A), the Revenue is in appeal before us. 3. The learned D.R. submitted that BSE being a statutory authority, violation of its rules & regulations amount to infringement of law, therefore, the Assessing Officer was justified in disallowing the penalty. 4. The learned counsel for the assessee, on the other hand, referring to a series of decisions of the Tribunal, submitted that penalty paid to NSE & BSE is allowed as revenue expend .....

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5. We have heard both the sides. We find the Assessing Officer disallowed the claim of the assessee on the ground that the penalty has been paid to SEBI, a statutory corporation for violation of rules framed by the Govt. The CIT(A) deleted the disallowance on the ground that the same has been paid to Stock Exchanges. We find merit in the alternative contention of the assessee that the matter may be restored to the file of the Assessing Officer for verification of the nature of payment and allow .....

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nsaction charges of ₹ 13,87,154/- made by the Assessing Officer u/s.40(a)(ia) of the I.T. Act. 6.1 After hearing both the sides, we find the assessee has debited transaction charges of ₹ 13,87,154/- which is payable to Stock Exchange on account of services rendered by it with regard to transactions in securities through the Exchange. The Assessing Officer disallowed the claim made by the assessee on the ground that no tax has been deducted out of such payment and, therefore, in view .....

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s not deductible on the same. Aggrieved with such order of CIT(A), the Revenue is in appeal before us. 7. We find the Co-ordinate Benches of the Tribunal are taking the consistent view that fees paid by the members to the Stock Exchange is not for any technical services rendered since the Stock Exchange does not provide managerial services and, therefore, no tax is deductible on such payment. Therefore, the order of the CIT(A) does not suffer from any infirmity, who has followed the decision of .....

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ted that these payments have been booked in the books of account as commission payment. Since the assessee has not deducted any TDS on this amount, the AO confronted the same to the assessee. Not being satisfied with the explanation given by the assessee and referring to the provisions of sec. 194(1), the AO held that the company has enlisted the services of jobbers for carrying out the work which primarily belongs to the company. The payments made are in lieu of services rendered for carrying o .....

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in respect of the services offered by the jobbers. He accordingly disallowed the payment of ₹ 43,89,541/- u/s. 40(a)(ia) read with sec. 194C of the I.T. Act since the assessee had not deducted tax. 8.2 In appeal, the ld. CIT(A), following his own decision in the case of M/s. Prakash K. Shah Share & Securities Pvt. Ltd., deleted the addition by holding as under : The role of jobbers as summarized in Encyclopaedia of Britannica Volume 23, Pages 517 & 518 is that a jobber transacts b .....

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ation of their trade and minimization of market risks. The jobbers are in fact clients acting on their own account and the jobbers deal in shares and securities on profit/loss sharing basis as decided mutually and periodically the profit/loss incurred by a jobber is ascertain and shares between the appellant and the jobber after deducting the cost. The relationship between the jobber and the appellant company is that of co-sharer of profit/loss, therefore, provisions of section 194C is not attra .....

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