Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2016 (11) TMI 881

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... TMI 1043 - ITAT MUMBAI ] - Decided in favour of the assessee. - ITA No. 335/Mum/2013, ITA No. 650/Mum/2014 - - - Dated:- 2-11-2016 - Shri Joginder Singh, Judicial Member And Shri Ramit Kochar, Accountant Member Revenue by : Shri Neil Philiph - DR Assessee by : Shri Vijay Mehta CA ORDER Per Joginder Singh (Judicial Member) Both these appeals are by the assessee for the A.Y. 2009-10 and 2010-11, aggrieved by the separate impugned orders dated 11/10/2012 and 04/10/2013 of the Ld. First Appellate Authority, Mumbai-39. 2. First we shall take up appeal for Assessment year 2009-10 (ITA No. 335/MUM/2013) wherein the first ground raised by the assessee pertains to disallowing depreciation on membership right amounting to ₹ 80,156/-. At the outset, the learned counsel for the assessee Shri Vijay Mehta claimed that the impugned issue is covered in favour of the assessee by the order of the Tribunal dated 07/05/2014 in the case of assessee itself (ITA No. 7375 8217/MUM/2010). This factual assertion of the ld. AR was not controverted by Shri Neil Philiph, ld. DR. 2.1. We have considered the rival submissions and perused the material available on record. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e decision of Hon ble Bombay High Court in the case of Techno Shares and Stocks Ltd. (supra) relied upon by the authorities below has already been overruled by the Hon ble Supreme Court vide its judgment in [2010] 327 ITR 323 (SC) holding that the stock exchange membership cards are eligible for depreciation u/s 32 of the Act being in the nature of intangible asset. Although the ld. D.R. has relied in support of the Revenue s case on this issue on the decision of co-ordinate bench of this Tribunal in the case of Sino Securities (P.) Ltd. Vs. ITO [2012] 134 ITD 321 (Mum) and in the case of Sunidhi Consultancy Services vs. DCIT reported in [2012] 50 SOT 223 (Mum), it is observed that the claim of depreciation made by the assessee in these cases was in respect of shares issued by the Bombay Stock Exchange in lieu of membership cards under the scheme of Corporatisation and Demutualisation and keeping in view the said scheme, it was held by the Tribunal that depreciation claimed by the assessee on the shares of Bombay Stock Exchange could not be allowed. The facts involved in the cases of Sino Securities (P.) Ltd. (supra) and Sunidhi Consultancy Services (supra) decided by the Tribunal .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ar 2010-11 also. 3. The next ground raised pertains to disallowance of lease line charges amounting to ₹ 2,45,179/- under section 40(a)(ia) of the Act. The learned counsel for the assessee claimed that this issue is also decided by the Hon'ble Jurisdictional High Court in the case of CIT vs. Angel Capital Debit Market Ltd. (ITA No. 475/2011, order dated 28/07/2011). This factual matrix consented to be correct by ld. DR. 4. We have considered the rival submissions and perused the material available on record. We find that the Tribunal for Assessment Year 2008-09 in the case of Dy. CIT vs. M/s. Angel Commodities (ITA No. 7026/Mum/2011, dated 10/07/2013) considered the issue. The relevant portion of the same is reproduced hereunder:- 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs..10,08,586/- by holding that VSAT and lease line charges cannot be considered as rendering of technical services and hence provisions of section 40(a)(ia) were not attracted. 3.1 The issue is with reference to deletion of the addition of ₹ 18,08,586/- by holding that V-SAT and lease line charges cannot be .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... n question i.e. 2005-2006. This is on account of the provisions of Section 40(a)(ia) of the Act. Notwithstanding the above, the Bombay High Court held that in view of the apparent understanding of both the assessee and the Revenue with regard to the liability to deduct TDS on transaction charges paid to the Bombay Stock Exchange right from the year 1995 i.e. coming into effect of Section 194J till the Assessment Year in question, benefit, in the facts of the case, should be granted to the appellant assessee and the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act must be held to be not correct. 4. Aggrieved by the finding that transaction charges paid to the Stock Exchange are fees for technical services , the assessee Kotak Securities Ltd. is in appeal before us whereas the Revenue seeks to challenge the later part of the order of the High Court set out above. The assessee is also in appeal against similar orders passed in respect of subsequent assessment orders in the case of the assessee itself. As the order of the High Court, with regard to transaction charges being in the nature of fee for technical services, has been made applicable to .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... f any such sum, tax has been deducted in any subsequent year, or has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200 such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation.......... 9. Income deemed to accrue or arise in India (1) The following incomes shall be deemed to accrue or arise in India:- (i)..................... ...................... ...................... (vii) income by way of fees for technical services payable by- (a) ............... (b) ............... (c) ............... 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 un .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ilable to all and would therefore stand out in distinction to the former. The service provided by the Stock Exchange for which transaction charges are paid fails to satisfy the aforesaid test of specialized, exclusive and individual requirement of the user or consumer who may approach the service provider for such assistance/service. It is only service of the above kind that, according to us, should come within the ambit of the expression technical services appearing in Explanation 2 of Section 9(1)(vii) of the Act. In the absence of the above distinguishing feature, service, though rendered, would be mere in the nature of a facility offered or available which would not be covered by the aforesaid provision of the Act. 9. There is yet another aspect of the matter which, in our considered view, would require a specific notice. The service made available by the Bombay Stock Exchange [BSE Online Trading (BOLT) System] for which the charges in question had been paid by the appellant assessee are common services that every member of the Stock Exchange is necessarily required to avail of to carry out trading in securities in the Stock Exchange. The view taken by the High Court t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates