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M/s. HSBC Securities and Capital Markets (India) Pvt. Ltd. Versus Income Tax Officer (TDS) (OSD) 1 (1) , Mumbai

2016 (11) TMI 960 - ITAT MUMBAI

TDS u/s 194J - non deduction of tds on transaction charges paid to the Stock Exchange - Held that:- As decided in Commissioner of Income Tax 4, Mumbai Vs. Kotak Securities Ltd.[2016 (3) TMI 1026 - SUPREME COURT ] the assessee was not liable to deduct the TDS upon the transaction charges paid to the Stock Exchange. Therefore, when the amount was not due then no interest was liable to be payable. Accordingly, the order passed by the CIT(A) is wrong against law and facts and is liable to be set asi .....

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2. The assessee has raised the following grounds:- GROUND I: PRINCIPLE OF NATURAL JUSTICE: 1. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in upholding the action of the Income Tax Officer (OSD) (TDS)-1(1), Mumbai ( the AO ) in passing an order under section 201(1) / 201(1A) of the Act without giving a fair and reasonable opportunity of hearing to the Appellant and thereby violating the principles of natural justice. 2. The learned CIT(A) failed to appr .....

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r section 201(1A) of the Act amounting to ₹ 2,75,530/- on the alleged ground that the Appellant failed to deduct tax under section 194J of the Act from the transaction charges paid to the Stock Exchanges. 2. He failed to appreciate and ought to have held that: i. Interest of the Act is compensatory in nature and can be levied only when there is default in the payment of taxes. ii. When the recipient of income claims the refund of taxes paid by them or files the loss return of income, defau .....

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f the case and in law, the learned CIT(A) erred in upholding the action of the AO in calculating the interest under section 201(1A) of the Act upto the date on which tax is to be deducted under section 194J of the Act by the Appellant. 2. He failed to appreciate and ought to have held that the recipients have already paid taxes on their income as advance tax or self-assessment tax and therefore, interest u/s.201(1A) of the Act is to be calculated upto the date on which recipients paid taxes on t .....

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nd thus the question of levying interest on non-deduction or late payments of TDS u/s.201(1A) of the Act does not arise. 2. The Appellant prays that the order passed by the Income Tax Officer (TDS)-1(1), Mumbai levying interest u/s.201(1A) of the Act amounting to ₹ 2,75,530/- be set aside and the demand be deleted. 4. The departmental representative raised the issue that the appeal of the assessee is time barred by 3 days. The assessee filed an application along with an affidavit stating t .....

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ation of delay is hereby allowed. 5. The brief facts of the case are that in the light of the decision of Hon ble Bombay High Court in the case of M/s.Kotak Securities Ltd., the information was called from M/s. Bombay Stock Exchange/s, M/s. National Commodity and Derivative Exchange and M/s. Multi Commodity Exchange of India. After the receipt of the information received from M/s.Bombay Stock Exchange, M/s. National Stock Exchange, it was found that the assessee failed to deduct the TDS on payme .....

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d the total default was worked out as under:- Sr. No. Description Transaction charges TDS Interest u/s.201(1A) Total Default 1 Bombay Stock Exchange Rs.9,65,675/- Rs.19,694/- Rs.19,694/- 2 National Stock Exchange Rs.1,25,44,648/- Rs.2,55,836/- Rs.2,55,836/- Total Rs.1,35,10,323/- Rs.2,75,530/- Rs.2,75,530/- 6. Thereafter the demand notice was issued for ₹ 2,75,530/-. Feeling aggrieved the assessee filed an appeal before the CIT(A) who confirmed the order of the Assessing Officer, therefore .....

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unt of non payment of interest also. This matter of controversy has been adjudicated by the Hon ble Supreme Court of India in case of Commissioner of Income Tax 4, Mumbai Vs. Kotak Securities Ltd. [2016] 67 taxmann.com 356 (SC). No doubt in the said case the Hon ble Bombay High Court was of the view that the transaction charges paid by the member of the M/s. Bombay Stock Exchange to transact business of sale and purchase of shares amounts to payment of a fee for technical services rendered by th .....

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