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DCIT 4 (2) (1) , Mumbai Versus M/s Vibrant Securities Pvt. Ltd.

2017 (12) TMI 420 - ITAT MUMBAI

TDS u/s 194J - Disallowance u/s 40(a)(ia) - ‘transaction charges’ paid by the assessee to the Stock exchange - whether ‘transaction charges’ not to be held as ‘fees for technical services’? - Held that:- We are of the considered view that after the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Kotak Securities Limited. (2016 (3) TMI 1026 - SUPREME COURT), the issue as to whether ‘transaction charges’ fall within the sweep of ‘fees for technical services’, or not, had been settled .....

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not be held as ‘fees for technical services’, therefore, no disallowance of the aforesaid amount would be called for in the hands of the assessee under Sec. 40(a)(ia). No disallowance under Sec. 40(a)(ia) of the ‘transaction charges’ was called for in the hands of the assessee.- Decided in favour of assessee. - I.T.A. No. 142/Mum/2016 - Dated:- 25-10-2017 - SHRI B.R. BASKARAN, AM AND SHRI RAVISH SOOD, JM For The Appellant : Ms. Pooja Swaroop, D.R. For The Respondent : Shri Dharmesh Shah, A.R. OR .....

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ng the appeal of the assessee relying on the decision of the ITAT in the assesses case for A.Y. 2009-10 in spite of the fact that the decision of Tribunal for A.Y. 2009-10 is itself contradictory in view of the decision of Hon ble Jurisdictional High Court in the case of Kotak Securities Ltd. Where non deduction of TDS on payment of transaction charges has been held as bonafide for A.Y. 2005-06 only. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in allowing the appea .....

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ts of the case are that the assessee company which is engaged in the business of Share Broking as a member of Bombay Stock Exchange and National Stock Exchange had filed its return of income for A.Y. 2007-08 on 15.11.2007, declaring total income of ₹ 80,70,021. The case of the assessee was taken up for scrutiny assessment under Sec. 143(2). The A.O being of the view that the assessee had failed to deduct tax at source on transaction charges of ₹ 36,52,820/-, therein disallowed the sa .....

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igh Court of Bombay in the case of CIT Vs. Kotak Securities Limited (2012) 340 ITR 333 (Bom) decided the issue in the favour of the revenue. The assessee filed a Miscellaneous application before the Tribunal, marked as M.A No. 167/Mum/2012 on the ground that as it was under a bonafide belief as regards its statutory obligation of deducting tax at source on the transaction charges, therefore, the aforesaid disallowance of ₹ 36,52,820/- in all fairness may be deleted. The Tribunal, viz. ITAT .....

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the order of the A.O before the CIT(A), wherein the latter observed that the Tribunal while disposing of the assesses own appeal for A.Y. 2009-10, marked as ITA No. 7158/Mum/2012, dated. 22.04.2015, had deleted the addition/disallowance of Transaction charges made under Sec. 40(a)(ia) for non-deduction of tax at source, by observing as under: We have heard both the parties and the contentions have carefully been considered. Keeping in view the sequence of dates which have been reproduced above, .....

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ribunal and the relevant portion from the order in the case of M/s Kedia Share & Stock Brokers has already been reproduced. The CIT(A) following the aforesaid order of the Tribunal in the assesses own case for A.Y. 2009-10, therein deleted the disallowance of ₹ 36,52,820/- (supra) made by the A.O on the same issue under Sec. 40(a)(ia) in the hands of the assessee during the year under consideration. 3. The revenue being aggrieved with the order of the CIT(A) vacating the disallowance/a .....

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in the case of CIT Vs. Kotak Securities Limited (2012) 340 ITR 333 (Bom), which pertained to A.Y. 2005-06, had in unequivocal terms held that though the transaction charges paid by the assessee to the stock exchange constituted fees for technical services and as such it was obligatory on the part of the assessee to have deducted tax at source under Sec. 194J of the Act, but however, since both the Revenue and the assessee were under the bona fide belief for nearly a decade that tax was not deduc .....

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e only in context of A.Y. 2005-06, and thus the assessee could not be allowed to take the benefit of the same for the year under consideration, viz. A.Y. 2007-08. Per Contra, the ld. Authorised representative for the assessee submitted that the aforesaid contention of the revenue did not hold the ground any more, as the judgment of the Hon ble High Court of Bombay in the case of CIT Vs. Kotak Securities Limited (2012) 340 ITR 333 (Bom) therein holding that transaction charges fell within he swee .....

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such payments was required to be deducted at source under Sec. 194J. The ld. A.R in the backdrop of his aforesaid contention submitted that now when the transaction charges are not to be held as fees for technical services , therefore, no disallowance under Sec. 40(a)(ia) for failure to deduct tax at source under Sec. 194J could have been made by the A.O. Thus, it was submitted by the ld. A.R that as the appeal of the revenue was devoid of any force, therefore, the same may be dismissed. 4. We h .....

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