JHP SECURITIES P. LTD, MUMBAI v. ACIT 4(3), MUMBAI

ITA 1368/MUM/2009 | 2005-2006
Pronouncement Date: 09-09-2010 | Result: Allowed

Appeal Details

RSA Number 136819914 RSA 2009
Assessee PAN AAACJ2847H
Bench Mumbai
Appeal Number ITA 1368/MUM/2009
Duration Of Justice 1 year(s) 6 month(s) 11 day(s)
Appellant JHP SECURITIES P. LTD, MUMBAI
Respondent ACIT 4(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 09-09-2010
Date Of Final Hearing 31-08-2010
Next Hearing Date 31-08-2010
Assessment Year 2005-2006
Appeal Filed On 27-02-2009
Judgment Text
1 ITA NO1368/MUM/09 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI R V EASWAR PRESIDENT & SHRI R K PAND A AM ITA NO.1368/MUM/2009 (ASSESSMENT YEAR 2005-06) M/ J H P SECURITIES P LTD 21-28 GOKUL ARCADE S N ROAD VILE PARLE (E) MUMBAI 57 THE ASST COMMR OF INCOME TAX 4(3) MUMBAI (APPELLANT) VS (RESPONDENT) PAN AAACJ2847H ASSESSEE BY: SHRI V G GINDE REVENUE BY: SHRI SURENDRA KUMAR DR O R D E R PER R K PANDA: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 29.12.2008 OF THE CIT(A)-XIV MUMBAI RELATING TO A SSESSMENT YEAR 2005-06. 2 IN GROUNDS OF APPEAL NO.1 THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF `. 11 94 217/- MADE BY THE ASSESSING OFFICER BEING BAD DEBTS CLAIMED BY THE ASSESSEE U/S 36(1)(VII) OF THE ACT. 3 AFTER HEARING BOTH THE SIDES WE FIND THE ASSESSI NG OFFICER DISALLOWED THE CLAIM OF BAD DEBTS OF ` 11 94 217/- MADE BY THE ASSESSEE WHO IS A SHARE B ROKER. IN APPEAL THE CIT(A) UPHELD THE ACTION OF THE ASSESSI NG OFFICER. WE FIND THE ISSUE REGARDING CLAIM OF BAD DEBTS IN CASE OF A SHARE BRO KER IS NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECI AL BENCH OF THE TRIBUNAL IN THE CASE OF SHRI SHREYAS S MORAKHIA REPORTED IN 42 DTR 320 WHEREIN IT HAS BEEN HELD THAT THE AMOUNT WRITTEN OFF BY A SHARE BROKER ON AC COUNT OF AMOUNTS RECEIVABLE 2 ITA NO1368/MUM/09 FROM ITS CLIENTS AS BAD DEBT HAS TO BE ALLOWED AS DEDUCTION. RESPECTFULLY FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL ( SUPRA) THIS GROUND OF THE ASSESSEE IS ALLOWED. 4 GROUND NO.2 IS AN ALTERNATE GROUND WHERE IN THE A SSESSEE HAS TAKEN THE GROUND THAT IN CASE THE BAD DEBT IS NOT ALLOWED AS DEDUCTION/S 36(1)(VII) THEN THE SAME SHOULD BE ALLOWED AS TRADING LOSS U/S 28 AND/O R U/S 37 OF THE I T ACT. 5 AFTER HEARING BOTH THE SIDES AND IN VIEW OF OUR D ECISION IN GROUNDS OF APPEAL NO.1 WHEREIN WE HAVE ALLOWED THE CLAIM OF BAD DEBT S BY THE ASSESSEE THIS GROUND OF APPAL BY THE ASSESSEE BECOMES INFRUCTUOUS. ACCOR DINGLY THE SAME IS DISMISSED. 6 IN GROUNDS OF APPEAL NO.3 THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF `. 77 365/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUNDRY BALANCES WRITTEN OFF. 7 AFTER HEARING BOTH THE SIDES WE FIND THE ISSUE R ELATES TO SUNDRY BALANCES WRITTEN OFF IN THE CASE OF A SHARE BROKER. WE FIND THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION IN THE CASE OF KOT AK SECURITIES LTD VS ACIT REPORTED IN 24 DTR 214(BOM) WHEREIN IT HAS BEEN HELD THAT SM ALL BALANCES WRITTEN OFF ARE TO BE ALLOWED AS BUSINESS LOSS U/S 28 OF THE I T ACT. A CCORDINGLY THIS GROUND OF THE ASSESSEE IS ALLOWED. 8 IN GROUNDS OF APPEAL NO.4 THE ASSESSEE HAS CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF ` .2 91 739/- BY THE ASSESSING OFFICER ON ACCOUNT OF LEASE-LINE CHARGES PAID TO BSE U/S 40(A )(IA) OF THE ACT. 3 ITA NO1368/MUM/09 9 AFTER HEARING BOTH THE SIDES WE FIND THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE AMOUNT OF ` .2 91 739/- PAID TO BSE ON ACCOUNT OF LEASE-LINE CHARGES U/S 40(A)(IA) ON THE GROUND THAT THE SAME WERE FEES FOR TECHNICAL SERVICES ON WHICH TAX WAS DEDUCTABLE U/S 194J OF THE I T ACT. WE FIND THE TRIBUNAL IN THE CASE OF DCIT VS ANGLE BROKING LTD R EPORTED IN 41 DTR 296 HAS HELD THAT VSAT BLOT LEASED LINE DEMAT CHARGES ETC. P AID BY STOCK BROKERS TO STOCK EXCHANGES ARE NOT IN THE NATURE OF FEES FOR TECHNIC AL SERVICES AND THEREFORE CANNOT BE DISALLOWED U/S 40(A)(IA) FOR NOT DEDUCTING TAX AT SOURCE THEREFROM. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL WHEREIN ONE OF US (ACCOUNTANT MEMBER) IS A PARTY; THE ORDER OF THE CIT(A) ON THIS ISSUE IS SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10 IN GROUNDS OF APPEAL NO.5 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ACTION OF THE ASSESSING OF FICER IN DISALLOWING AN AMOUNT OF ` .22 25 588/- BEING TRANSACTION CHARGES PAID TO BSE U/S 40(A)(IA) FOR NON- DEDUCTION OF TAX AT SOURCE U/S 194J. 10.1 THE LD COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISIONS: I) KOTAK SECURITIES LTD VS ACIT 24 DTR 214 II) DCIT VS SONAL SHARES & STOCK BROKERS P LTD 38 SOT 150(MUM) III) DCUIT VS ANGLE BROKING LTD 41 DTR 296 (MUM) THE LD DR ON THE OTHER HAND SUPPORTED THE ORDER O F THE CIT(A). 11 AFTER HEARING BOTH THE SIDES WE FIND THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE TRIBUNAL RELIED UP ON BY THE LD COUNSEL FOR THE ASSESSEE. THE CO-ORDINATE BENCHES OF THE TRIBUNAL ARE TAKING THE CONSISTENT VIEW THAT TRANSACTION CHARGES PAID TO BSE ARE NOT IN TH E NATURE OF FEES FOR TECHNICAL SERVICES AND THEREFORE CANNOT BE DISALLOWED U/S 40 (A)(IA) FOR NOT DEDUCTING TAX AT 4 ITA NO1368/MUM/09 SOURCE. IN VIEW OF THE CONSISTENT VIEW TAKEN BY TH E CO-ORDINATE BENCHES OF THE TRIBUNAL AND IN ABSENCE OF ANY CONTRARY DECISION BR OUGHT TO OUR NOTICE BY THE LD DR THE ORDER OF THE CIT(A) ON THIS ISSUE IS SET ASIDE AND THE GROUND TAKEN BY THE ASSESSEE IS ALLOWED. 12 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED ON THE 9 TH DAY OF SEPT 2010. SD/- SD/- ( R V EASWAR ) PRESIDENT ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 9 TH SEPT 2010 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI