The ACIT, Circle-4,, Baroda v. M/s. VSE Stock Services Ltd.,, Baroda

ITA 22/AHD/2013 | 2009-2010
Pronouncement Date: 04-10-2013 | Result: Allowed

Appeal Details

RSA Number 2220514 RSA 2013
Assessee PAN AABCV4258K
Bench Ahmedabad
Appeal Number ITA 22/AHD/2013
Duration Of Justice 9 month(s)
Appellant The ACIT, Circle-4,, Baroda
Respondent M/s. VSE Stock Services Ltd.,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 04-10-2013
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 04-10-2013
Date Of Final Hearing 08-05-2017
Next Hearing Date 08-05-2017
Assessment Year 2009-2010
Appeal Filed On 04-01-2013
Judgment Text
ITA NO 22/A/2013 & CO. NO.49/A/13 . A.Y. 2009- 10 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH A HMEDABAD (BEFORE SHRI D.K. TYAGI J.M. & SHRI ANIL CHATURVE DI A.M.) I.T. A. NO. 22 /AHD/2013 & CO. NO.49/AHD/2013 (ASSESSMEN T YEAR: 2009-10) THE A.C.I.T CIRCLE-4 BARODA (APPELLANT) VS. M/S VSE STOCK SERVICES LTD. BARODA (RESPONDENT) PAN: AABCV4258K APPELLANT BY : SHRI O.P. BATHEJA SR.D.R . RESPONDENT BY : SHRI S.N. SOPARKAR A.R. ( )/ ORDER DATE OF HEARING : 18-09-201 3 DATE OF PRONOUNCEMENT : 04-10-2013 PER SHRI ANIL CHATURVEDI A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-III BARODA DATED 22.10.2012 FOR A.Y. 2009-10. 2. THE FACTS AS CULLED OUT FROM THE ORDER OF LOWER AUT HORITIES ARE AS UNDER: ITA NO 22/A/2013 & CO. NO.49/A/13 . A.Y. 2009- 10 2 3. ASSESSEE IS A CORPORATE SHARE BROKER MEMBER OF THE BSE & NSE. IT FILED ITS RETURN OF INCOME FOR A.Y. 2009-10 ON 25.09.2009 DECLARING TOTAL INCOME OF RS. 1 02 63 170/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143 (3) VIDE ORDER DATED 21.11.2011 AND THE TOTAL INCOME WAS DETERMINE D AT RS. 1 75 85 650/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 22.10.2012 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US AND THE ASSESSEE HAS ALSO FILED A CO. 4. THE ONLY GROUND OF REVENUE IS WITH RESPECT TO DELET ION OF DISALLOWANCE OF RS. 72 86 348/- UNDER SECTION 40(A)(IA) OF THE A CT BEING TRANSACTION CHARGES PAID TO BSE AND NSE. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESS ING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED AN AMOUNT OF RS. 73 05 26 1/- ON ACCOUNT OF TRANSACTION CHARGES PAID TO BSE & NSE. ASSESSING O FFICER ALSO NOTICED THAT ASSESSEE HAS NOT DEDUCTED TDS. THE ASSESSEE W AS ASKED TO SUBSTANTIATE ITS CLAIM. ASSESSEE INTERALIA SUBMITT ED THAT THE PAYMENT WAS FOR THE USE OF FACILITIES PROVIDED BY THE STOCK EXC HANGES FOR ON-LINE TERMINAL FACILITIES AND WAS NOT FOR ANY SERVICE EIT HER TECHNICAL OR MANAGERIAL AND THEREFORE THE PROVISIONS OF SECTION 194J WERE NOT APPLICABLE. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS UNDER SECTION 194J OF TH E ACT ON THE TRANSACTION CHARGES PAID TO BSE/NSE. HE WAS FURTHE R OF THE VIEW THAT ITA NO 22/A/2013 & CO. NO.49/A/13 . A.Y. 2009- 10 3 SINCE THE ASSESSEE HAS NOT DEDUCTED THE TDS AND THE REFORE THE AMOUNT OF EXPENDITURE WAS LIABLE FOR DISALLOWANCE UNDER SECTI ON 40(A)(IA). HE ALSO PLACED RELIANCE ON THE DECISION OF HON. BOMBAY HIGH COURT IN THE CASE OF KOTAK SECURITIES LTD. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER ASSESSEE CARRIED THE MATTER BEFORE CIT(A) CIT(A) A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 4.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS MADE BY THE AR OF THE APPELLANT. THE BOMBAY HIGH COURT IN ITS ORDER I N THE OF SECURITIES LTD (SUPRA) HAS CLEARLY HELD THAT THE PERSON MAKING PAY MENT OF TRANSACTION CHARGES TO STOCK EXCHANGES IS REQUIRED TO MAKE TDS ON SUCH PAYMENT. THE APPELLANT IS A MEMBER OF BSE & NSE AND IN THIS CAPACITY IS MAKING PAYMENT OF TRANSACTION CHARGES TO BSE AND NSE HENCE THE APPELLANT WAS RE QUIRED TO MAKE TDS ON THESE PAYMENTS. THE APPELLANT'S CLAIM THAT SUCH TDS IS TO BE MADE ONLY IF THE PERSON MAKING THE PAYMENT OF TRANSACTION CHARGE IS MAKING SUCH PAYMENT ON SHARE TRADING DONE BY ITSELF ON THE STOCK EXCHANGE IS NOT CORRECT. THE PAYMENT OF TRANSACTION CHARGES ARE MADE BY THE BROKERS TO THE STOCK EXCHANGES ON ACCOUNT OF TRADING DONE THROUGH THEM AND NOT ONLY ON THE AC COUNT OF TRADING MADE ON THEIR OWN BEHALF. HENCE IT IS HELD THAT THE APPELL ANT WAS LIABLE FOR MAKING TDS ON TRANSACTION CHARGES PAID TO BSE AND NSE AND HEN CE THE AO HAS RIGHTLY INVOKED THE PROVISIONS OF 40(A)(IA) OF THE IT ACT 1961 IN THE APPELLANTS CASE. 4.2.1. AT THE SAME TIME THE APPELLANT HAS ALSO PLA CED RELIANCE UPON THE DECISION OF SPL. BENCH VISHAKHAPATTAM OF ITAT IN THE CASE O F MERILYN SHIPPING & TRANSPORT (SUPRA) AND HAS STATED THAT ONLY THE TRAN SACTION CHARGES WHICH REMAINED PAYABLE AS ON 31-3-2009 CAN BE DISALLOWED U/S 40(A)(IA). AS PER DETAILS SUBMITTED BY THE APPELLANT ONLY AN AMOUNT O F RS. 18 913/- IS OUTSTANDING FOR PAYMENT TO BSE AS ON 31-3-09. THE AO IS DIRECTE D TO VERIFY THIS FIGURE AND TO RESTRICT THE DISALLOWANCE MADE BY HIM TO THE AMOUNT OF TRANSACTION CHARGES WHICH WAS PAYABLE AS ON 31-03-2009. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US. ITA NO 22/A/2013 & CO. NO.49/A/13 . A.Y. 2009- 10 4 7. BEFORE US THE LEARNED D.R. SUBMITTED THAT THE HON. BOMBAY HIGH COURT IN THE CASE OF KOTAK SECURITIES LTD HAS HELD THAT T DS IS REQUIRED TO BE DEDUCTED ON THE PAYMENT OF TRANSACTION CHARGES PAID TO STOCK EXCHANGES. HE FURTHER SUBMITTED THAT CIT(A) RELYING ON THE SPE CIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORT (SUPR A) HAS HELD THAT ONLY TRANSACTION CHARGES WHICH REMAINED PAYABLE AS ON 31 .03.2009 CAN BE DISALLOWED UNDER SECTION 40(A)(IA). HE FURTHER SUB MITTED THAT THE AFORESAID DECISION OF SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING (SUPRA) IS NO MORE A GOOD LAW IN VIEW OF THE DECISI ON OF GUJ. H.C. IN THE CASE OF SIKANDER KHAN TUNVAR. HE THUS SUBMITTED THA T THE ORDER OF ASSESSING OFFICER BE UPHELD. 8. THE LEARNED A.R. FAIRLY AGREED TO THE SUBMISSIONS M ADE BY LEARNED D.R. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE HON. GUJARAT HIGH COURT IN THE CAS E OF CIT VS. SIKANDER KHAN TUNVAR TAX APPEAL NO. 905 AND ORS OF 2012 ORDER DATED 2.05.2013 HAS HELD AS UNDER:- 38 IN THE RESULT WE ARE OF THE OPINION THAT SECTI ON 40(A)(IA) WOULD COVER NOT ONLY TO THE AMOUNTS WHICH ARE PAYABLE AS ON 31 ST MARCH OF A PARTICULAR YEAR BUT ALSO WHICH ARE PAYABLE AT ANY TIME DURING THE YEAR OF COURSE AS LONG AS THE OTHER REQUIREMENTS OF THE SAID PROVISION EXIST. IN THAT CONTEXT IN OUR OPINION THE DECISION OF SPECIAL BENCH OF TRIBUNAL IN THE CASE OF MERILYN SHIPPING A ND TRANSPORT VS. ACIT (SUPRA) DOES NOT LAY DOWN CORRECT LAW. 10. CIT(A) WHILE GRANTING RELIEF HAD RELIED ON THE DEC ISION OF MERILYN SHIPPING BUT THE HON. GUJ. HIGH COURT HAS HELD THAT THE DECISION OF TRIBUNAL IN CASE OF MERILYN SHIPPING (SUPRA) DOES N OT LAY DOWN CORRECT ITA NO 22/A/2013 & CO. NO.49/A/13 . A.Y. 2009- 10 5 LAW. IN VIEW OF THE AFORESAID FACTS WE FIND THAT T HE ASSESSING OFFICER WAS JUSTIFIED A MAKING THE DISALLOWANCE AND WE THER EFORE UPHOLD THE ORDER OF ASSESSING OFFICER AND THUS THIS GROUND OF REVENUE IS ALLOWED. 11. IN THE CO OF ASSESSEE THE GROUNDS RAISED BY THE ASS ESSEE READS AS UNDER:- 1. LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF R S. 17 221/- MADE BY ASSESSING OFFICER INVOKING PROVISIONS OF SECTION 14A OF THE A CT FOR EARNING DIVIDEND INCOME OF RS. 39 988/- IGNORING THE SUBMISSION AND DOCUMENTAR Y EVIDENCE PLACED ON RECORD THAT DIVIDEND PERTAINED TO EXCESS BALANCE PARKED AU TOMATICALLY IN THE MUTUAL FUNDS OVER THE WEEKEND. BOTH THE LOWER AUTHORITIES ERRED IN IGNORING SUBMISSIONS THAT NO DISALLOWANCE IS CALLED FOR IN ABSENCE OF ANY NEXUS BETWEEN EXEMPTED INCOME AND EXPENDITURE INCURRED HAVING BROUGHT ON RECORD. LD. CIT(A) OUGHT TO HAVE DELETED DISALLOWANCE MADE UNDER INVOKING SECTION 14A R W R 8D OF THE ACT. 12. BEFORE US THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT. THE LD. D.R. ON THE OTHER HAND LIED ON THE ORD ER OF A.O. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAS EARNED R S. 39 988/- AS DIVIDEND INCOME WHICH HAS BEEN CLAIMED AS EXEMPT. ASSESSING OFFICER HAS WORKED OUT THE DISALLOWANCE BY FOLLOWING THE FORMULA PRESC RIBED UNDER RULE 8D OF I.T. RULES. ASSESSING OFFICER HAS NOTED THAT TH E ASSESSEES BANKER WAS ENGAGED IN THE INVESTING ACTIVITY OF WHICH ASSE SSEE HAS EARNED EXEMPT INCOME. IT IS ALSO A FACT THAT ASSESSEE HAS DEBITED RS. 14.11 LACS AS BANK CHARGES. BEFORE US THE LD. A.R. COULD NOT CONTROVERT THE FINDING OF A.O. AND CIT AND THEREFORE WE FIND NO REASON TO INTERFERE WITH THE ORDER OF A.O. THUS THIS GROUND IS DISMISSED. ITA NO 22/A/2013 & CO. NO.49/A/13 . A.Y. 2009- 10 6 14. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED AND THE CO OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 04 -10 - 2013. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD