ITO 4(2)(4), MUMBAI v. S.P. JAIN SECURITIES P. LTD, MUMBAI

ITA 4787/MUM/2010 | 2006-2007
Pronouncement Date: 25-07-2011 | Result: Dismissed

Appeal Details

RSA Number 478719914 RSA 2010
Assessee PAN AADCS2423F
Bench Mumbai
Appeal Number ITA 4787/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 15 day(s)
Appellant ITO 4(2)(4), MUMBAI
Respondent S.P. JAIN SECURITIES P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 25-07-2011
Assessment Year 2006-2007
Appeal Filed On 10-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI T.R. SOOD (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO.4787/MUM/2010 ASSESSMENT YEAR 2006-07 THE ITO 4(2)(4) AAYAKAR BHAVAN MUMBAI-400 020 VS. M/S. S.P. JAIN SECURITIES PVT. LTD. 14 AMBALAL DOSHI MARG 3 RD FLOOR FORT MUMBAI-400 023 PAN-AADCS 2423F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.K. GUPTA RESPONDENT BY: MRS. ARATI VISSANJI DATE OF HEARING :25 TH JULY 2011 DATE OF PRONOUNCEMENT: 25 TH JULY 2011 O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 3.3.2010 PASSED BY THE LD. CIT(A)-8 FOR THE A SSESSMENT YEAR 2006-07. 2. THE REVENUE IN ITS GROUNDS OF APPEAL HAS CHALLEN GED THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE OF V-SAT CHARGE S OF RS.9 44 633/- AND TRANSACTION CHARGES OF RS.7 14 232/- DISALLOWED BY THE ASSESSING OFFICER U/S. 40(A)(IA) OF THE INCOME TAX ACT 1961 (THE ACT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SEE A PRIVATE LIMITED COMPANY IS CARRYING ON THE BUSINESS AS A SHARE BRO KER(BEING A MEMBER OF BOMBAY STOCK EXCHANGE) AND ALSO CARRYING ON THE ACT IVITIES OF A DEPOSITORY PARTICIPANT OF CENTRAL DEPOSITORY SERVICES (INDIA) LTD. THE ASSESSING OFFICER IN THE ORDER PASSED U/S. 143(3) DISALLOWED AN AMOUNT O F RS.9 44 633 ON ACCOUNT ITA NO. 4787/M/2010 2 OF V-SAT CHARGES AND RS.7 14 232/- ON ACCOUNT OF TR ANSACTION CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 4. IN APPEAL THE CIT(A) DELETED BOTH THE ADDITIONS BY HOLDING AS UNDER: VSAT AND LEASE LINE CHARGES TRANSACTION CHARGES A ND OTHER CHARGES ARE REIMBURSEMENT CHARGES PAID BY THE MEMBE RS OF THE STOCK EXCHANGE IN LIEU OF INFRASTRUCTURE AND TRADIN G FACILITIES PROVIDED BY THE STOCK EXCHANGE. THE VSAT AND LEASE LINE TRANSACTION CHARGES ETC PAID TO STOCK EXCHANGE ARE NOT PAYMENTS WHICH COME WITHIN THE DOMAIN OF FEE TECHN ICAL SERVICES AND THEY ARE ALSO NOT FOR ANY WORK DONE BY STOCK EXCHANGE FOR THE MEMBER BROKER. THE ITAT MUMBAI I N ITA NO. 1955/M/08 FOR A.Y. 2005-06 IN THE CASE OF KOTAK SEC URITIES VS ACIT-4(3) ORDER DT. 26.8.2008 (25 SOT 440) HAS HELD THAT THE STOCK EXCHANGE DOES NOT PROVIDE MANAGERIAL SERVICES AND THE FEES PAID BY THE MEMBER TO THE STOCK EXCHANGE IS NO T FOR ANY TECHNICAL SERVICES RENDERED SO TDS IS NOT DEDUCTIB LE ON THE SAME. IN VIEW OF ABOVE GROUNDS OF APPEAL ARE ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 6. BOTH THE PARTIES FAIRLY CONCEDED THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY T HE DECISION OF THE TRIBUNAL REPORTED IN 41 DTR 296 AND IN THE CASE OF KOTAK SECURITIES LTD. VS. ADDL. CIT REPORTED IN 25 SOT 440 WHEREIN IT IS HELD THAT V-SAT CHARGES AND TRANSACTION FEE PAID TO THE STOCK EXCHANGE CANNOT B E SAID TO BE A FEE PAID INCONSIDERATION OF THE STOCK EXCHANGE RENDERING ANY TECHNICAL SERVICE TO THE ASSESSEE. THEREFORE THE PROVISIONS OF SECTION 194J ARE NOT ATTRACTED. SINCE THERE IS NO OBLIGATION ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE THEREFORE THE PROVISIONS OF SECTION 40(A)(IA) ARE ALSO NOT ATTRACTED. SINCE THE CIT(A) HAS FOLLOWED THE DECISION OF THE TRIBUNAL AN D SINCE NO CONTRARY MATERIAL AGAINST THE ORDER OF THE TRIBUNAL WAS BROU GHT TO OUR NOTICE THEREFORE WE UPHOLD THE ORDER OF THE CIT(A) ON THI S ISSUE. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. ITA NO. 4787/M/2010 3 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY 2011 SD/- SD/- (T.R. SOOD) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 25 TH JULY 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI ITA NO. 4787/M/2010 4 DATE INITIALS 1. DRAFT DICTATED ON: 25.7.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 25.07.11 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: