D.C.I.T.CIRCLE 4(2), MUMBAI v. M/S. ROSY BLUE SECURITIES P.LTD., MUMBAI

ITA 6480/MUM/2008 | 2005-2006
Pronouncement Date: 14-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 648019914 RSA 2008
Bench Mumbai
Appeal Number ITA 6480/MUM/2008
Duration Of Justice 1 year(s) 6 month(s) 7 day(s)
Appellant D.C.I.T.CIRCLE 4(2), MUMBAI
Respondent M/S. ROSY BLUE SECURITIES P.LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 14-05-2010
Date Of Final Hearing 10-03-2010
Next Hearing Date 10-03-2010
Assessment Year 2005-2006
Appeal Filed On 07-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO.6480/MUM/2008 ASSESSMENT YEAR-2005-06 THE DY. CIT CIR-4(2) AAYAKAR BHAVAN MUMBAI-400 020 VS. M/S. ROSY BLUE SECURITIES PVT. LTD. 154-C MITTAL COURT NARIMAN POINT MUMBAI-400 021 PAN-AAACR4-82Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI T.T. JACOB RESPONDENT BY: SHRI NITESH JOSHI O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DT. 4.8.2008 PASSED BY THE LD. CIT(A)-IV MUMBAI FO R THE ASSESSMENT YEAR 2005-06. 2. GROUND NO. 1 REFERS TO THE DIRECTION OF THE CIT(A) IN ALLOWING DEPRECIATION ON BSE MEMBERSHIP CARD. BOTH THE PARTI ES HAVE FAIRLY CONCEDED THAT THIS ISSUE WAS DECIDED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHARES & STOCKS LTD. 318 ITR 687 WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT BSE MEMBERSHIP CAR D IS NOT ELIGIBLE FOR DEPRECIATION. RESPECTFULLY FOLLOWING THE SAME W E REVERSE THE ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE A.O. GROUND NO. 1 OF THE REVENUE IS ALLOWED. 3. GROUNDS OF APPEAL NO. 2 TO 8 ARE WITH RESPECT T O DELETION OF DISALLOWANCE OF RS. 96 000/- MADE IN RESPECT OF V-S AT AND LEASELINE CHARGES AT RS. 1 00 103/- ON THE GROUND THAT THESE WERE COMPOSITE ITA NO. 6480/M/08 2 CHARGES ALONGWITH TRANSACTION CHARGES FOR PROFESSIO NAL AND TECHNICAL SERVICES RENDERED BY THE EXCHANGE TO ITS MEMBERS A ND THE ASSESSEE HAS FAILED TO DEDUCT TDS THEREON. 4. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISI ON IN THE CASE OF SKYCELL COMMUNICATION LTD. VS DCIT 251 ITR 53 AND I N THE CASE OF KOTAK SECURITIES LTD. VS ACIT (MUM) 24 DTR 214 WHER EIN IT HAS BEEN HELD AS FOLLOWS: TRANSACTION FEE PAID TO STOCK EXCHANGE ON THE BASI S OF VOLUME OF TRANSACTION IN PAYMENT FOR USE OF FACILIT IES PROVIDED BY STOCK EXCHANGE AND NOT FOR ANY SERVICES EITHER TECHNICAL OR MANAGERIAL HENCE PROVISIONS OF S. 194J ARE NOT ATT RACTED AND NO DISALLOWANCE CAN BE MADE BY INVOKING S. 40(A)(IA ). THEREFORE GROUND NOS. 2 TO 8 OF THE REVENUE IS DIS MISSED. 5. GROUND NO. 9 IS WITH RESPECT TO DELETION OF ADDI TION MADE ON ACCOUNT OF PENALTY OF RS. 5 09 429/- ON VIOLATION O F THE BYE-LAWS OF THE STOCK EXCHANGE WHICH ARE STATUTORY IN CHARACTER AN D THUS AMOUNTED TO INFRINGEMENT OF LAW. 6. THE INTEREST PAYABLE IS FOR THE DELAYED PAYMENT OF FEES TO SEBI. THE BROKERS WERE DISPUTING BOTH THE PAYMENT OF FEES AS WELL AS INTEREST FOR DELAYED PAYMENTS. TO SETTLE THIS DISPUTE SEBI ANNOUNCED A REGULARIZATION SCHEME WHEREBY SEBI PERMITTED THE BR OKERS TO PAY THE FULL FEES AND 20% OF THE INTEREST PAYABLE ON DELAY ED PAYMENT IN FULL AND FIND SETTLEMENT OF BROKERS LIABILITY. AS THE AMOUN T PAYABLE WAS COMPENSATION FOR DELAYED PAYMENT IT IS NOT IN THE NATURE OF PENALTY AND AS THE QUANTUM OF INTEREST PAYABLE WHICH WERE BEIN G DISPUTED BY BROKERS WAS SETTLED ONLY THIS YEAR BY THE ANNOUNC EMENT OF THIS SCHEME. CONSEQUENTLY THE PAYMENT WHICH IS COMPENSATORY IN NATURE AND WHICH HAS ACCRUED THIS YEAR IS AN ALLOWABLE DEDUCTION. ITA NO. 6480/M/08 3 7. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISI ON OF MUMBAI TRIBUNAL IN THE CASE OF SHRI PRASHANT J. PATEL IN ITA NO. 213/M/2007 C BENCH VIDE ORDER DT. 21 ST OCTOBER 2009. IN THIS CASE THE TRIBUNAL HELD AS FOLLOWS: THE LD. COUNSEL FOR THE ASSESSEE SHRI V.G. GINDE SUBMITTED THAT THE LIABILITY TO PAY THE SEBI FEE DURING THE Y EAR AS WELL AS THE INTEREST LIABILITY CRYSTALLIZED DURING THE YEAR AND IS TO BE ALLOWED ON THE MERCANTILE SYSTEM. HE ALSO SUBMITTED THAT THE INTEREST PAYMENT IN RESPECT OF ARREARS OF SEBI FEE PARTAKE THE CHARA CTER OF THE FEE ITSELF AS THE SAME IS COMPENSATORY IN NATURE AND TH EREFORE IS TO BE ALLOWED IN THE YEAR OF PAYMENT AS PER THE PROVISION S OF SEC. 43B. IN VIEW OF THE SUPREME COURT JUDGMENT IN THE CASE O F MAHALAXMI SUGAR MILLS CO. VS CIT (SC) WE ARE OF TH E OPINION THAT INTEREST ON SEBI FEES PARTAKES THE CHARACTER OF SEB I FEE ITSELF AND IS THUS ALLOWABLE ON THE BASIS OF ACTUAL PAYMENT U/S. 43B. THEREFORE WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE REVENUES APPEAL ON THIS ISSUE. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE ITAT IN THE CASE OF SHRI PRASHANT J. PATEL WE DISMISS THE REVENUES APPEAL ON THIS ISSUE. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 14 TH DAY OF MAY 2010 SD/- SD/- (R.S. SYAL ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 14 TH MAY 2010 RJ ITA NO. 6480/M/08 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI ITA NO. 6480/M/08 5 DATE INITIALS 1 DRAFT DICTATED ON: 7.5.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 10 .5 .2010 ______ 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. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/ PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______