MAPE SECURITIES, MUMBAI v. DCIT, MUMBAI

ITA 842/MUM/2012 | 2008-2009
Pronouncement Date: 24-11-2014 | Result: Allowed

Appeal Details

RSA Number 84219914 RSA 2012
Assessee PAN AAECM7039E
Bench Mumbai
Appeal Number ITA 842/MUM/2012
Duration Of Justice 2 year(s) 9 month(s) 15 day(s)
Appellant MAPE SECURITIES, MUMBAI
Respondent DCIT, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 24-11-2014
Date Of Final Hearing 24-11-2014
Next Hearing Date 24-11-2014
Assessment Year 2008-2009
Appeal Filed On 08-02-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI D. KARUNAKAR RAO ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMBER ITA NO. 842/MUM/2012 ASSESSMENT YEAR: 2008-09 M/S. MAPE SECURITIES PVT. LTD. 13/14 1 ST FLOOR NIRLON HOUSE ANNIE BESANT ROAD WORLI MUMBAI- 400 030 PAN:AAECM 7039 E VS. DCIT RANGE 4(3) ROOM NO. 649 4 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI PRAKASH JOTWANI REVENUE BY : SHRI AKHILENDRA YADAV DATE OF HEARING : 24.11.2014 DATE OF ORDER : 24 . 1 1 .2014 O R D E R PER AMIT SHUKLA JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AG AINST ORDER DATED 09.11.2011 PASSED BY THE LD.CIT(A) -8 MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE A.Y . 2008-09 ON THE FOLLOWING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.14 33 110/- AS TRANSACTION CHARGES U/S 40(A)(IA) . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING STOCK BROKING SERVICES TO ITS CLIENTS AND IS MEMBER OF NSE AND BSE. THE ASSESSEE HAS PAID SUM OF RS.14 33 110/- AS TRANSACTIONS CHARGES TO STOCK EXC HANGE. HOWEVER THE ITA NO. 842/MUM/2012 M/S. MAPE SECURITIES PVT. LTD. ASSESSMENT YEAR: 2008-09 2 ASSESSEE HAS NOT DEDUCTED TDS ON SUCH AN AMOUNT PAI D. BEFORE THE AO THE ASSESSEES CASE WAS THAT NO DISALLOWANCE U/S 40 (A)(IA) CAN BE MADE BECAUSE THE ITAT MUMBAI BENCH IN THE CASE OF KOTAK SECURITIES LTD. VS. ACIT ITA NO. 1956/M/2008 HAS HELD THAT NO TDS IS TO BE DEDUCTED U/S 194 J. THE ASSESSING OFFICER REJECTED THE ASSESSEE S CONTENTION AND MADE THE DISALLOWANCE U/S 40(A)(IA) ON THE GROUND THAT THE DECISION OF THE TRIBUNAL HAS NOT BEEN ACCEPTED AND MATTER IS SU BJUDICE BEFORE THE HONBLE BOMBAY HIGH COURT. THE LD. CIT(A) HAS CONFI RMED THE SAID DISALLOWANCE ON THE GROUND THAT NOW THE HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. KOTAK SECURITIES LTD. (2012) 340 ITR 333 HAS REVERSED THE SAID DECISION OF THE ITAT AND HELD THA T THE TRANSACTION CHARGES PAID BY THE ASSESSEE TO THE STOCK EXCHANGE CONSTITUTES FEES FOR TECHNICAL SERVICES FOR WHICH THE TDS IS TO BE DEDUCTED U/S 194 J. 3. BEFORE US LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT ASSESSEE HAS PAID TRANSACTION CHARGES IN THE EARLIE R YEARS ALSO AND NO DISALLOWANCE U/S 40(A)(IA) HAD BEEN MADE. THE DECIS ION OF THE HONBLE BOMBAY HIGH COURT WAS RENDERED IN FAVOUR OF THE REV ENUE ONLY ON 21.10.2011 AND PRIOR TO THAT THE TRIBUNAL DECISION WAS IN FAVOUR OF THE ASSESSEE. THUS THE ASSESSEE WAS UNDER A BONA FIDE B ELIEF THAT IT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON TRANSACTION CHARG ES. HE FURTHER SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID J UDGMENT ITSELF HAD HELD THAT IF THE REVENUE AND THE ASSESSEE WERE UND ER A BONA FIDE BELIEF FOR SEVERAL YEARS THAT TAX WAS NOT DEDUCTIBLE AT SO URCE ON PAYMENT OF TRANSACTION CHARGES THEN NO FAULT CAN BE FOUND WIT H THE ASSESSEE FOR NOT DEDUCTING THE TAX AT SOURCE AND THEREFORE NO DISALLOWANCE U/S 40(A)(IA) CAN BE SUSTAINED. THUS FOLLOWING THE SAME RATIO NO DISALLOWANCE SHOULD BE MADE. IN SUPPORT OF THIS CON TENTION HE ALSO ITA NO. 842/MUM/2012 M/S. MAPE SECURITIES PVT. LTD. ASSESSMENT YEAR: 2008-09 3 RELIED UPON DECISION OF ITAT MUMBAI BENCH IN THE CA SE OF DCIT VS. ANANT INVESTMENTS ITA NO. 6428/MUM/2000. 4. ON THE OTHER HAND LD. DR STRONGLY RELIED UPON TH E DECISION OF THE LD. CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTION AND ALSO PERU SED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER. THE ASSESSEE H AS PAID TRANSACTION CHARGES TO THE STOCK EXCHANGE ON WHICH TDS WAS NOT DEDUCTED. SUCH A NON DEDUCTION OF TDS WAS BASED ON THE FACT AND BELI EF THAT IN THE EARLIER YEARS ALSO NO TDS WAS DEDUCTED AND DEPARTMENT HAS A CCEPTED THIS POSITION. THIS BONA FIDE BELIEF THAT NO TDS IS REQU IRED TO BE DEDUCTED WAS ALSO BASED ON DECISIONS OF ITAT MUMBAI BENCHES SPECIALLY IN THE CASE OF KOTAK SECURITIES LTD. EVEN THE ASSESSING OF FICER HAS ACCEPTED THIS FACT BUT HAS MADE THE DISALLOWANCE U/S 40(A)(IA) O N THE GROUND THAT THE SAID DECISION OF THE TRIBUNAL IS SUBJUDICE BEFORE T HE HONBLE HIGH COURT. THIS DECISION OF THE TRIBUNAL WAS REVERSED ONLY ON 21.10.2011 BY THE HONBLE HIGH COURT WHEREIN IT WAS HELD THAT TRANSA CTION CHARGES ARE FEES FOR TECHNICAL SERVICES FOR WHICH TDS WAS RE QUIRED TO BE DEDUCTED U/S 194J. THE ASSESSEES CASE BEFORE US IS THAT NO DISALLOWANCE SHOULD BE MADE AND ASSESSEE WAS UNDER A BONA FIDE BELIEF T HAT NO TAX WAS DEDUCTIBLE. WE FIND THAT SUCH A BONA FIDE BELIEF FO R NOT DEDUCTING THE TAX IN THE ASSESSMENT YEAR IN QUESTION UNDER SUCH CIRCU MSTANCES HAS BEEN ACCEPTED BY THE HONBLE HIGH COURT IN THE CASE OF K OTAK SECURITIES LTD. (SUPRA) ITSELF AND DISALLOWANCE MADE U/S 40(A)(IA) WAS DELETED. THE RELEVANT OBSERVATION AND THE FINDING OF THE HONBLE HIGH COURT ON THIS ASPECT HAS GIVEN IN PARA 32 OF THE ORDER WHICH IS REPRODUCED HEREUNDER:- ITA NO. 842/MUM/2012 M/S. MAPE SECURITIES PVT. LTD. ASSESSMENT YEAR: 2008-09 4 HOWEVER SINCE BOTH THE REVENUE AND THE ASSESSEE WE RE UNDER THE BONA FIDE BELIEF FOR NEARLY A DECADE THAT TAX WAS NOT DEDUCTIBLE AT SOURCE ON PAYMENT OF TRANSACTION CHARGES NO FAULT CAN BE FOUND WITH THE ASSESSEE IN NOT DEDU CTING THE TAX AT SOURCE IN THE ASSESSMENT YEAR IN QUESTION CONSEQUENTLY DISALLOWANCE MADE BY THE ASSESSING OFF ICER UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF TH E TRANSACTION CHARGES CANNOT BE SUSTAINED. WE MADE IT CLEAR THAT WE HAVE ARRIVED AT THE ABOVE CONCLUSION IN THE PECULIAR FACTS OF THE PRESENT CASE WHERE BOTH THE REVENUE A ND THE ASSESSEE RIGHT FROM THE INSERTION OF SECTION 194J I N THE YEAR 1995 TILL 2005 PROCEEDED ON THE FOOTING THAT THE AS SESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE AND IN FACT IMME DIATELY AFTER THE ASSESSMENT YEAR IN QUESTION I.E. FROM A.Y . 2006-07 THE ASSESSEE HAS BEEN DEDUCTING TAX AT SOURCE WHILE CREDITING THE TRANSACTION CHARGES TO THE ACCOUNT OF THE STOCK EXCHANGE. THUS ON THE FACTS OF THE PRESENT CASE ALSO WE HOLD THAT NO DISALLOWANCE U/S 40(A)(IA) SHOULD BE MADE IN THE PRESENT ASSESSM ENT YEAR AS THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT NO TAX W AS DEDUCTIBLE BECAUSE IN THE EARLIER YEARS BOTH THE REVENUE AND T HE ASSESSEE HAD ACCEPTED THE POSITION THAT NO TAX WAS DEDUCTIBLE ON THE TRANSACTION CHARGES. IT HAS BEEN STATED BEFORE US BY THE LEARNE D COUNSEL THAT ASSESSEE IS NOW DEDUCTING TAX U/S 194J ON TRANSACTI ON CHARGES IN THE WAKE OF THE DECISION OF THE HONBLE HIGH COURT. ACC ORDINGLY WE HOLD THAT NO DISALLOWANCE SHOULD BE MADE U/S 40(A)(IA) I N THIS YEAR. THUS ASSESSEES GROUND IS ALLOWED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOVEMBER 2014. SD/- SD/- (D.KARUNAKAR RAO) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 24.11.2014 ITA NO. 842/MUM/2012 M/S. MAPE SECURITIES PVT. LTD. ASSESSMENT YEAR: 2008-09 5 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.